Understanding money laundering risks for Australian real estate agencies

Australia’s real estate sector is on the brink of a major regulatory shift, with Anti-Money Laundering (AML) legislation set to impose new compliance obligations on property agencies. With real estate globally recognised as a key channel for money laundering, Australian regulators are now following the lead of countries like the UK and New Zealand by strengthening financial crime measures in the sector.

Whether you’re a national real estate chain or a small independent agency, these reforms will require you to implement robust AML procedures, conduct thorough due diligence and report suspicious transactions. Understanding the risks and your responsibilities will be critical to protecting your agency, your clients, and the integrity of the property market.

Money Laundering and Real Estate: The Risks for Agencies

Money laundering is not just a concern for banks or financial institutions—it has long been a major issue in real estate. Criminals exploit property transactions to disguise illicit funds, often inflating property prices, distorting competition and introducing hidden financial risks into the market.

With Australian regulators poised to bring real estate under the AML framework, agencies will soon be required to conduct client verification, assess transaction risks and report suspicious activity to AUSTRAC (the Australian Transaction Reports and Analysis Centre).

What is Money Laundering?

Money laundering is the process of making illegally obtained money appear legitimate. Criminals use property transactions to funnel illicit funds into the legitimate economy, often through complex ownership structures, shell companies, or high-value purchases with little transparency.

When dirty money enters the real estate market, it can have wide-ranging effects, including:

• Artificially inflating property prices
• Distorting competition by allowing money launderers to outbid genuine buyers
• Exposing real estate agencies to legal and reputational risks

How Money Laundering Works in Property Transactions

Money laundering in real estate generally follows three stages:

1. Placement

Illicit funds are introduced into the economy, often through property transactions. This could involve:

• Large cash deposits
• Transactions where the buyer’s source of funds is unclear
• Payments made via third parties or offshore accounts

2. Layering

This stage involves disguising the origins of the money through multiple transactions. In real estate, this can include:

• Rapid resale of properties (flipping)
• Using trusts, offshore companies, or nominee buyers to hide ownership
• Overpaying for a property and getting a refund to create a false transaction record

3. Integration

Once the money appears ‘clean,’ it is reintroduced into the economy through legitimate investments. At this point, it becomes more difficult to trace.

Common red flags include:

• High-value transactions with no clear financial backing
• Buyers unwilling to provide proper identification or proof of funds
• Purchases involving politically exposed persons (PEPs) or high-risk jurisdictions

Why This Matters for Australian Real Estate Agencies

Australian real estate professionals will soon be legally required to comply with AML regulations, which will likely include:

• Customer Due Diligence (CDD) – Verifying clients and understanding the source of their funds
• Ongoing Transaction Monitoring – Identifying unusual activity and escalating suspicious cases
• Suspicious Matter Reporting (SMR) – Submitting reports to AUSTRAC when red flags are detected

Failure to comply can result in severe financial penalties, reputational damage, and even criminal liability for agencies and their directors.

Real Estate Agencies: A Frontline Defence Against Financial Crime

With Australia’s property market being a prime target for money laundering, real estate agencies must be ready to play their part in protecting the industry. Adapting to AML requirements now will not only ensure compliance but also enhance trust with clients and regulators.

By understanding the risks, implementing best practices, and staying informed on regulatory changes, Australian real estate firms—big or small—can safeguard their business and contribute to a more transparent property sector.

Preparing for AML Compliance