Important Disclaimer
Brendan Leahy and Naked Real Estate are not lawyers, accountants, or financial advisors. This article is general information based on industry training and publicly available guidance from AUSTRAC and the Anti-Money Laundering and Counter-Terrorism Financing
Amendment Act 2024. It is not legal, financial, or compliance advice. If you have specific questions about how the new laws apply to your circumstances, please speak to a qualified lawyer, accountant, conveyancer, or licensed AML/CTF specialist.

* This article last updated 08/08/2026

What actually happened on 1 July 2026

Since 1 July 2026, anti-money laundering and counter-terrorism financing (AML/CTF) obligations apply to real estate agents, buyer’s agents, property developers and several other professional service providers across Australia. These are commonly known as the Tranche 2 reforms.

Before July 1st, 2026, banks, casinos and other financial institutions had been operating under these laws since 2006. Real estate sat outside the system. From 1 July 2026, that changed. The Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024 was passed by Parliament in November 2024 and received Royal Assent on 10 December 2024.It brings around 70,000 to 100,000 newly regulated Australian businesses under AUSTRAC’s oversight, including every real estate agency in the country.

This article explains what that means in plain English for you as a seller or buyer — and what Naked Real Estate did to be ready.

What Naked Real Estate has already done

I’ll get to what the law requires shortly. But because this is an article about trust, transparency, and being prepared, you should know what we’ve already done at Naked Real Estate:

• All agents and staff have completed the mandatory three-hour training course
  covering all aspects of the new legislation
• We have already enrolled with AUSTRAC

Enrolment for new Tranche 2 entities opened on 31 March 2026, with a deadline of 29 July
2026. We didn’t wait until the last minute. We were ready before the deadline.

If you’re working with another agency, it’s worth asking them the same two questions: has your team completed AML/CTF training, and are you enrolled with AUSTRAC? If they can’t answer cleanly, that tells you something about how seriously they’re taking your transaction.

Why is this happening at all?

For years, Australian banks, casinos, and remittance providers have had to verify customer identities, track suspicious transactions, and report concerns to AUSTRAC. Real estate did not.

The reason is straightforward: property is one of the most attractive vehicles for laundering money anywhere in the world. Large transaction values. Capital growth. The ability to use companies and trusts. The ability to disguise who really owns what. The ability to transform illicit cash into a legitimate asset.

The Australian Federal Police and AUSTRAC have been saying this for years. Until now, a criminal could potentially move millions of dollars through Australian property without the same level of scrutiny applied by the professionals facilitating the transaction. The Financial Action Task Force — the international body that sets global standards for AML/CTF — had been recommending for years that Australia bring real estate, legal practitioners, accountants and certain other professions under its regime. Australia was genuinely an outlier internationally. From 1 July 2026, that gap closed.

So the laws aren’t government overreach for the sake of it. There was a real problem. The question is whether the solution is well-designed – and that’s where it gets more interesting, but I’ll come back to my honest opinion on that at the end of this article.

When does the AML obligation actually start?

This is the question that confuses most people, because the legislation is dense.

In plain English: at Naked Real Estate, the obligation begins when a client formally engages our services – typically at the appraisal-to-list stage or when a listing agreement is being signed.

We’re not running AML checks on someone who rings the office to ask a general question about market conditions. We’re not checking ID on someone browsing a home open. The obligation kicks in when a client genuinely engages our services for a property transaction.

For sellers: at the point you’re moving from “thinking about it” to “let’s list.”

For buyers: when an offer is being put together and accepted on a property.

Once that point is reached, the identity check process begins.

It is in your contract now, not just in the law 

When I first wrote this article, all of this sat in federal legislation. It was something the law required of us as agents, and something you were going to be asked to do. 

That has changed, and it is worth knowing about. 

The current REIWA Offer and Acceptance contract now carries a notice on the front page: from 1 July 2026, a seller’s agent and a buyer’s agent must each undertake customer due diligence on both the seller and the buyer, to comply with the AML Act. 

More significantly, the contract itself now includes a condition where the buyer and the seller each agree to provide their customer due diligence information when it is requested, and each authorises their representative, meaning their settlement agent or lawyer, to provide that information to the agents as well. 

