AML/CTF Tranche 2: What AU Real Estate Agents Need to Know Before July 2026

On July 1, 2026, Australian real estate agents become regulated reporting entities under the Anti-Money Laundering and Counter-Terrorism Financing Act. This means agents must conduct formal identity verification on purchasers and vendors, map beneficial ownership structures, screen for politically exposed persons, and report suspicious transactions to AUSTRAC within 72 hours. The estimated upfront compliance cost for a small agency is $28,650, with $23,250 in annual ongoing costs.

What is Tranche 2?

Tranche 2 is the extension of Australia's Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) regime to real estate agents, conveyancers, accountants, and lawyers. Until now, these obligations applied only to banks and financial institutions. From July 1, 2026, real estate agents become regulated reporting entities for the first time in Australian history.

The legislation passed as Act No. 110 of 2024. The enrollment window opens March 31, 2026, and compliance is mandatory from July 1.

This is not a voluntary code of conduct. It is federal law, administered by AUSTRAC, with a non-compliance penalty ceiling of $33 million for corporate entities.

What agents are required to do

Under Tranche 2, every real estate agent involved in a residential property transaction must complete the following before the transaction can proceed:

Customer Due Diligence (CDD): Verify the identity of both the purchaser and the vendor. This is not a handshake and a driver's licence check. CDD requires documenting the identity verification process, collecting supporting evidence, and retaining records.

Beneficial ownership mapping: When a property is purchased through a corporate entity, trust, or self-managed super fund, the agent must identify and document the ultimate beneficial owners. This means understanding who actually controls the entity, not just who signs the contract.

Politically Exposed Person (PEP) screening: Agents must screen both parties against PEP databases. A politically exposed person is anyone who holds or has held a prominent public function, domestically or internationally.

Sanctions screening: Both parties must be screened against AUSTRAC's sanctions lists.

Suspicious Matter Reports (SMRs): If at any point during the transaction the agent suspects money laundering, terrorism financing, or other criminal activity, they must submit a Suspicious Matter Report to AUSTRAC within 72 hours. Failure to report carries criminal penalties.

Ongoing Customer Due Diligence (OCDD): For transactions involving higher-risk profiles (foreign purchasers, corporate structures, unusually large cash components), the agent must conduct ongoing monitoring throughout the settlement period.

What it costs

The Government's Regulatory Impact Statement estimates the following costs for a small real estate agency:

• Upfront compliance cost: $28,650. This covers establishing an enterprise-wide AML/CTF program, initial risk assessments, staff training, and technology setup.
• Annual ongoing cost: $23,250. This covers maintaining the program, conducting ongoing risk assessments, triannual independent evaluations, and continued staff training.
• RegTech software: $59 to $299 per month. Identity verification, PEP screening, and sanctions checking require software tools. Manual compliance is not practical at transaction volume.

For a solo agent running 15 to 25 settlements per year, the upfront cost represents roughly 3 to 4 deals' worth of net commission (based on the average agent retaining approximately 40.5% of ex-GST commission per transaction).

The non-compliance penalty ceiling is $33 million for corporate entities. For individual agents, penalties include criminal prosecution and deregistration.

Where this fits in the settlement process

Every Australian residential settlement involves 47 distinct actions between exchange and keys: 30 legal milestones handled by conveyancers and solicitors, 17 coordination touchpoints currently handled by the agent, and 4 human judgement moments where the agent's presence is genuinely required.

Tranche 2 adds a new category of obligation that sits before the settlement window begins. The CDD, beneficial ownership mapping, and screening must be completed before the contract can progress. This means the agent's pre-exchange workload increases, and any delays in completing compliance checks can push back exchange dates, which cascades into the entire settlement timeline.

For agents already managing the 17 coordination touchpoints on memory and phone calls, Tranche 2 adds another layer of administrative responsibility with zero additional commission to cover it.

What this means for solo agents specifically

The compliance burden is identical regardless of agency size. A solo agent running 20 deals per year has the same CDD obligations as a franchise network running 2,000. The difference is that the franchise can amortise the $28,650 upfront cost across hundreds of transactions and centralise the compliance function. The solo agent absorbs the full cost personally.

This creates a structural disadvantage for independent operators. The Government's own Regulatory Impact Statement acknowledges that Tranche 2 is likely to accelerate industry consolidation, as fixed compliance costs disproportionately burden smaller agencies.

For the solo agent doing $15 to $25 million in annual volume, Tranche 2 is not just an administrative inconvenience. It is a meaningful financial and operational burden that lands on top of an already full settlement coordination workload.

The enrollment timeline

Date	Milestone
March 31, 2026	AUSTRAC enrollment window opens
July 1, 2026	Compliance mandatory for all captured entities
Ongoing	Triannual independent program evaluations required
Ongoing	SMRs to AUSTRAC within 72 hours of suspicion

Agents who have not enrolled by July 1 will be operating in breach of federal law.

What you can do now

Step 1: Familiarise yourself with the full obligations. AUSTRAC's website (austrac.gov.au) has the official guidance for real estate practitioners.

Step 2: Budget for compliance. The $28,650 upfront cost is not optional and will not be waived for small agencies.

Step 3: Evaluate RegTech providers. Identity verification, PEP screening, and sanctions checking require software. Research providers who specifically serve Australian real estate (not generic global compliance platforms).

Step 4: Review your current settlement process. The 47 actions between exchange and keys are about to get more complex. Understanding where your coordination gaps already exist will help you prepare for the additional compliance layer.

The NeuraCall Settlement Audit maps your current post-exchange process against the full 47-action framework. With Tranche 2 landing on top, knowing where your existing coordination gaps already exist becomes more important, not less. The audit takes 30 minutes and you keep the written report regardless.

neuracall.com.au/free-tool

For the full 47-action breakdown, see the 47-Step Australian Settlement Framework. For a broader look at why settlements fail, see Why Settlements Fall Over in Australia.