Australia’s anti-money laundering (AML) laws are undergoing their most significant expansion in almost two decades. For the first time, many legal professionals, conveyancers, real estate professionals and others involved in property transactions will be required to comply with the Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) regime.
These reforms, commonly referred to as the Tranche 2 AML reforms, are designed to prevent criminals from using Australia’s property market to launder money or finance terrorism. They will change the way property transactions are conducted and introduce new identity verification and due diligence requirements for many clients.
Why are the laws changing?
For many years, Australia’s banks and financial institutions have been subject to AML/CTF obligations. However, international organisations have criticised Australia for not extending these obligations to “gatekeeper” professions such as lawyers, conveyancers and real estate agents who often facilitate high-value property transactions.
The reforms are intended to:
– reduce money laundering through Australian real estate;
– improve transparency of property ownership;
– strengthen Australia’s compliance with international standards; and
– make it more difficult for organised crime groups to exploit the property market.
When do the new rules apply?
The new AML/CTF obligations commenced on 1 July 2026 for businesses providing designated services, with enrolment and implementation requirements applying around that commencement period.
Who is affected?
The reforms extend to many professionals involved in property transactions, including:
– lawyers providing designated legal services;
– conveyancers;
– real estate agents;
– buyer’s agents;
– property developers in certain circumstances;
– accountants providing designated services; and
– trust and company service providers.
For clients, this means that buying or selling property may involve additional identification and verification steps before a transaction can proceed.
What will clients be asked to provide?
If your lawyer or conveyancer is required to comply with the AML/CTF regime, you may be asked to provide:
– photographic identification;
– proof of your residential address;
– information about the source of funds being used to purchase the property;
– information about the source of your wealth in some circumstances;
– details about companies, trusts or other entities involved in the transaction; and
– information about any beneficial owners or controllers of companies or trusts.
Your legal representative may also ask additional questions if a transaction presents a higher level of risk.
Why are lawyers asking these questions?
Many clients may be surprised by the increased level of enquiry.
Under the new regime, lawyers providing designated services must undertake customer due diligence before providing certain legal services. This includes understanding who their client is, verifying identity, assessing the level of money laundering risk and, where necessary, undertaking enhanced due diligence.
These enquiries are not intended to inconvenience clients; they are legal obligations designed to protect both clients and the integrity of Australia’s financial system.
How will this affect property transactions?
For most straightforward residential conveyancing matters, the transaction itself will remain largely unchanged. However, clients should expect:
– additional identification requirements at the beginning of the matter;
– more detailed questionnaires;
– requests for supporting documentation;
– possible delays if requested information is not provided promptly; and
– ongoing monitoring in some higher-risk matters.
Providing requested documents early can help minimise delays to settlement.
What does this mean for buyers and sellers?
The vast majority of buyers and sellers have nothing to worry about.
If you are purchasing or selling property using legitimate funds and can readily provide identification documents, the additional compliance process should become another routine part of the conveyancing process, similar to existing identity verification requirements.
However, transactions involving overseas parties, trusts, companies, complex ownership structures or unusual funding arrangements may require additional enquiries and documentation.
The AML/CTF regime extends beyond property transactions
While these reforms will have a significant impact on property transactions, it is important to understand that the new AML/CTF regime is not limited to buying and selling real estate.
Lawyers providing a range of designated legal services may be required to comply with the AML/CTF legislation. This includes work involving the purchase or sale of businesses, the establishment or restructuring of companies and trusts, certain commercial transactions, and other matters involving the movement or management of significant assets or funds.
As a result, clients may be asked to provide identification documents and information about the source of funds or the purpose of a transaction, even where no property is involved. These enquiries are a legal requirement designed to help prevent money laundering, terrorism financing and other serious financial crimes.
At Miller Sockhill Lawyers, we are committed to making this process as straightforward as possible. Our team will explain what information is required, why it is necessary, and assist you in meeting these obligations while providing practical and efficient legal advice across all areas of our practice.