So the answer to “do I actually have to do this?” is no longer just “yes, because federal law says so.” It is now also “yes, because it is a term of the contract you signed.” 

I think that is a sensible change, and here is why. 

Before it went into the contract, this was a conversation that could turn awkward. An agent asking a client for identification, citing legislation the client had never heard of, with no document in front of either of them saying it was required. Some people were understandably suspicious about it. 

Now it is written into the same document that sets out the price, the settlement date and the finance terms. Everyone signs it. Everyone can see it. Nobody has to take the agent’s word for it. 

It also removes an argument before it starts. If a party decides part way through a transaction that they would rather not provide identification, that is no longer a disagreement about what the law might require. It is a term of their own contract. Two practical points that follow from this. 

Do it early. Because it is now a contractual obligation tied to a live transaction, leaving it to the last week is a genuinely bad idea. Outstanding identity checks are now one of the things that can hold up a settlement, and a late settlement in Western Australia has real costs attached to it. If you want to understand what those costs look like, we have written about it in what happens when settlement is delayed in WA. 

Tell your settlement agent. The contract authorises your settlement agent or lawyer to provide your due diligence information to the agents. That works best when everyone knows it is coming rather than discovering it three days before settlement. 

None of this changes what is actually asked of you. For most people it is still a licence or a passport and a couple of minutes on a phone. What has changed is that it is now clearly on the page, in the document you sign, rather than sitting somewhere in the background.

It is in your contract now, not just in the law 

When I first wrote this article, all of this sat in federal legislation. It was something the law required of us as agents, and something you were going to be asked to do. 

That has changed, and it is worth knowing about. 

The current REIWA Offer and Acceptance contract now carries a notice on the front page: from 1 July 2026, a seller’s agent and a buyer’s agent must each undertake customer due diligence on both the seller and the buyer, to comply with the AML Act. 

More significantly, the contract itself now includes a condition where the buyer and the seller each agree to provide their customer due diligence information when it is requested, and each authorises their representative, meaning their settlement agent or lawyer, to provide that information to the agents as well. 

So the answer to “do I actually have to do this?” is no longer just “yes, because federal law says so.” It is now also “yes, because it is a term of the contract you signed.” 

I think that is a sensible change, and here is why. 

Before it went into the contract, this was a conversation that could turn awkward. An agent asking a client for identification, citing legislation the client had never heard of, with no document in front of either of them saying it was required. Some people were understandably suspicious about it. 

Now it is written into the same document that sets out the price, the settlement date and the finance terms. Everyone signs it. Everyone can see it. Nobody has to take the agent’s word for it. 

It also removes an argument before it starts. If a party decides part way through a transaction that they would rather not provide identification, that is no longer a disagreement about what the law might require. It is a term of their own contract.

Two practical points that follow from this. 

Do it early. Because it is now a contractual obligation tied to a live transaction, leaving it to the last week is a genuinely bad idea. Outstanding identity checks are now one of the things that can hold up a settlement, and a late settlement in Western Australia has real costs attached to it. If you want to understand what those costs look like, we have written about it in what happens when settlement is delayed in WA. 

Tell your settlement agent. The contract authorises your settlement agent or lawyer to provide your due diligence information to the agents. That works best when everyone knows it is coming rather than discovering it three days before settlement. 

None of this changes what is actually asked of you. For most people it is still a licence or a passport and a couple of minutes on a phone. What has changed is that it is now clearly on the page, in the document you sign, rather than sitting somewhere in the background. 

What the new process will look like for you

The law tells agents what outcome is required — identify and verify the customer, understand the risk, report suspicious matters — but it does not force every agency to use exactly the same process or technology. What I’m describing below is what a typical Naked Real Estate transaction will look like in practice, based on AUSTRAC’s requirements and the systems being adopted across the industry.

For sellers — what to expect

When you sit down for your listing appointment, we’ll collect the things we’ve always collected — authority to sell, property information, marketing approvals. From 1 July 2026, we’ll also need to verify your identity.

You’ll likely hear me say something close to this:

“Before we can act for you, we’re required under federal AML laws to verify your identity. You’ll receive a text in a moment. It takes about two minutes.”

