The Australian real estate sector is about to undergo significant regulatory changes, with the impending implementation of the Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Tranche 2 regulations. We’ve previously examined these changes more broadly, but now want to focus on what they mean for a specific subset of impacted occupations. Effective 1 July 2026, these Tranche 2 reforms will extend AML/CTF obligations to include real estate agents and buyers’ agents, sectors previously outside the direct scope of such stringent requirements.
Background to the AML/CTF Tranche 2 regulations
The Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act), administered by the Australian Transaction Reports and Analysis Centre (AUSTRAC), aims to prevent financial systems from being exploited for money laundering and terrorism financing. Historically, the Act targeted financial institutions and casinos, but the Tranche 2 reforms will broaden its reach to encompass additional professions identified as high-risk, including real estate professionals.
Why are real estate professionals included?
The 1983 film Scarface, the 2013 film The Wolf of Wall Street, and many other famous movies depict criminals using real estate and property to legitimise illicit funds. The high value of real estate assets provides an attractive avenue for integrating illegal money into the legitimate economy.
By bringing real estate agents and buyer’s agents under the AML/CTF umbrella, the Australian government, through AUSTRAC, aims to bolster the integrity of the property market and align the country with international standards set by the Financial Action Task Force (FATF).
Do the current identity verification methods support Tranche 2 compliance for real estate agents?
Our digital verification of identity solution is already being used by hundreds of real estate professionals across Australia. Over the years, at conferences, events and industry occasions, we’ve talked with hundreds more agents about their current VOI practices.
If one thing is certain, identity verification practices among real estate professionals vary widely. We’ve found that this depends on state-specific regulations as well as individual agency preferences. Processes range from not completing verification at all (relying on familiarity or assumptions about the client’s legitimacy) to manual verification at face-to-face meetings, sighting and photocopying identification documents, all the way through to using a comprehensive digital VOI solution such as Scantek.
Those using no verification or manual verification methods will find they are on the back foot when Tranche 2 regulations are introduced next year.
These new national regulations will level the playing field for all agencies and require a uniform standard of client ID verification nationwide. This is a stark difference from the state of the national market today. It presents an excellent opportunity for astute agents to get ahead of their competitors and implement robust tools to ensure ongoing compliance.
How should real estate agents prepare for AML/CTF Tranche 2 compliance?
It’s important to note that AUSTRAC has yet to confirm precisely what compliance will look like for each of the Tranche 2-impacted industry groups. In our experience, the finer details for such changes are often not finalised until much closer to the implementation deadline, leaving impacted parties scrambling to decipher, understand, and ultimately implement the changes in time.
Scantek is in the fortunate position that we work closely with many businesses already covered by AML/CTF regulations, including the gaming and banking & finance industries. We have seen firsthand how the AML/CTF regulations have not only rolled out but become business as usual in these sectors. We have built our product to make AML/CTF compliance for businesses in these industries simple and efficient.
To mitigate the impact of the upcoming regulations, real estate professionals should consider the following proactive measures:
Engage with professional bodies:
Participate in industry associations, including your state’s Real Estate Institute (REI), to stay informed about best practices and updates related to AML/CTF compliance. These associations across Australia are in consultation with AUSTRAC and providing feedback and submissions on behalf of their members.
Look at your Identity Verification processes:
If your business is not already using a digital VOI solution such as Scantek, now is the time to implement this. Reliable and secure methods for verifying client identities include back-to-source document checks and biometric authentication, which will be updated to include the necessary Customer Due Diligence (CDD) & Know Your Customer (KYC) requirements ahead of the Tranche 2 reforms taking effect. The impact on agents already using a digital VOI solution will be minimal.
Begin dialogue and training with your staff:
Ensure all team members are educated about the upcoming AML/CTF Tranche 2 amendments and the importance of compliance, equipping them to identify and report suspicious activities.
More information is still to come:
As more information about the key obligations for real estate agents regulated by AUSTRAC comes to light, businesses should also start to consider:
- Enrolling and registering with AUSTRAC
- Developing and maintaining an AML/CTF program
- Reporting obligations for certain transactions and suspicious activities
- How AML/CTF obligation records are made and kept
Your state-specific REI will be valuable in guiding you on recommendations to ensure compliance. Working with an industry-leading digital VOI provider like Scantek will also help ensure your CDD and KYC obligations are met under the new requirements.
What is the role of digital verification solutions like Scantek?
Adopting a digital verification solution that stays ahead of industry changes like the upcoming AML/CTF Tranche 2 reforms can significantly ease the compliance burden on real estate professionals, who are typically running small and medium-sized businesses:
- Efficiency: Scantek streamlines the verification process, reducing the time and effort required compared to manual methods.
- Accuracy: Advanced technologies embedded in Scantek’s solution minimise human error and enhance the detection of fraudulent documents.
- Compliance: Our automated systems ensure adherence to regulatory requirements, providing audit trails and real-time reporting capabilities.
Don’t wait – consider your AML/CTF obligations today.
The forthcoming AML/CTF Tranche 2 regulations represent a pivotal shift for real estate professionals in Australia. By proactively enhancing identity verification practices and embracing digital solutions, agents and buyers can ensure compliance and protect their businesses and clients from the risks associated with financial crimes.
Early adoption of these measures will facilitate a smoother transition into the new regulatory landscape. To find out more about how Scantek’s digital VOI solution can help you, contact our team today.