From 1 July 2026, real estate agents, buyer’s agents, property developers and certain conveyancers in Australia will be required to comply with Tranche 2 AML/CTF reforms.
These reforms extend anti-money laundering and counter-terrorism financing obligations to the real estate sector, requiring enrolment with AUSTRAC, implementation of an AML/CTF program, customer due diligence on both buyers and sellers, suspicious matter reporting, ongoing monitoring, and formal record keeping.
Enrolment with AUSTRAC opens on 31 March 2026 and must be completed by 29 July 2026.
For real estate professionals, understanding these obligations early is essential to avoid penalties, protect reputation, and ensure transactions proceed smoothly under the new compliance regime.
What Are Tranche 2 Obligations in Real Estate?
Tranche 2 obligations in real estate refer to the expansion of Australia’s anti-money laundering and counter terrorism financing framework to cover the real estate sector from 1 July 2026.
Under these reforms, real estate agents, buyer’s agents, property developers and certain conveyancers will become a regulated reporting entity under the AML/CTF Act.
This means they must enrol with AUSTRAC, implement a compliant AML CTF program, conduct customer due diligence, report suspicious matter reports, and maintain detailed record-keeping systems.
These AML CTF obligations are designed to combat money laundering, terrorism financing, and broader financial crime within the real estate sector.
Expansion to Designated Non-Financial Businesses and Professions (DNFBPs)
The reforms bring Australia into alignment with international standards set by the Financial Action Task Force by regulating Designated Non-Financial Businesses and Professions (DNFBPs).
These include:
- Real estate agents and buyer’s agents
- Property developers operating a business selling real estate
- Lawyers and conveyancers involved in transferring real estate
- Accountants and trust service providers
For real estate professionals and other businesses that provide designated services, such as brokering or auctioneer services, these designated services now trigger AML CTF obligations.
This expansion captures new reporting entity obligations across the real estate sector, strengthening oversight of money laundering and counter terrorism financing risks.
Why Real Estate Is Considered High-Risk
Real estate transactions often involve large sums of money, cross-border parties and complex ownership structures.
Criminal organisations and organised crime groups may exploit real estate businesses for money laundering and terrorism financing AML CTF risks.
Particularly through:
- Cash-intensive transactions involving physical currency
- Layered corporate ownership structures
- Third-party intermediaries
- Certain transactions lack commercial rationale
These vulnerabilities create exposure to serious and organised crime, making the real estate sector a high-risk environment for financial crime.
FATF Pressure and Regulatory Reform
The Financial Action Task Force has repeatedly identified gaps in Australia’s oversight of DNFBPs and other new reporting entities.
Without reform, Australia risked international scrutiny and reputational damage.
These reforms strengthen compliance with global international standards, improving oversight of money laundering and counter terrorism financing risks.
Shift from Financial Institutions to the Property Sector
Historically, financial institutions managed AML CTF compliance.
Under Tranche 2, responsibility shifts to real estate professionals and other businesses that deliver regulated services within the real estate sector.
These reforms mean professionals who provide designated services now carry direct AML CTF obligations, rather than relying solely on banks for risk management.
How Tranche 2 Impacts Property Settlements in Western Australia
Although the reforms focus heavily on real estate agents, they also impact transferring real estate and settlement workflows in Western Australia.
Settlement agents operate where compliance requirements, documentation and execution intersect.
As new AML CTF compliance frameworks apply, coordination between professionals becomes essential.
Interaction Between Agents and Settlement Agents
Real estate agents must conduct initial customer due diligence when their designated services begin.
Conveyancers and settlement agents may also be captured as a reporting entity depending on the regulated services they provide.
In practice:
- Agents must conduct customer identity checks early.
- Settlement agents may need additional diligence checks before completion.
- Each reporting entity must manage its own compliance obligations.
Increased Documentation
Tranche 2 expands record keeping, risk assessment, and documentation standards.
This may include:
- Identity verification documents
- Beneficial ownership declarations
- Enhanced review of high-risk customers
- Documented risk management processes
In Western Australia, where settlement timelines are precise, incomplete documentation can disrupt established workflows.
Delays if CDD Is Incomplete
If customer due diligence is incomplete, transactions may be delayed.
