This week on the WA Property Q&A, Peter Fletcher welcomes back Ches Rafferty to discuss the significant changes brought about by AML-CTF (Anti-Money Laundering and Counter-Terrorism Financing) regulations impacting Western Australian real estate agents and conveyancers.
Ches clarifies the complexities of these new rules, effective July 1st, 2026, emphasizing the importance of customer due diligence and suspicious matter reporting. He explains the need for real estate professionals to verify the identities of buyers and sellers, outlining the potential consequences of non-compliance – hefty fines reaching millions of dollars.
While acknowledging privacy concerns, Ches stresses the crucial role of these regulations in preventing serious crimes like drug trafficking and human exploitation. He also highlights the upcoming release of detailed guidelines from AUSTRAC in January 2026, advising listeners to begin their education and planning now, but to avoid rushing into costly solutions before the guidelines are released.
Key Takeaways:
- AML-CTF regulations require real estate agents and conveyancers to implement comprehensive compliance programs by July 1st, 2026.
- Customer due diligence, including identity verification and checks against sanctions and politically exposed persons lists, is mandatory.
- Suspicious matter reports must be filed with AUSTRAC when unusual behavior is detected, even if it's a "mate" involved in the transaction.
- Non-compliance carries severe penalties, including substantial fines and potential business closure.
- Detailed AUSTRAC guidelines will be released in January 2026; professionals should begin educating themselves and planning their compliance strategy now.
Understanding AML-CTF in WA Property
What is AML-CTF? AML-CTF stands for Anti-Money Laundering and Counter-Terrorism Financing. It's a federal act expanding regulations to minimize money laundering and terrorism funding in various sectors, including real estate. This impacts real estate agents and conveyancers (but not property managers) from July 1st, 2026.
Impact on Real Estate Agents and Conveyancers: All real estate agents and conveyancers must implement an AML-CTF program, conduct customer due diligence (identifying buyers), and file suspicious matter reports (SMRs) with AUSTRAC if buyer behavior seems suspicious. Detailed guidelines from AUSTRAC are expected in January 2026.
Customer Due Diligence: This involves verifying the identity of buyers and sellers, checking against money laundering and terrorism lists. While the exact timing isn't fully defined yet, it's likely required upon offer submission. Refusal to comply with identity verification can result in the agent or conveyancer refusing to proceed with the transaction. It's not the agent's responsibility to prevent transactions, but they must still proceed with due diligence and reporting of suspicious activity. "Tipping off" is illegal, thus even if you are suspicious the transaction still proceeds.
Verification and Safe Harbor: Verification platforms can help real estate agents and conveyancers meet their obligations. While these platforms can provide evidence of due diligence, they do not provide absolute safe harbor; the business retains ultimate responsibility. Comprehensive record-keeping is crucial. Ongoing due diligence is generally only required for clients with frequent transactions, like professional property buyers.
Source of Funds: While not always required, scrutiny of funds increases if the source seems unusual (e.g., a sudden shift from financing to cash). Suspicious activity needs to be reported.
Penalties for Non-Compliance: Non-compliance carries significant penalties, including criminal charges, fines up to $6 million for individuals and $24 million for businesses, and daily penalties for failure to enroll. Record-keeping is crucial to demonstrate due diligence and avoid penalties.
- Educate yourself and your staff on AML-CTF regulations.
- Start planning your compliance strategy now; don't wait until June 2026.
- Enroll with AUSTRAC as soon as possible after January 2026.
- Consider using a reputable compliance platform to assist with due diligence and reporting.
- Implement robust record-keeping procedures.
- Develop clear processes for identifying and reporting suspicious activity.
- Implement an AML-CTF compliance program
Links and Resources:
AUSTRAC - Summary of AML/CTF obligations for tranche 2 entities
Scantek - AML/CTF platform expressions of interest
Scantek - Real estate agents, here’s what you need to know about the upcoming AML/CTF Tranche 2 changes
Visit the AUSTRAC website to learn more about AML-CTF compliance requirements. Start researching technology and service providers to assist with your compliance program now, don't wait until the last minute. Begin your preparations today to ensure a smooth transition and avoid the significant penalties associated with non-compliance.
