Legal
DELAYED VERIFICATION, NO DEEMED COMPLIANCE FOR PROPERTY DEVELOPERS
Prepared by Professor James O’Donovan
Professor O’Donovan is an Honorary Professor of Law at the University of Queensland and the author of The New Anti-Money Laundering and Counter-Terrorism Financing Laws in Australia (Thomson Reuters, 2026) and An AML/CTF Manual for Property Developers (Safe As Compliance Pty Ltd, 2026).
3 VERIFICATION OF IDENTITY AND KYC INFORMATION One of the most significant AML/CTF obligations imposed on property developers is to verify the identity of their buyers or transferees and conduct customer due diligence. The buyers or transferees, not the owners or contractors, are the property developers’ customers. For the purposes of the AML/CTF Act. 4 DELAYED VERIFICATION As a general rule, a reporting entity may not commence to provide a designated service to a customer before it has verified the customer’s identity and completed customer due diligence. However, the AML/CTF Rules provide for two different types of delayed verification. The first type is delayed verification for brokering the sale, purchase or transfer of real estate and assisting a person or otherwise acting for or on behalf of a person, in a real estate transaction. This type of delayed verification does not apply to property developers. The second type of delayed verification applies where a property developer sells real estate directly to a buyer in the course of carrying on a business without using a real estate agent. Contrary to the views expressed by some commentators , it is not necessary for property developers to complete full Customer Due Diligence at or before a contract of sale is signed. Although property developers receive deposits and financial commitments that could be used for ML/TF, they can delay verification if they satisfy the requirements of s 6-12 of the AML/CTF Rules and s 29 of the AML/CTF Act. Despite s28(1) of the AML/CTF Act 2006, a reporting entity may commence to provide a designated service to a customer before the reporting entity complies with that subsection if:
1 INTRODUCTION It is estimated that compliance with the Tranche 2 AML/CTF reforms will cost the real estate sector $1.2 billion in this financial year alone. It is reasonable, therefore, to consider whether there are any features of the new regime that reduce the burden on property developers. Two possible concessions spring to mind: delayed verification and deemed compliance. But before we examine these concepts, let us consider how property developers are brought within the ambit of the Tranche 2 reforms. 2 DESIGNATED SERVICES The AML/CTF Act 2006 imposes a raft of obligations on reporting entities that provide a customer with designated services with a geographical link to Australia. These obligations apply to property developers because provide designated services by selling or transferring real estate in the course of carrying on a business selling real estate to a buyer or transferee where the sale or transfer is not brokered by an independent real estate agent. AUSTRAC guidance confirms that property developers provide designated services to buyers or transferees when they: (a) sell apartments or units off the plan; (b) sell commercial properties; (c) sell subdivided land; (d) sell apartments and townhouse complexes; and (e) assign off-the-plan contracts before settlement. Developers become reporting entities when they: (a) accept a deposit; (b) enter into a contract; (c) receive funds; or (d) issue payment instructions.
6 – September / October 2026
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