Real Estate

This guide covers the AML/CTF obligations specific to real estate professionals under AUSTRAC Tranche 2. Read this alongside the general AML/CTF guide for the shared compliance framework.

Why real estate is regulated

Real estate is one of the most commonly exploited channels for money laundering in Australia. AUSTRAC and FATF have identified that property transactions:

• Store and appreciate in value — making real estate attractive for integrating and growing illicit wealth
• Generate legitimate income — rental income provides an ongoing, apparently legitimate revenue stream
• Involve large transactions — property purchases can absorb large amounts of illicit funds in a single transaction
• Benefit from tax arrangements — negative gearing and capital gains concessions make property investment common, helping illicit purchases blend in
• Can involve complex structures — companies, trusts, and nominee arrangements can obscure the true owner

Your designated services

As a real estate professional, your AML/CTF obligations are triggered when you provide these designated services:

Brokering the sale or purchase of real estate

Acting as an intermediary in the sale, purchase, or transfer of real estate on behalf of a buyer, seller, transferee, or transferor.

• Customers: Both the buyer AND the seller are your customers — each requires separate, independent CDD
• Trigger: When you enter into a brokering arrangement (e.g., listing agreement with the seller, or a buyer's agent agreement)
• This is the most common designated service for real estate agents

Selling real estate as principal (property developers)

Selling or transferring real estate in the course of your own business — this applies to property developers selling their own stock, or businesses with in-house sales teams.

• Customer: The buyer only — the developer/seller is the reporting entity, not a customer of itself
• Trigger: When you sell or transfer your own real estate to a buyer

What counts as "real estate"?

Note: Property management (collecting rent, managing tenants) is not a designated service. Your obligations are triggered by the sale, purchase, or transfer of real estate.

Dual-party CDD

This is the most significant operational difference between real estate and other Tranche 2 industries. When brokering a property sale, both the buyer and the seller are your customers, and each requires independent CDD.

Seller CDD

• Trigger: When the brokering arrangement (listing agreement or sales authority) is signed
• Timing: Begin immediately upon listing — do not delay
• Completion: CDD must be satisfactorily completed before settlement

Buyer CDD

• Trigger: When the buyer's offer is accepted and the contract of sale is executed
• Timing: Begin as soon as the buyer is identified — send the KYC link promptly
• Completion: CDD must be satisfactorily completed before settlement

In Verifia

When you create a property sale transaction in Verifia:

1. The system prompts you to add both parties — seller and buyer
2. Each party receives their own KYC case with independent CDD tracking and risk assessment
3. The transaction view shows the CDD status for each party side by side
4. Both parties must have approved CDD before the transaction is marked as compliant
5. If either party's CDD raises concerns, the system flags the transaction

Auction scenarios — delayed CDD

At auctions, the winning buyer may only be identified when the hammer falls. AUSTRAC recognises that immediate, full CDD may not be practicable in these circumstances and allows delayed CDD where justified.

When delayed CDD is permitted

• The auction format makes it impractical to complete full CDD before the contract is signed
• Delaying CDD does not materially increase the ML/TF risk in the circumstances
• You document the justification for applying delayed CDD

What you must still do immediately

Even when applying delayed CDD, you should:

• Collect basic identification information from the buyer at the auction (name, contact details, photo ID if possible)
• Send the KYC verification link immediately after the auction
• Begin the CDD process as soon as practicable

How it works in Verifia

1. Create the KYC case for the buyer and select Delayed CDD
2. Select or enter the justification reason (e.g., "Auction sale — buyer identified post-hammer")
3. The system sets a completion deadline (default: 5 business days — configurable by your Compliance Officer)
4. The transaction can proceed while CDD is in progress
5. Your dashboard shows a countdown for all delayed CDD cases
6. If the deadline passes without completion, escalating alerts are triggered — first to the assigned staff member, then to the Compliance Officer

Important: Delayed CDD is an exception, not a routine practice. It should only be used when genuinely necessitated by the auction process, and the justification must be documented.