Potential triggers include:
- Suspicious activity
- Complex ownership structures
- Escalation of suspicious transactions
Because obligations attach early, leaving verification until late in the process increases disruption risk.
Risk Allocation Between Parties
Each reporting entity is independently responsible for AML CTF compliance.
- Real estate agents remain responsible for designated services.
- Settlement agents remain responsible for their regulated services.
- Compliance cannot be outsourced to an independent real estate agent or other party.
Clear delineation of responsibilities reduces exposure to regulatory scrutiny.
How Early Verification Reduces Settlement Risk
Early risk assessment, customer due diligence, and structured AML CTF program implementation reduce disruption.
Proactive compliance supports smoother real estate and helps real estate businesses maintain operational stability.
When Do Tranche 2 Obligations Begin in a Property Transaction?
A common misconception is that obligations begin at settlement. They do not.
Obligations attach when a designated service begins. That is the moment a business starts providing a regulated service connected to the sale, purchase or transfer of real estate.
Because professionals engage at different stages, trigger points vary.
Seller’s Agent
For a seller’s agent, obligations begin when an agency agreement is signed.
At that point, they must conduct customer due diligence and prepare for potential suspicious matter reports.
Buyer’s Agent
For a buyer’s agent, obligations attach when engagement begins.
They must conduct customer verification processes before progressing.
Property Developers Selling In-House
Developers selling property directly may trigger obligations when there is a commitment to sell or transfer property, typically when a contract is executed.
Selling your own stock does not create an exemption if the activity forms part of a business of selling real estate.
Even transfers for no consideration can fall within scope if they are business-related.
Conveyancers & Settlement Agents
Conveyancers and settlement agents may be regulated under separate designated services connected to executing property transfers.
Obligations may attach when:
- They are formally engaged
- They begin preparing transfer documentation
- They undertake services integral to property transfer
This creates potential regulatory overlap. Each party must meet its own obligations independently.
Core Tranche 2 Obligations for Real Estate Professionals
From 1 July 2026, real estate professionals captured under Tranche 2 will become reporting entities under the AML/CTF Act.
This brings with it a structured set of compliance obligations that must be embedded into everyday business operations.
Below is a breakdown of the core requirements.
1. Enrol with AUSTRAC
Enrolment opens on 31 March 2026 and must be completed by 29 July 2026. Once enrolled, your business becomes a reporting entity subject to regulatory oversight.
Failure to enrol may result in civil penalties and enforcement action.
2. Implement an AML/CTF Program
An AML/CTF program must include:
- A documented risk assessment
- Procedures to conduct customer due diligence
- Suspicious matter reports processes
- Threshold transaction reports for physical currency
- Ongoing record keeping
- Monitoring of ongoing customer due diligence
3. Customer Due Diligence (CDD)
CDD includes:
- Identity checks
- Beneficial owner identification
- Screening for politically exposed persons
- Enhanced checks for high-risk customers
4. Ongoing Customer Due Diligence (OCDD)
Compliance continues beyond onboarding. Businesses must monitor client behaviour and update risk assessments where new information arises.
Red flags may include:
- Large cash components
- Complex ownership structures
- Reluctance to provide identification
- Unusual third-party involvement
5. Suspicious Matter Reporting (SMRs)
Where suspicion of criminal activity arises, a Suspicious Matter Report must generally be submitted within 72 hours.
Threshold Transaction Reports are required for physical cash transactions of $10,000 or more.
6. Record Keeping Requirements
Reporting entities must retain records for the prescribed statutory period and maintain sufficient documentation to demonstrate compliance during regulatory review.
7. Appointing a Compliance Officer
Each reporting entity must appoint a fit and proper compliance officer responsible for oversight of the AML/CTF program.
Staff must receive appropriate training, and internal reporting lines must be clearly defined to ensure accountability.
Learn More about Tranche 2 Obligations at Peacock Settlements Today!
Tranche 2 represents a significant shift in how property transactions are managed across Australia, with compliance obligations attaching earlier and requiring greater coordination between agents, developers, conveyancers and settlement professionals.
Understanding when obligations begin, what documentation is required and how responsibilities are allocated is essential to avoiding delays and regulatory risk.
If you would like practical guidance on how these reforms may affect your next property transaction in Western Australia, speak with our team at Peacock Settlements to ensure you are prepared well before the 1 July 2026 commencement date.