PART 3: What AML/CTF Means for Commercial Real Estate
In Parts 1 and 2 of this series, we explored the upcoming expansion of Australia’s Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) laws and the industries captured under Tranche 2.
Now we turn to the sector where these changes will be felt most directly—commercial real estate.
While the reforms apply broadly across several professions, their impact on commercial property is particularly significant. This is not just due to regulatory change, but because of the underlying characteristics of the sector itself.
For investors, landlords, vendors, and agents alike, the way transactions are conducted is set to evolve.
Why commercial real estate is in focus
Real estate has long been recognised globally as a sector exposed to money laundering risk. Within that, commercial property presents a unique set of characteristics that elevate its profile.
These include:
1. High-value transactions
Commercial property deals often involve substantial capital, making them an efficient vehicle for moving large sums of money in a single transaction.
2. Complex ownership structures
It is common for commercial assets to be held through:
- Companies
- Trusts
- Joint ventures
- Offshore entities
While these structures are legitimate and often necessary, they can also make it more difficult to identify the ultimate beneficial owner.
3. Cross-border investment
Commercial property frequently attracts international capital. While this is a positive for market liquidity and growth, it also introduces additional layers of regulatory complexity and risk.
4. Income generation
Unlike many other asset classes, commercial property can generate ongoing rental income—providing a mechanism for funds to be integrated into the financial system over time.
For these reasons, regulators—including AUSTRAC—have identified commercial real estate as a key area of focus within the broader AML/CTF reform agenda (AUSTRAC, 2024).
What changes for commercial real estate professionals
From 1 July 2026, commercial real estate agencies will be formally brought into the AML/CTF regime.
This introduces a number of new obligations that will directly affect how agencies operate.
1. Client identification and verification (KYC)
Agencies will be required to verify the identity of their clients—both individuals and entities.
This includes:
- Confirming personal identity
- Understanding ownership structures
- Identifying beneficial owners
For entities and trusts, this process can become significantly more detailed.
2. Understanding source of funds and wealth
In certain circumstances, agencies may need to take reasonable steps to understand where funds are coming from.
This does not mean conducting forensic financial investigations, but it does mean asking appropriate questions where risk indicators are present.
3. Risk assessment at a transaction level
Each transaction will need to be assessed for risk.
Factors that may elevate risk include:
- Unusual transaction structures
- Involvement of high-risk jurisdictions
- Complex or opaque ownership arrangements
- Behaviour that is inconsistent with normal market activity
4. Ongoing monitoring and reporting
Where concerns arise, agencies may be required to submit Suspicious Matter Reports (SMRs) to AUSTRAC.
Importantly, this is not about making accusations—it is about identifying and reporting activity that does not align with expected patterns.
5. Internal compliance frameworks
Agencies will need to implement:
- An AML/CTF compliance program
- Staff training processes
- Record-keeping systems
- A designated compliance officer
For many agencies, this represents a new operational layer that will need to be carefully integrated into existing workflows.
What changes for clients (buyers, vendors, landlords)
While the regulatory obligations sit with agencies, the practical impact will be shared by clients.
More information upfront
Clients should expect to provide:
- Identification documents
- Details of ownership structures
- Information relating to purchasing entities
Greater transparency expectations
Transactions involving complex structures or multiple parties may require additional explanation and documentation.
Potential for longer transaction timelines
Where additional verification is required, this may introduce delays—particularly in more complex deals.
Increased consistency across transactions
Over time, these processes are likely to become standard practice, creating a more predictable and uniform transaction environment.
How transactions are likely to evolve
One of the most noticeable impacts of AML/CTF reform will be the way transactions are conducted.
Earlier engagement on compliance
Rather than being addressed late in the process, compliance requirements will shift to the front end of transactions.
This means:
- Identification and verification occurring earlier
- Potential issues being identified sooner
- Greater certainty before progressing too far into negotiations
More structured deal processes
Transactions are likely to become more methodical, with clearer stages and checkpoints.
This may include:
- Formal onboarding processes for clients
- Standardised documentation requirements
- Internal risk assessments before progressing deals
A shift in due diligence expectations
Due diligence will extend beyond the asset itself to include:
- The parties involved
- The structure of the transaction
- The source of funds
Costs, friction, and the reality of change
It would be unrealistic to suggest that these reforms will come without cost or friction.
In the short term, the industry is likely to experience:
- Increased administrative workload
- Additional compliance costs
- A learning curve as processes are implemented
However, over time, these impacts are expected to stabilise as systems, processes, and expectations become more familiar.
The upside: a more transparent market
While much of the discussion around AML/CTF reform focuses on compliance, there is also a broader benefit to consider.
A more transparent and accountable marketplace can:
- Increase confidence among investors
- Reduce the risk of problematic transactions
- Strengthen the overall integrity of the sector
For commercial real estate—an asset class heavily reliant on trust and capital flow—this is not insignificant.
A competitive differentiator for prepared agencies
As these reforms come into effect, there will be a clear distinction between:
- Agencies that are prepared, structured, and informed
- Those that are reactive and still adapting
For clients, this difference will matter.
Working with an agency that:
- Understands the requirements
- Has processes in place
- Can guide clients through compliance efficiently
…will become increasingly valuable.
What this means for the deals themselves
At a practical level, the fundamentals of commercial property transactions will not change:
- Buyers will still seek value
- Vendors will still seek strong outcomes
- Agents will still facilitate deals
However, the path to completing those deals will become more structured, more transparent, and more accountable.
Looking ahead
With the 1 July 2026 commencement date approaching, the commercial real estate sector is entering a period of transition.
For those who engage early—understanding the requirements, adapting processes, and educating clients—the shift will be manageable.
For those who delay, the adjustment may be more challenging.
In Part 4…
In the final article of this series, we move from understanding to action.
We will outline:
- Practical steps property owners and investors can take now
- How to prepare for future transactions
- What documentation and information you may need
- How to avoid delays and position yourself effectively in a changing regulatory environment
Final thoughts
AML/CTF reform is not just a compliance exercise—it is a structural shift in how commercial real estate transactions are conducted.
While it introduces new requirements, it also creates an opportunity:
to operate within a more transparent, consistent, and trusted marketplace.
For those willing to adapt, the future landscape is not something to be concerned about—but something to be prepared for.