AML Compliance for Conveyancers & Settlement Agents — What You Must Do Before July 1

Yes, if you handle property transactions or provide settlement services in Australia. AML/CTF Tranche 2 brings all conveyancers, settlement agents, and anyone facilitating property transfers under AUSTRAC regulation. There are no exemptions for small practices or sole practitioners. Compliance is mandatory from 1 July 2026.

CDD is the process of verifying and documenting a client's identity, understanding their relationship to the property, and identifying the true beneficial owner. For conveyancing, this means: (1) obtaining government-issued ID from the buyer, (2) verifying the source of funds for the purchase, (3) understanding who the real owner is if using trusts/companies, and (4) documenting all of this in your file. You must complete CDD before settlement and keep records for minimum 7 years.

You must refuse to act. AML/CTF law requires you to obtain CDD information. If a client refuses to provide identification, proof of funds, or beneficial ownership details, you cannot complete the settlement. Failure to obtain CDD is a compliance breach and can result in penalties. Document the refusal and file a Suspicious Matter Report if the behaviour is suspicious. Your professional obligations under AML law take priority over client convenience.

Ask the buyer to provide bank statements, loan approvals, investment account statements, or gift letters showing where the funds come from. For bank transfers, verify they come from an account in the buyer's name. For cash, ask detailed questions and document the answers. For gifts, get a signed letter from the donor confirming it's a gift, not a loan. For foreign funds, verify the origin country isn't on FATF high-risk lists. For business proceeds, ask for tax returns or accountant letters. Document everything in your file.

An SMR is a formal report to AUSTRAC when you suspect a transaction may involve money laundering, terrorism financing, or other financial crime. You must file an SMR if: (1) a client acts suspiciously (evasive, reluctant, pressuring), (2) the transaction doesn't make financial sense (overpaying, fast on-selling, unusual structure), (3) the source of funds is unclear or suspicious, or (4) red flags appear. Filing is mandatory—don't discuss it with the client or they may tip off the criminal. AUSTRAC processes SMRs confidentially. Use their online portal or paper form.

AUSTRAC requires sighting original or certified copies of government-issued photo ID (passport, driver's licence). Email scans or online photos are acceptable only if certified by a licensed conveyancer, lawyer, or accountant. Best practice: sight the original document in person, take a certified copy, and keep it in your file. If the client is interstate or overseas, use a certified copy sent by post or an online notary service. For virtual settlements, video identification with certified documents is becoming standard.

Minimum 7 years from the date of the transaction or the date the business relationship ended, whichever is later. Keep: customer identification documents, CDD information, source of funds verification, risk assessment notes, SMR records, staff training records, and any correspondence about the transaction. Use secure storage (locked filing cabinet or encrypted digital storage). After 7 years, you can securely destroy records. AUSTRAC can audit these records anytime, so keep them organised and accessible.

You must update CDD at least every 3 years, or sooner if circumstances change. For repeat clients buying multiple properties, verify their identity again at each new transaction. Don't assume a client's details are still current—people move, change jobs, and circumstances evolve. Even if you've dealt with a client before, confirm their identity and source of funds for each new property transaction. This is called ongoing CDD and is mandatory.

Trusts and companies are legitimate but require additional verification. You must identify the beneficial owner (the person who ultimately controls or benefits from the entity). Ask for: trust deed, trustee identification, beneficial owner identification, and source of trust funds. For companies, ask for: incorporation documents, shareholders list, directors' IDs, and source of company funds. Document the structure and beneficial ownership in your file. If ownership is opaque, multi-layered, or the beneficial owner won't identify themselves, this is a red flag—consider filing an SMR.

All staff involved in settlements must complete training covering: red flags specific to property, CDD procedures, beneficial ownership structures, SMR process, and record-keeping. Use our 2-hour training course or develop your own. Document who completed training, when, and topics covered. Refresh training annually or when laws change. Keep records for AUSTRAC audits. Smaller practices should conduct in-house training and document it. Ensure staff understand their personal obligations and responsibilities—training protects both them and your firm.

If you've followed proper CDD procedures, kept detailed records, and conducted appropriate checks, you're protected. Compliance demonstrates your good faith. The law doesn't hold you liable if a criminal deceives you despite reasonable due diligence. However, if you ignored red flags, skipped CDD, or knowingly turned a blind eye, you can face penalties. This is why thorough, documented compliance is essential—it's your defence if something goes wrong.

Start here: Take our free 5-minute Readiness Quiz to assess your current status. It gives you a personalised action plan. Then: (1) download our AML/CTF Program template for conveyancers, (2) work through our plain-English guides covering property-specific red flags, (3) enrol your staff in our 2-hour training course, and (4) review our software comparison if you want automation. If you want hands-on help, connect with a conveyancing AML consultant. Most practices complete core compliance in 4–6 weeks using these resources.