The reality is that for the vast majority of sellers, this will be a smartphone-based process. We’ll send a secure link to your phone. You’ll:

• Photograph your driver’s licence or passport
• Take a quick selfie (called a “liveness check”)
• Submit it

The system verifies your identity in real time. The whole thing typically takes two to five minutes. No office visit required. No paper forms. No photocopying licences. You can do it while we’re still sitting at your kitchen table talking about marketing.

For most owner-occupier sellers, that’s the entire AML process. Done. Move on with selling the home.

For buyers — yes, you get checked too

A lot of people assume only sellers will be checked. That’s not how the reforms work.

Since 1 July 2026, agencies are expected to conduct customer due diligence on both sellers and buyers. So when an offer is accepted, you (the buyer) will receive a similar secure link. Same process — driver’s licence or passport, selfie, two to five minutes.

This is usually completed before the contract progresses further.

What about companies, trusts, and more complex situations?

This is where it gets more involved.

If you’re buying or selling as an individual, the process is simple — verify identity, done.

If a company is buying — say “Smith Holdings Pty Ltd” — we’ll need to identify the company itself, the directors, and what AUSTRAC calls the ultimate beneficial owners (the real people who control the company). This may involve providing an ASIC extract and verifying the identities of those individuals.

Trusts add another layer — we may need to see the trust deed, identify the trustees, and understand the beneficiaries depending on the structure.

This part of the law is targeted at one of the most exploited vulnerabilities in property — criminals hiding behind complex layered ownership structures to obscure who really owns an asset. If you’re a legitimate company or trust, the documentation will be straightforward. If you’re not, it won’t be.

Source of funds and source of wealth

For higher-risk transactions, agents may also need to ask about where the money is coming from. This isn’t to be nosy. It’s because the law requires us to understand the transaction enough to spot something that doesn’t add up.

For most buyers — finance approved through a bank, deposit from a savings account, normal Australian transaction — this won’t involve much beyond what your bank or broker has already documented.

For more unusual situations — overseas transfers, third-party funding, large cash components — more questions may be asked.

What about privacy and your data?

This is one of the most important parts of the new system, and one most articles on this topic don’t talk about honestly.

Every time identity is verified, data is collected. Photo IDs. Selfies. Personal information. Records of who bought what, when, from whom. Under AML/CTF obligations, this data must be retained for record-keeping purposes — many industry guides reference a seven-year retention framework.

That data has to live somewhere. The risk isn’t the law itself. The risk is poor implementation. A large franchise with enterprise-grade cybersecurity is one thing. A small agency with weak security is another.

In my view, data security is going to become a much bigger conversation over the next five years than AML/CTF itself. Every agency now holds significantly more sensitive personal data than they did before — and that data becomes a potential target.

When choosing an agent, it’s worth asking them how they store and protect the data they collect. Not as a hostile question, but as a reasonable one. A well-prepared agent will have a clear answer.

What if something doesn’t look right?

This is where the law becomes very different from how most real estate agents think.

We are not detectives. We are not required to prove a crime has occurred. The legal test under AUSTRAC’s guidance is something close to:

Would a reasonable person with my training and knowledge think this transaction may involve money laundering, proceeds of crime, identity fraud, tax evasion, terrorism financing, or another serious offence?

If the answer is yes, an obligation to consider what’s called a Suspicious Matter Report (SMR) is triggered. So what kinds of things might trigger that obligation? Here are some general examples — not based on any specific Naked Real Estate client.

Example 1: The buyer wanting to pay in cash

A buyer offers $1.8 million for a home. Nothing unusual there. Then during discussions they say: “I can pay the whole thing in cash. Actual cash. Can we split the payments into smaller amounts?”

Two separate issues arise. The cash itself is unusual in a modern property transaction. The attempt to split payments may indicate an effort to avoid reporting thresholds (sometimes called “structuring”). Either issue on its own warrants further questions. Both together would justify careful review.

Example 2: The mysterious third party

The contract is in John Smith’s name. Then John says: “My cousin in another country will send the money.” You ask why. The explanation is vague. Funds arrive from a different name, a different country, with no obvious connection.

This is a classic red flag because the person controlling the property and the person providing the funds are different people — and there’s no clear reason why.

