PART 1:
AML/CTF Reform is Coming — What You Need to Know Before 1 July 2026
From 1 July 2026, Australia’s Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) laws will undergo one of the most significant changes since their introduction nearly two decades ago.
For many, this may sound like a regulatory issue that sits somewhere in the background—important, but not directly relevant to day-to-day property decisions. The reality, however, is quite different.
These reforms will reshape how a wide range of industries operate, including commercial real estate. More importantly, they will begin to influence how property transactions are conducted, the level of information required from clients, and the expectations placed on both agents and their customers.
If you are a property owner, investor, landlord, or prospective vendor, understanding what is coming—and why—will place you in a far stronger position as the market adapts.
What is AML/CTF (in plain English)?
At its core, AML/CTF legislation is designed to prevent illegal money from being disguised as legitimate income.
“Money laundering” refers to the process of taking funds generated from criminal activity and moving them through legitimate channels so they appear clean. “Counter-terrorism financing” focuses on preventing funds from being directed toward unlawful or harmful activities.
Governments around the world have introduced laws to monitor, detect, and report suspicious financial behaviour. In Australia, this responsibility sits with AUSTRAC (Australian Transaction Reports and Analysis Centre), which regulates industries that may be exposed to financial crime risk.
Historically, these laws have applied to sectors such as banking, gambling, and financial services. What is changing now is the expansion of those obligations into a broader set of industries—those that play a key role in facilitating significant financial transactions.
Why are the laws changing now?
The short answer: the current system has gaps.
Australia has long been under increasing international pressure to strengthen its AML/CTF framework, particularly from organisations such as the Financial Action Task Force (FATF), which sets global standards for combating financial crime.
One of the most frequently identified gaps has been the absence of regulation across what are known as “gatekeeper” professions—industries that sit at critical points in financial transactions.
These include:
+ Real estate agents
+ Lawyers
+ Accountants
+ Conveyancers
Trust and company service providers
These professions often facilitate or advise on transactions involving significant sums of money, asset transfers, or ownership structuring. Without appropriate oversight, they can (knowingly or unknowingly) become channels through which illicit funds are moved.
The upcoming reforms—commonly referred to as “Tranche 2”—are designed to address this.
According to AUSTRAC, the reforms will expand the AML/CTF regime from approximately 15,000 regulated entities to more than 100,000 businesses across Australia, significantly increasing the scope of oversight (AUSTRAC, 2024).
What is “Tranche 2”?
“Tranche 2” is simply the next phase of AML/CTF reform.
The original legislation (introduced in 2006) focused primarily on financial institutions and high-risk sectors like banks and casinos. Tranche 2 extends those obligations to a broader group of professional service providers.
From 1 July 2026, many of these businesses will be required to:
+ Register with AUSTRAC
+ Implement an AML/CTF compliance program
+ Verify the identity of clients (commonly referred to as “Know Your Customer” or KYC)
+ Monitor and assess transaction risk
+ Report suspicious matters
+ Maintain records and train staff
This represents a significant operational shift for industries that have not previously been subject to this level of regulatory scrutiny.
Why does this matter to property owners and investors?
At first glance, it may seem that these obligations sit with agents and advisors—not with clients themselves. While that is technically correct, the practical impact will be felt across the entire transaction process.
In simple terms, transactions are likely to become:
+ More transparent
+ More structured
+ More documentation-driven
For example, when buying or selling property in the future, you may be required to:
+ Provide more detailed identification
+ Verify the source of funds
+ Explain ownership structures (particularly where entities or trusts are involved)
While this may add a layer of complexity, it also brings a level of consistency and integrity to the market.
Globally, these types of measures are already standard practice in many jurisdictions. Australia is, in many ways, catching up.
Why is real estate a focus?
Real estate has long been recognised as an attractive channel for money laundering—and not just in Australia.
There are several reasons for this:
+ Property transactions often involve large sums of money
+ Assets can be held long-term, allowing value to be “stored”
+ Ownership structures can be layered or complex
+ Rental income can provide a legitimate-looking revenue stream
AUSTRAC has identified real estate as a sector with elevated exposure to financial crime risk, particularly where transactions involve opaque ownership structures or cross-border capital (AUSTRAC Real Estate Guidance, 2024).
This does not mean that the majority of transactions are problematic—far from it. However, it does mean the sector is considered a key point of vulnerability within the broader financial system.
What will change in practice?
While the full operational detail is still being refined, we can expect several practical changes across the property transaction process.
1. More upfront information requirements
Clients will likely need to provide identification and supporting documentation earlier in the process.
2. Increased scrutiny on transactions
Agents and advisors will be required to assess whether a transaction presents a higher level of risk.
3. Potential delays in some transactions
Where additional verification is required, timelines may be extended—particularly in more complex deals.
4. A more consistent national approach
Standardised compliance processes will reduce variation across agencies and transactions.
A shift toward “risk-based” thinking
One of the most important aspects of the reform is the move toward a risk-based compliance model.
Rather than applying the same level of scrutiny to every transaction, businesses will be required to assess risk and respond accordingly.
For example:
+ A straightforward local transaction may require minimal additional checks
+ A transaction involving offshore entities or complex structures may require significantly more scrutiny
This approach is designed to balance efficiency with effectiveness—focusing effort where it is most needed.
Looking ahead
While 1 July 2026 may still feel some distance away, the reality is that preparation is already underway across many industries.
For commercial real estate in particular, these changes will not just introduce new compliance obligations—they will influence how deals are structured, negotiated, and executed.
For clients, the key takeaway is simple: expect more structure, more transparency, and a greater emphasis on documentation in future transactions.
In this series
This blog is the first in a four-part series exploring AML/CTF reform and its impact on commercial real estate. We will publish these blogs monthly between April and July.
In the coming articles, we will cover:
+ A deeper look at the industries captured under Tranche 2—and why they are in focus
+ What these reforms specifically mean for commercial property transactions
+ Practical steps property owners and investors can take now to prepare
Final thoughts
Regulatory change can often feel burdensome, particularly when it introduces new processes or requirements.
However, these reforms are part of a broader global shift toward greater transparency and accountability in financial systems.
For those who take the time to understand what is coming, there is an opportunity—not just to comply, but to transact with greater confidence in a more robust and trusted marketplace.