CDD Obligations for Real Estate Agents Under Tranche 2

From 1 July 2026, Australian real estate agents providing designated services must perform customer due diligence (CDD) on buyers and vendors before or during each transaction. CDD under the AML/CTF Act 2006 means verifying the client's identity, understanding the nature of the relationship, and — for entity clients — mapping beneficial ownership.

Which real estate transactions trigger CDD obligations?

Tranche 2 covers agents who assist with the purchase or sale of real property as a designated service. CDD is required: - Before providing the designated service — identity verification must be completed before settlement, not after - When the risk profile changes — a new matter, a change in client circumstances, or a re-screen flag requires updated CDD - On an ongoing basis — agents must re-screen existing clients against PEP and sanctions lists at the cadence defined in their AML/CTF programme

What identity information must agents collect from individual buyers?

For buyers and vendors who are natural persons, agents must collect and verify: 1. Full legal name — as shown on a government-issued document 2. Date of birth — verified against the same document 3. Residential address — current address, verified where possible Verification means cross-referencing the information against a reliable, independent document — a passport, driver's licence, or foreign equivalent. Expired identification does not satisfy CDD requirements.

What does CDD require when the buyer is a company or trust?

When a buyer is a company or trust, CDD must extend to beneficial ownership mapping: identifying the natural persons who ultimately own or control the entity. For companies, that means shareholders with 25% or more of voting rights. For trusts, the settlor, trustee, and beneficiaries with 25% or more of the trust's interests. Agents must also verify the entity's existence — via ASIC for Australian companies, or the relevant foreign registry equivalent. If a buyer is unwilling to disclose their ownership structure, that is itself an AML red flag requiring escalation. See AMLify for real estate agents for an automated beneficial ownership workflow.

When does enhanced due diligence apply?

EDD applies when a client or transaction presents elevated ML/TF risk. Common triggers include politically exposed persons (PEPs), clients from high-risk jurisdictions, and transactions involving unexplained third-party funds. EDD requires a more thorough source-of-funds analysis and senior management approval before proceeding. Your AML/CTF programme should specify which risk indicators trigger EDD and document how each case was resolved.

Key Takeaways

• CDD is mandatory from 1 July 2026 for all real estate agents providing a designated service under the AML/CTF Act 2006
• Individual clients require name, DOB, and address verified against a current government-issued document
• Entity clients require beneficial ownership mapping to the natural persons who own or control them
• EDD is triggered by PEPs, high-risk jurisdictions, and unexplained third-party funds — and requires senior management sign-off
• AMLify for real estate agents automates CDD collection, beneficial ownership mapping, and re-screening within your transaction workflow

Frequently Asked Questions

Q: When must CDD be completed for a real estate sale?

CDD must be completed before or during the provision of the designated service — in practice, before exchange of contracts. Agents cannot defer verification until settlement. If CDD cannot be completed in time, the agent's AML/CTF programme should specify whether the transaction must be paused or declined.

Q: Do agents need to re-verify clients they have dealt with before?

Yes. Ongoing monitoring is required under the AML/CTF Act 2006. If a client's circumstances have changed, their risk profile has been updated, or their CDD records are out of date, re-verification is required. Most AML/CTF programmes set re-screening at each new transaction for standard-risk clients.

Q: What if a buyer refuses to provide beneficial ownership information?

If a buyer refuses to disclose beneficial ownership, the agent cannot complete CDD and must not proceed with the designated service. The agent should also consider whether the refusal warrants a Suspicious Matter Report (SMR) to AUSTRAC. Refusal to identify controlling persons is a recognised red flag under AUSTRAC's guidance for real estate.

This is general information only and not a substitute for legal advice.

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