Example 3: The company nobody can explain

A property is being purchased by “Blue Horizon Investments Pty Ltd.” You ask who owns the company. The representative cannot explain. ASIC records lead to another company. That company is owned by a trust. The trust has overseas beneficiaries. Nobody seems able to identify the ultimate controller.

Complex ownership structures are not illegal. Unnecessarily complex ownership structures are a recognised money-laundering risk indicator.

Example 4: The overseas buyer who never sees the property

Important caveat first: being overseas is not suspicious. Buying sight-unseen is not suspicious. Perth agents handle these transactions regularly with completely legitimate buyers — expats, FIFO workers, investors.

The concern arises when multiple unusual factors combine on the same transaction. Overseas buyer, never sees property, pays well above market, uses multiple intermediaries, refuses to explain source of funds, pushes for unusually fast completion. Individually those may all be explainable. Together they may justify a closer look.

Example 5: The seller who wants no questions asked

The agent asks for standard ID verification. The response is something like: “Why do you
need that? Just list it. I don’t want my information recorded. Can’t we skip that part?” Most genuine clients are mildly annoyed by extra paperwork but comply. Active resistance to basic identification can itself become a warning sign.

What does “reporting to AUSTRAC” actually involve?

For most agencies it isn’t a phone call. It’s an electronic Suspicious Matter Report (SMR) lodged through AUSTRAC’s reporting system.

The report generally covers:

• Who’s involved
• What’s being transacted
• When it’s happening
• Why the agent considers it unusual
• How the behaviour is presenting

It’s closer to an intelligence report than a criminal complaint. AUSTRAC receives it and
decides whether further investigation is warranted.

Does the deal stop?

This surprises a lot of people. Usually, no.

Lodging an SMR does not automatically stop a transaction. AUSTRAC receives the intelligence and decides what to do with it. In many cases the property transaction continues to settlement. The AML obligation runs in parallel with the transaction, not on top of it.

Is the client told?

Generally, no — and this is critical.

It is an offence under AML laws for an agent to tell a client they’ve been reported to AUSTRAC. This is called “tipping off” and exists to prevent investigations being compromised. So an agent cannot say: “We’ve reported you to AUSTRAC” or “We’re delaying because AUSTRAC is looking at you.”

If you’re a genuine seller or buyer reading this, none of that is relevant to you. But it’s worth understanding why your agent might not be able to explain certain delays or process
changes in certain rare scenarios.

My honest opinion on the new laws

I’ll give you the politically careful answer and the honest one. The honest one is more useful.

The good

Australia was genuinely behind international standards. Property has long been a known vehicle for laundering money — large values, capital growth, ability to use companies and trusts, ability to disguise who really owns what. The Australian Federal Police and AUSTRAC have been saying this for years. Bringing real estate, legal practitioners and accountants under the same framework as banks is a reasonable policy objective.

If someone tells you “there was no problem, this is just government overreach,” I don’t think that’s accurate. There was a problem.

The reality check

The people most affected day to day will not be organised crime groups. It will be ordinary
buyers, sellers, agents, lawyers and conveyancers.

That’s almost always how AML systems work. The sophisticated criminal rarely walks into a real estate office saying “I’d like to launder $5 million.” The sophisticated criminal hires lawyers, accountants, nominees, trust structures, intermediaries. The more sophisticated the criminal, the more likely they are to adapt around the rules.

Meanwhile, every legitimate seller and buyer now goes through more identity checks, more data collection, more compliance screening. The burden is spread across 100% of transactions to catch a small percentage of bad actors.

Will it catch real money launderers?

Yes — but not all of them, and probably not the smartest ones.

I think these laws will reliably catch careless launderers — the ones who use obvious third-
party funds, can’t explain ownership structures, produce inconsistent ID. Those people become much easier to identify.

I think they’ll catch mid-level criminals — the ones who previously relied on weak verification and poor record keeping. Those people are now operating in a much less friendly environment.

I don’t think they’ll consistently catch sophisticated organised crime — people moving serious money already employ professionals and structures specifically designed to obscure ownership and funds. These laws make it harder, more expensive, and riskier. Sometimes that’s enough. Sometimes it isn’t.

The better question isn’t “will this stop money laundering?” It’s “will this reduce money laundering?” I think the answer is probably yes.

My biggest concern: data security

This is the thing I think most people are missing.

