AML/CTF Tranche 2 FAQ: 25 Questions Answered for Property Professionals

Getting Started

1. What is AML/CTF Tranche 2?

Tranche 2 extends Australia's anti-money laundering laws to real estate agents, conveyancers, property developers, accountants, and lawyers. These professions must comply with the same AML/CTF framework that banks have followed since 2006. Obligations commence 1 July 2026. See our complete Tranche 2 guide.

2. Does Tranche 2 apply to my business?

If you sell, buy, auction, convey, or develop property in Australia, yes. This includes sales agents, buyer's agents, auctioneers, conveyancers, settlement agents, and property developers. Use AUSTRAC's eligibility checker to confirm. Property management and leasing are excluded.

3. When do I need to be compliant?

All obligations commence 1 July 2026. AUSTRAC enrolment opened 31 March 2026 with a deadline of 29 July 2026. Your AML/CTF program, CDD workflows, screening, and training must all be in place by 1 July.

4. What is the difference between Tranche 1 and Tranche 2?

Tranche 1 (2006) covers banks, casinos, and remittance providers. Tranche 2 (2026) extends the same framework to real estate agents, conveyancers, developers, accountants, and lawyers. The obligations are structurally the same — the difference is who they apply to.

5. Do I need to enrol with AUSTRAC?

Yes. Every business providing designated services must enrol with AUSTRAC as a reporting entity. Enrolment opened 31 March 2026. Deadline is 29 July 2026. You'll need your ABN, business structure details, and a nominated compliance officer.

Obligations

6. What is an AML/CTF program and do I need one?

An AML/CTF program is a written, risk-based document describing how your business meets its AML obligations. Yes, you need one. It must be tailored to your risk profile, approved by your principal or board, and reviewed annually.

7. What is customer due diligence (CDD)?

CDD means verifying who your customers are, assessing their risk level, identifying beneficial owners, screening against sanctions and PEP lists, and monitoring the relationship over time. It applies to every customer before you provide a designated service. See our CDD guide for agents.

8. Do I need to verify my client's identity for every transaction?

Yes. CDD must be performed on every customer — buyers and vendors — before providing a designated service. For auctions, delayed CDD is allowed (20 business days for buyers). Different procedures apply for individuals, companies, trusts, and SMSFs.

9. What sanctions lists do I need to screen against?

You must screen against the DFAT Consolidated List (Australia's sanctions list) and Politically Exposed Persons (PEP) databases. Screening must occur at onboarding and periodically thereafter.

10. What is a suspicious matter report (SMR)?

An SMR is a report filed with AUSTRAC when you suspect a customer is involved in money laundering, terrorism financing, or other serious crime. File within 24 hours for terrorism financing or 3 business days for other matters. See our SMR guide.

11. What is a threshold transaction report (TTR)?

A TTR must be filed when a customer pays you $10,000 or more in physical cash (notes and coins, not electronic transfers). File with AUSTRAC within 10 business days.

12. How long do I need to keep records?

All CDD records, screening results, transaction records, and compliance documents must be kept for 7 years after the business relationship ends or the transaction is completed. Records must be accessible, accurate, and audit-ready at all times.

Specific Situations

13. What about auction-day buyers?

AUSTRAC allows delayed CDD for auction buyers. You have 20 business days after the auction to complete verification on the winning buyer. For exchange buyers, you have 15 business days. You must complete CDD on the vendor before the auction. You do not need to verify every bidder.

14. Do I need CDD on both the buyer and vendor?

Yes. Unlike banks (who deal with one side), real estate agents deal with both sides. You need CDD on the buyer, the vendor, and any associated entities — companies, trusts, nominees, powers of attorney.

15. How do I handle trust structures?

For trusts, you must identify the trustee, settlor, appointor, and beneficial owners or beneficiaries. Discretionary trusts are rated high risk by AUSTRAC and likely require Enhanced Due Diligence. Corporate trustees require CDD on both the company and the trust. See our trust CDD guide.

16. What about foreign buyers?

Foreign buyers may present higher geographic risk. Apply risk-based CDD — this may include Enhanced Due Diligence, source of funds verification, and additional screening. Check whether the buyer's country appears on FATF's list of high-risk jurisdictions.

17. Do I need CDD for property management or leasing?

No. Tranche 2 only applies to the sale or transfer of real property. Property management, residential leasing, holiday letting, and commercial leasing are outside the scope of designated services. If your business only does property management, you are not a reporting entity.

18. What if a transaction falls through?

If you began providing a designated service (listed the property, started negotiations, accepted a deposit), your CDD obligations were triggered regardless of whether the transaction completes. Keep all records for 7 years from when the service was provided.

Costs and Software

19. How much does AML compliance cost?

The government estimates manual compliance costs $23,250 per year. Purpose-built compliance software ranges from $59–$399/month. Consultant-led approaches cost $5,000–$15,000 for initial setup plus ongoing fees. See our cost comparison guide.

20. Do I need AML software?

Software isn't legally required, but obligations like real-time sanctions screening, 7-year record keeping, and AUSTRAC-format reporting make manual processes impractical for most businesses. AUSTRAC expects your systems to be appropriate to your risk profile.

21. What are AUSTRAC's Program Starter Kits?

AUSTRAC is developing free template AML/CTF programs for small, low-complexity businesses. They provide guidance but don't include operational tools like screening, IDV, or record-keeping systems. See our starter kits guide.

22. Can I use spreadsheets for compliance?

Technically yes, but spreadsheets can't perform real-time sanctions screening, generate AUSTRAC-format reports, or maintain tamper-proof audit trails for 7 years. Manual approaches carry higher error risk. If you process more than a few transactions per month, software will pay for itself.

Penalties and Enforcement

23. What happens if I don't comply?

Penalties include civil fines up to $2.22 million per breach for businesses, up to 10 years imprisonment for individuals, infringement notices, remedial directions, and licence suspension by state regulatory bodies. "I didn't know" is not a defence. See our penalties guide.

24. Can AUSTRAC audit my business?

Yes. Under Section 172A, AUSTRAC can examine your AML/CTF compliance at any time. They can review your program, CDD records, screening processes, reporting history, and training records. AUSTRAC has indicated an education-first approach in year one. See our examination powers guide.

25. What is tipping off and why is it a criminal offence?

Tipping off means telling a customer (or anyone outside your compliance team) that you've filed or intend to file a Suspicious Matter Report about them. It's a criminal offence under the AML/CTF Act with penalties including up to 2 years imprisonment. Your agents should never see SMR details — only behavioural descriptions of what they observed.

Disclaimer: This FAQ provides general information about AML/CTF Tranche 2 and does not constitute legal advice. You should confirm your specific obligations with AUSTRAC or a qualified legal adviser. AMLTranche helps streamline your compliance workflows alongside your professional advisers.