Massive fines await real estate professionals in breach of new money laundering laws

Hefty fines and penalties may be applied to a broad cross-section of real estate professionals who fail to adhere to new anti-money laundering laws that will take effect next year.

Anti money laundering (AML) graphic
Real estate professionals have a year and a half to get up to speed with new anti money laundering (AML) laws or risk paying the price. (Image source: Shutterstock.com)

The Federal Government must launch education services for real estate agents and other property professionals if it wants compliance with its new anti-money laundering laws, says the Real Estate Institute of Australia. 

Real estate agents and other property industry professionals will face potentially massive fines from 1 July 2026 if they fail to comply with the new laws, passed late last year. 

In late November — 18 years after the initial laws — the Federal Government extended anti-money laundering and counter-terror financing laws (AML/CTF) to include so-called “Tranche 2” entities. 

The laws, which previously applied to entities such as banks, financial institutions, and casinos, will now also apply to all real estate agents, as well as property developers, conveyancers, lawyers and accountants. 

REIA President, Leanne Pilkington, told Australian Property Investor Magazine that the Federal Government needed to educate real estate agents and other property professionals about the new laws. 

Most real estate agencies were “primarily small businesses” who “do not have the expertise nor resources to be able to identify such activity”. 

“I don’t believe that it can just come from the industry, it really needs to have the Government behind it,” said Ms Pilkington.  

“They are going to have to provide training, it’s a simple as that”. 

Dirty money infiltrates real estate, costs billions in policing, and takes a terrible toll on Australian lives.

- Nathan Lynch, author of The Lucky Laundry

Ms Pilkington said the industry was working closely and constructively with regulator, the Australian Transaction Reports and Analysis Centre, AUSTRAC. 

Previous enforcement of anti-money laundering law by AUSTRAC has led to some enormous fines. 

In 2020 banking giant Westpac was ordered to pay $1.3 billion for breaching the anti-money laundering laws, the biggest civil penalty in Australian history. 

In July 2023 casino operator Crown was ordered to pay $450 million for breaches of the legislation; and in 2018 banking giant CBA was ordered to pay a $700m penalty.

AML laws 'cause for alertness, not alarm'

While the Tranche 2 legislation has been passed, the associated regulations — which will detail the specifics of the new requirements — are yet to be released. 

“Most of the heavy lifting stuff will be taking place in the regulations,” said Sophie Gerber, owner of Sydney-based legal and compliance business Sophie Grace. 

“We will be offering to help people to put together compliance programs, but there’s nothing they can do until the regulations are finalised,” Ms Gerber told Australian Property Investor. 

“So don’t be alarmed — be ready but not alarmed.” 

Real estate agents and other Tranch 2 professions will be required to register with AUSTRAC, with registration opening on March 31 next year. 

Ms Gerber said the regulations were likely to be similar to those that currently apply to banks and financial institutions. 

While some of the expected requirements, such as verifying the identification of buyers and sellers of properties, other aspects, such as reporting to AUSTRAC “suspicious matters” would likely prove more difficult. 

“The suspicious matter reporting is something that I think a lot of agents will find quite difficult, because basically you have to report to AUSTRAC anything that you think is suspicious,” Ms Gerber said. 

That would involve “dobbing in clients”. 

“People tend to have a lot of trouble with what’s suspicious and what’s not”. 

Real Estate Institute of Queensland CEO Antonia Mercorella said there were concerns real estate agents — many of which were “micro-businesses” — would now be required to undertake the same sort of checks as major financial institutions. 

“These are big organisations with very deep pockets and expansive resources,” Ms Mercorella told Australian Property Investor. 

“Our concerns lie around how realistic is it for real estate agents to screen for politically exposed persons, or if you’re dealing with a sanctioned person or entity?” 

“It will ultimately mean having to engage experts and external third parties,” said Ms Mercorella. 

“We’ve already seen all of the AML providers swooping in, they see it’s a commercial opportunity”. 

Ray White Groups General Counsel, Marc Johnston, told Australian Property Investor the news laws would “significantly impact” the “practices and processes of carrying on an agency business”. 

He expected the upcoming regulations would require real estate agents to “develop and maintain an AML/CTF program”, lodge an annual “compliance report”, and “report to AUSTRAC all suspicious transactions/activity”. 

The Tranche 2 changes will bring Australia’s anti-money laundering into line with most of the rest of the world. 

By 2023, Australia was one of just five of the almost 200 members of the Financial Action Force Global Network that had not “regulated, or committed to regulating Tranche 2 entities”, according to law firm Norton Rose Fulbright. 

Financial crime expert Nathan Lynch, author of The Lucky Laundry, about money laundering in Australia, said the nation was “awash with dirty money”. 

“It flows through our economy, keeps banks running, powers big business, puts coffee on restaurant tables, seeps into clubs, pubs, sport, the art world and anywhere that value is moved,” writes Mr Lynch. 

“It infiltrates real estate, costs billions in policing, and takes a terrible toll on Australian lives.” 

Mr Lynch said there had been fierce opposition to the Tranche 2 laws over many years “from the most powerful lobbying interests in Australia”.

“Every country is up against powerful lobbying interests around money laundering and, sadly, Australia is not an exception,” he posted to social media after the laws were passed in November. 

“After a mere 18-year hiatus, Australia has finally delivered on its promise to extend the Anti-Money Laundering regime to cover gatekeeper professions”. 

“Children have grown to adulthood in the time that Bill took to pass,” said Mr Lynch. 

“Almost as painful as waiting for the sequel to Top Gun … but we got there in the end.” 

Article Q&A

When were Australia's new anti money laundering laws revised?

In November 2024 — 18 years after the initial laws — the Federal Government extended anti-money laundering and counter-terror financing laws (AML/CTF) to include so-called “Tranche 2” entities. The laws, which previously applied to entities such as banks, financial institutions, and casinos, will now also apply to all real estate agents, as well as property developers, conveyancers, lawyers and accountants.

Do real estate industry professionals have to comply with money laundering laws?

Real estate agents and other property industry professionals will face potentially massive fines from 1 July 2026 if they fail to comply with the new laws, passed in November 2024. REIA president Leanne Pilkington told Australian Property Investor the Federal Government needed to educate real estate agents and other property professionals about the new laws.

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