Every additional database storing passports, driver’s licences, selfies and personal financial information becomes a potential target for cybercriminals. The risk isn’t the law itself. It’s poor implementation by under-prepared agencies.

I suspect data security will become the bigger story over the next five years.

What was necessary, what may have gone too far

If I were rewriting the law, I’d absolutely keep:

• Beneficial ownership transparency (knowing who really controls a property)
• Sanctions screening
• Basic identity verification

What I’d watch carefully is whether government has shifted too much investigative responsibility onto private businesses. There’s a real difference between “verify identity and report concerns” and “become a quasi-financial-crime investigator.” If compliance becomes so complex that small independent agencies need dedicated AML staff, then I think policymakers have probably overshot.

So if you’re a seller or buyer reading this — how should you feel?

In my view, mildly annoyed.

Not angry. Not grateful. Just mildly annoyed at the extra friction.

Here’s your licence. Here’s your passport. Three minutes later, get on with selling or buying the house.

Looking at the system as a whole, I’m cautiously supportive. Not because I think the laws will eliminate money laundering — they won’t. Not because I think criminals can’t adapt — they can. But because property was one of the last major gaps where Australia was behind comparable countries internationally. Closing that gap is defensible policy.

The one-sentence summary:

These laws are likely to catch some criminals, inconvenience almost everyone, stop very few sophisticated operators completely, but still leave Australia with a stronger property- transactions framework than it had before.

What you should actually do as a seller or buyer

Practical, in priority order:
1. Have your ID ready.
A current Australian driver’s licence or passport will cover the vast majority of cases. If you’re selling or buying through a company or trust, have your ASIC extract, trust deed or relevant ownership documents ready as well.
2. Ask your agent two questions before you sign anything.
Have your team completed AML/CTF training? Are you enrolled with AUSTRAC? Any agent that can’t answer cleanly hasn’t taken this seriously.
3. Ask your conveyancer or lawyer the same questions.
The Tranche 2 reforms apply to them too. They have the same obligations to verify identity and report concerns. A coordinated, professional team across agent and conveyancer is what you want.
4. Push back if anything seems excessive.
The law requires identity verification, beneficial ownership transparency, and reporting of suspicious matters. It does NOT require agents to demand information that goes well beyond what’s necessary. If something feels disproportionate, ask why it’s being requested.
5. Take data security seriously.
Ask how your information is stored and protected. A reputable agent should have a clear answer about which compliance platform they use and how data is secured.
6. If anyone tells you there’s a way around the rules — be very worried.
There isn’t. The fines for non-compliance reach into the millions for businesses, and individuals can face significant penalties personally. Any agent suggesting shortcuts is putting both themselves and you at serious risk.

The bottom line

We’re here now. Most of the world has been doing this for years. We don’t have a choice in the matter — it’s federal legislation, and the penalties for getting it wrong are heavy. So have your ID ready. Be prepared for it. There’s no way around it. And if somebody tells you there is, be very worried.

At Naked Real Estate, we’ve completed the training. We’re enrolled with AUSTRAC. We’ve prepared properly so that for our clients, the new process will be as quick and as painless as the law allows.

If you have questions about how this affects your specific situation, give us a call. If we’re not the right people to answer it — and for some specific legal, accounting, or financial questions we won’t be — we’ll point you toward someone who is.

Truth. Strategy. Sold.

Final Disclaimer
Brendan Leahy and Naked Real Estate are not lawyers, accountants, or financial advisors. This article is general information based on industry training and publicly available guidance from AUSTRAC and the Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024. The law in this area is new, complex, and subject to ongoing guidance updates from AUSTRAC. If you have specific questions about how the new laws apply to your circumstances — particularly involving companies, trusts, foreign ownership, complex funding arrangements, or any matter where compliance is unclear — please seek advice from a qualified lawyer, accountant, conveyancer or licensed AML/CTF specialist.

Brendan Leahy Director and Licensee, Naked Real Estate Selling in the Perth Hills since
2002
Office: Unit 1/198 Brookton Highway, Kelmscott WA 6111
Phone: 08 6254 6333
Mobile: 0439 998 867
Email: brendan@nakedrealestate.com.au
Truth. Strategy. Sold.