New rules target dirty money in property deals

Local property buyers and sellers will now face additional identity checks under new federal requirements introduced to the real estate industry.

The changes came into effect on Wednesday, July 1, and are designed to help combat both money-laundering and terrorism financing and will require real estate agents to complete extra checks when handling property transactions.

The requirements are overseen by AUSTRAC, Australia’s financial crime regulator.

AUSTRAC CEO Brendan Thomas said criminals were targeting real estate and professional services to move and conceal illicit money, often using trusts and company structures to make it harder to detect.

“Bringing these sectors into the regime is about closing those gaps and putting more scrutiny on high-risk transactions and stopping dirty money at the point it enters the system,” he said.

“This means more eyes on the ground where we know criminal exploitation occurs, helping us detect suspicious behaviour earlier and disrupt it at scale.”

Christie Nelson, Director of Christie Nelson Real Estate, said the reforms simply add another layer of compliance for agencies, though she doesn’t expect the process to be too burdensome for most clients.

“It’s a little bit more paperwork,” she said.

“It’s actually not too daunting. It’s just another procedure to follow and do our due diligence from our point of view.”

Ms Nelson has worked as a real estate agent for 26 years, and she said both she and her staff have completed training and research ahead of the changes to understand how the requirements would be incorporated into everyday sales.

For those selling, the checks are expected to take place near the beginning of the process, around the time they appoint an agent and sign a sales authority.

“We actually can’t make a listing public until these AML checks have been completed,” Ms Nelson said.

“That’s going to just mean maybe a day or two up our sleeves to have that process completed.

“It’s pretty quick, and it’s pretty painless, but it’s just something that will be required before a property can be openly advertised.”

Buyers, on the other hand, will generally complete the process around the time an offer is accepted, and contract paperwork is signed.

Both buyers and sellers may be sent an online link asking them to provide photo ID, such as a driver’s licence or passport, along with personal details like their full name, address and date of birth.

Purchasers may also be asked about how they intend to use the property.

In higher-risk or unusual circumstances, clients may also be asked to explain the source of their funds or wealth, or whether they are a politically exposed person, or whether a family member or close associate is one.

Ms Nelson said that many of the checks will be handled by external compliance platforms rather than the real estate agents directly asking the clients themselves.

While there’s likely to be some uncertainty, as with any change, Ms Nelson doesn’t expect ordinary sales to be significantly delayed at all.

“Once we’re all used to it, I think it’s just going to be added to the listing or sale process, like any other document that we do from a legal point of view,” she said.

“It shouldn’t, unless there are some red flags that the government does find. Then yes, it could pause the transaction.”

Agencies have also faced additional training and administrative costs while preparing for these new reforms to come into effect.

Ms Nelson said her business will now pay an ongoing fee to use a third-party compliance system, while buyers and sellers could also face a small cost to complete the checks.

Despite the added workload, she said stronger transparency across the property industry can only be a positive thing.

“It does mean a little bit of extra work and extra onus on us as agents. It puts us on alert,” she said.

“But once the dust has settled, I think everyone will just do it as second nature.”