THE PROPERTY DEVELOPMENT REVIEW
5 NO DEEMED COMPLIANCE FOR PROPERTY DEVELOPERS
(a) circumstances specified in the AML/CTF Rules apply; and (b) the reporting entity determines on reasonable grounds that commencing to provide the designated service to the customer before s 28(1) is complied with in relation to the customer is essential to avoid interrupting the ordinary course of business; and (c) the reporting entity has AML/CTF policies to comply with s 28(1) in relation to the customer: (i) as soon as reasonably practicable after commencing to provide the designated service to the customer; and (ii) within the period (if any) specified in the AML/CTF Rules; and (d) the reporting entity determines on reasonable grounds that any additional risk of money laundering, terrorism financing or proliferation financing associated with complying with s 28(1) in relation to the customer after commencing to provide the designated service to the customer is low; and (e) the reporting entity implements AML/CTF policies to mitigate and manage the associated risks; and (f) the reporting entity complies with the requirements (if any) specified in the AML/CTF Rules. Under the second type of delayed verification, a property developer can delay verification of some KYC information for up to 20 business days after commencing to provide a designated service to a buyer provided it satisfies the following conditions: (i) it must have AML/CTF policies to comply with the customer due diligence requirements of s 28 of the AML/CTF Act 2006 as soon as reasonably practicable; (ii) it must take reasonable steps to verify the identity of the buyer; (iii) it must identify the buyer’s ML/TF risk based on reasonably available KYC information; (iv) it must collect (but not necessarily verify) KYC information that is appropriate to the buyer’s ML/TF risk (other than source of funds/ source of wealth information for a politically exposed person, such as a government minister or official) ; (v) it must establish on reasonable grounds the identity of the buyer and its principal. It may be useful to explain some of these conditions. A property developer takes reasonable steps to verify the identity of the buyer if it: (i) collects reliable KYC information; (ii) verifies it using independent sources; (iii) escalates anomalies to its Compliance Officer; and (iv) stops the transaction if verification cannot be completed. In this context, “reasonably available information” is any information that the property developer can obtain without undue difficulty, cost, or delay, using sources that are independent, reliable and appropriate to the level of ML/TF risk. A property developer can establish on reasonable grounds that the buyer is who they claim to be by applying a risk-based, evidence-based verification process using information that is independent, reliable and reasonably available. The property developer must resolve discrepancies, escalate risks and anomalies appropriately, and document the basis of being satisfied that it has verified the identity of the buyer. AUSTRAC does not expect perfection but rather a reasonable, defensible, risk-based standard. However, A property developer does not establish on reasonable grounds the identity of the buyer by: (i) blindly accepting documents provided by the buyer; (ii) relying on unverified statements; (iii) ignoring red flags; (iv) proceeding because the buyer is “known to the property developer”; (v) accepting unverifiable foreign documents; and (vi) proceeding with the sale because of commercial pressure.
Real estate agents can rely on deemed compliance where they take reasonable steps to verify the identity of the customer who is not their client, but they are unable to complete initial customer due diligence because the customer is uncooperative. Property developers cannot rely on deemed compliance even if the buyer is uncooperative in providing KYC information. In short, there is no deemed compliance for developers. If the property developer cannot verify a buyer’s identity or KYC information, it must stop the transaction, assess and escalate suspicious matters, give the buyer a s 35C “unable to verify” notice, and document everything. 6 CONCLUSION While a form of delayed verification is available for property developers subject to certain stringent conditions, it is still necessary to complete customer due diligence within the prescribed period of 20 business days after starting to provide the designated service. If a property developer cannot complete customer due diligence within the prescribed period it may be necessary to abort the transaction. Deemed compliance is available to real estate agents but not property developers even though they both operate in the real estate sector. If buyers do not cooperate in providing documents to verify KYC information and assist in completing customer due diligence, property developers must not proceed with the transaction and must lodge a Suspicious Matter Report with AUSTRAC. There is widespread commentary to the effect that property developers selling their own properties are not providing designated services. This commentary suggests that designated services require acting on behalf of another person. It is said that the AML/CTF Act is built around a service-provider model, not a risk-based activity model. However, the risk of criminals using property purchases to launder money is just as high whether the vendor is a developer selling their own property, or an agent selling on behalf of someone else. Let me be clear. I do not share this view of the AML/CTF Act. In my view, the designated service listed is s 6(5A),Table 5, Item 2 clearly applies to property developers who sell their own properties directly to buyers without using an agent. It follows that property developers are entitled to delay verification in accordance with s 29 of the AML/CTF Act and s 6-12 of the AML/CTF Rules provided they satisfy all the necessary requirements of those provisions. Nevertheless, it is unfortunate that the provisions dealing with delayed verification and deemed compliance turn on a close reading of the fine print in the AML/CTF Act 2006 and the AML/CTF Rules leading to uncertainty on whether property developers must complete customer due diligence at or before a contract of sale is signed. 1.See AML/CTF Act 2006, s 6(5A), Table 5: Real estate services, Item 2. See also AUSTRAC, “Regulated entities and designated services” at www.aistrac.gov.au, viewed 16 September 2026. 2. See AML/CTF Act 2006, s 28. 3. AML/CTF Act 2006, s 28. 4. See AML/CTF Act 2006, s 6, Table 6, Item 1. 5. AML/CTF Act 2006, s 6, Table 6, Item 1 and AML/CTF Act 2026, s 29. 6. See AML/CTF Rules, s 6-12. 7. See AML/CTF Act 2006, s 6(5A) Table 5, Item 2 and AML/CTF Rules, s 6-12. A government body or agency, such as Development WA or Development Victoria, may not be carrying on business but rather performing its statutory functions. On this basis, it might not be subject to the AML/CTF Act. 8. See e.g., amltranche.com.au, “AML Compliance for Property Developers” in https//amltranche.com.au, viewed 16 September 2026. 9. AML/CTF Act 2026, s 29. 10. For an example of such an AML/CTF policy, see O’Donovan J, An AML/CTF Compliance Manual for Property Developers (Safe As Compliance Pty Ltd, 2026), available through drjimcompliance.com.au. 11. For a definition of “politically exposed person”, see s 5 of the AML/CTF Act 2026. 12. See AML/CTF Act 2006, ss 28 and 29 and AML/CTF Rules, s 6-12. 13. AML/CTF Rules, ss 6-33(2) and (3) and 9-4A, and AML/CTF Act 2026, s 28(2) a nd 6(b). 14. But see AML/CTF Act 2006,s 37A and s 38 ( reliance on other person’s collection and verification of KYC information). See also AML/CTF Rules, s 6-33(1). Compare s 37 of the AML/CTF Act 2006. 15. But see AML/CTF Act 2006, s 37A and s 38 (reliance on other person’s collection and verification of KYC information. See also AML/CTF Rules, s 6-33(1). 16. As to clauses in contracts designed to protect property developers who find it necessary to abort transactions because of AML/CTF considerations, see O’Donovan J. An AML/CTF Compliance Manual for Property Developers (Safe As Compliance Pty Ltd , 2026), Appendix 1. This manual is available through drjimcompliance.com.au.
September / October 2026 – 7
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