Property developer distinction

If your organisation is both a developer (selling its own properties) and a brokerage (selling on behalf of clients):

• During onboarding, Verifia asks whether you are a brokerage, developer, or both
• For developer direct sales: only the buyer requires CDD (you are the reporting entity, not a customer)
• For brokered sales: both parties require CDD
• The system configures designated service types and CDD workflows accordingly

Risk factors specific to real estate

Verifia pre-loads industry-specific risk factors for real estate professionals. These are based on AUSTRAC guidance and common ML/TF typologies in the property sector.

High-risk indicators

Medium-risk indicators

Suspicious behaviour to watch for

• Customer is unconcerned about the price or makes a significantly above-market offer
• Multiple properties purchased in a short period by the same buyer or related entities
• Purchase is made through a newly formed company or trust with no trading history or apparent purpose
• Customer is reluctant to provide identity documents or source of funds information
• Settlement funds come from multiple unrelated sources or unexpected jurisdictions
• Customer wants to complete the transaction unusually quickly without normal due diligence
• Customer offers to pay in cash or cryptocurrency for a high-value property
• Customer asks about the anonymity or confidentiality of property ownership records
• Customer asks you to hold funds in your trust account without a clear purpose related to the transaction
• Back-to-back transactions — property is purchased and immediately on-sold at a significantly different price

Example scenarios

Scenario 1: Standard residential sale

You list a $900,000 house for sale on behalf of the owner, Sarah. You find a buyer, Michael.

1. Seller CDD (Sarah): Begin when the listing agreement is signed. Standard CDD — verify identity, assess risk. Low risk (local individual, standard property). Proceed.
2. Buyer CDD (Michael): Begin when Michael's offer is accepted. Standard CDD — verify identity, assess risk. Low risk (local individual, bank-funded purchase). Proceed.
3. Settlement: Both CDD cases approved. Transaction completes. Records archived to vault.

Scenario 2: High-value property with overseas corporate buyer

A $3.2M waterfront property. The buyer is a company registered in Singapore with a multi-layered ownership structure.

1. Seller CDD: Standard process for the local individual seller.
2. Buyer CDD: Enhanced CDD triggered — high property value, overseas entity, complex structure, and no mortgage.
3. UBO analysis: Use Verifia's entity penetration to identify the natural persons who ultimately own and control the Singapore company. Trace through all entity layers.
4. ECDD requirements: Source of funds (where is the $3.2M coming from?), source of wealth for UBOs, adverse media screening, senior manager approval.
5. Assessment: If source of funds cannot be satisfactorily established, or UBOs cannot be identified, you must not proceed with the service and should consider filing an SMR.

Scenario 3: Auction purchase

A property sells at auction for $1.1M. The winning buyer is identified only after the hammer falls.

1. Seller CDD: Already completed during the listing phase.
2. Buyer CDD: Create a delayed CDD case with justification "Auction sale — buyer identified post-hammer." A 5 business day deadline is set.
3. Immediate actions: Collect the buyer's basic identification at the auction. Send the KYC verification link immediately.
4. Monitor deadline: Dashboard shows the countdown. Follow up if documents are not received promptly.
5. Completion: Verify identity and assess risk before settlement. If CDD cannot be completed, escalate to the Compliance Officer.

Daily workflow for real estate

1. Listing a property: Create the transaction in Verifia, add the seller, begin seller CDD immediately
2. Finding a buyer: When an offer is accepted, add the buyer to the transaction, begin buyer CDD
3. Pre-settlement: Ensure both CDD cases are approved and all alerts are addressed
4. Settlement and completion: Record the transaction outcome; all documents are automatically archived to the compliance vault
5. Ongoing: Monitor your dashboard for CDD review reminders, training due dates, and any new alerts

Key Verifia features for real estate