The Australian Government's proposed Tranche 2 updates to the Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) regime will bring significant changes for real estate professionals. These updates aim to enhance the detection and prevention of illicit financial activities and ensure Australia remains compliant with international standards. This article outlines the critical changes and new obligations that real estate professionals will face.

Key Obligations

1. Enrolment with AUSTRAC
   • Real estate professionals will need to enrol with the Australian Transaction Reports and Analysis Centre (AUSTRAC). This enrolment will officially recognise them as reporting entities under the AML/CTF Act.
2. Development of an AML/CTF Program
   • Each real estate business must develop and maintain a tailored AML/CTF program. This program should address the specific risks associated with their clients, services, and the jurisdictions they operate in.
3. Customer Due Diligence (CDD)
   • Real estate agents will need to conduct thorough CDD to verify the identity of their clients and understand the nature and purpose of the business relationship. This includes checking if clients are politically exposed persons or appear on any Australian sanction lists.
4. Ongoing Customer Due Diligence
   • Continuous monitoring of clients' transactions and behaviours will be necessary to detect any suspicious activities or changes in risk profiles.
5. Reporting Obligations
   • Real estate professionals must report certain transactions and suspicious activities to AUSTRAC, such as cash transactions over $10,000 and any suspicious matter reports (SMRs) if there are reasonable grounds to suspect illegal activity.
6. Record Keeping
   • Proper records of all customer due diligence, transactions, and AML/CTF compliance activities must be maintained securely. These records will support investigations if the business is misused for criminal purposes.

Impact on Existing Customers

Real estate businesses will need to transition their existing customers into compliance with the new AML/CTF regime. Pre-commencement customers (those already in a business relationship before the reforms take effect) will not require immediate re-verification unless their risk profile changes or a suspicious matter arises. However, ongoing due diligence will still be necessary​​.

Preparing for Compliance

The Tranche 2 updates to the AML/CTF regime will introduce new responsibilities for real estate professionals, aiming to safeguard the industry from money laundering and terrorism financing risks. By understanding and implementing these changes, real estate businesses can contribute to a more secure financial system and comply with international standards.

If you need support in performing a detailed ML/TF Risk Assessment, setting up your AML/CTF Program and implementing AML/CTF mitigation controls such as KYC, CDD, PEPs and Sanctions Screening, Negative Media Screening etc., you can book a free consultation with with one of our AML Advisers.