From 1 July 2026, property developers and some builders who sell new homes, house-and-land packages, subdivision lots or other property directly to purchasers may be subject to Australia’s expanded AML/CTF regime. If they provide a designated service, they must enrol with AUSTRAC, verify customer identities, assess money laundering risks, maintain an AML/CTF compliance programme, keep records, train staff, and report suspicious transactions where required. Failing to comply can result in significant penalties, making it essential for affected businesses to review their sales processes and implement appropriate compliance measures.
Do Australia’s new anti-money laundering laws apply to property developers and builders selling new homes, and what do they need to do to comply?
Our Building and Construction team discuss this important topic.
Introduction
Buying and selling property has never involved a shortage of paperwork. Contracts, finance approvals, disclosures and settlement documents are all part of the process.
Since 1 July 2026, for some property developers and builders, there is another important item on the checklist: complying with Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) laws.
If you think AML/CTF laws are mainly something banks and financial service providers have to worry about, you’re not alone. However, Australia’s AML/CTF regime has now expanded to include parts of the property industry, meaning some developers and builders now have compliance obligations of their own.
The key question is not whether you are a builder or developer. It is whether your business provides a designated service under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (AML/CTF Act).
This article explains who is likely to be affected, what the new obligations involve and the practical steps your business should take.
Quick Takeaways
- Since 1 July 2026, Australia’s AML/CTF regime has expanded to include certain direct property sales.
- Developers and builders who sell real estate (including new homes, house-and-land packages, and blocks of lands) directly to purchasers may now provide a designated service under the AML/CTF Act.
- Builders who simply construct homes on land already owned by their clients will generally not be affected solely because they perform construction work.
- Businesses that provide designated services must enrol with AUSTRAC, undertake customer due diligence, implement an AML/CTF program and comply with ongoing record-keeping and reporting obligations.
- Failing to comply can expose businesses to significant regulatory action.
Does the New Regime Apply to Your Business?
For most businesses, this is the only question that really matters.
The good news is that the new laws do not apply simply because you build houses or develop land.
Instead, they apply where a business provides a designated service under the AML/CTF Act.
Broadly speaking, a business may provide a designated service where, in connection with Australia, it:
- brokers the sale, purchase or transfer of real estate in the course of carrying on business; or
- sells or transfers real estate in the course of carrying on a business selling real estate where the sale is not brokered by an independent real estate agent.
Whether your business is caught depends on the role it performs in the transaction and not simply on whether it describes itself as a builder or developer.
Builders
A builder engaged solely to construct a dwelling on land already owned by its client will generally not provide the relevant designated service merely because it performs construction work.
However, the position may be different where the builder or a related entity:
- sells house-and-land packages;
- sells completed residential properties;
- sells subdivision lots;
- sells off-the-plan apartments or other interests in real estate; or
- otherwise carries on a business selling real estate directly without an independent real estate agent.
Property Developers
Many property developers are more likely to fall within the new regime.
If your business directly markets and sells residential land, completed homes, subdivision lots or off-the-plan apartments through its own staff or in-house sales team, you should carefully consider whether you are providing a designated service.
Where a sale is brokered by an independent real estate agent, the developer will generally not provide the direct-sale designated service merely because it owns the property. The agent may, however, provide a separate designated service, and the precise position will depend on the roles performed by each party.
If you’re unsure whether your business is captured, obtaining legal advice early is often far less expensive than dealing with compliance issues later.
What Does Compliance Involve?
If your business provides a designated service, compliance involves considerably more than simply checking a purchaser’s driver’s licence.
Enrol with AUSTRAC
Businesses that commenced providing newly designated real estate services on 1 July 2026 must apply to enrol with AUSTRAC by 29 July 2026. More generally, a business must apply to enrol within 28 days after it starts providing a designated service.
Know Your Customer
Before providing a designated service, reporting entities must generally undertake customer due diligence.
Depending on the circumstances, this may include:
- identifying and verifying customers;
- identifying and verifying beneficial owners where required;
- understanding the nature and purpose of the business relationship; and
- assessing the money laundering, terrorism financing and proliferation financing risks associated with the customer.
Higher-risk customers or transactions may require enhanced due diligence.
Prepare an AML/CTF Program
Reporting entities must establish and maintain an AML/CTF program appropriate to the risks faced by their business.
Among other things, the program should address:
- AML/CTF risk assessments;
- customer due diligence procedures;
- internal reporting processes;
- governance arrangements;
- personnel due diligence and staff training;
- ongoing compliance monitoring and review; and
- independent evaluation where required.
No one goes into property development because they enjoy compliance manuals. Nevertheless, this is one manual worth getting right.
Reporting and Record Keeping
Reporting entities may also be required to:
- lodge Suspicious Matter Reports where required by the legislation;
- comply with other reporting obligations that apply to their business; and
- retain records required under the AML/CTF Act and Rules.
There are four types of transaction reports reporting entities might have to make to AUSTRAC:
- Threshold Transaction Reports (TTR): For transfers of physical currency of $10,000 or more
- International Funds Transfer Instructions (IFTI): For instructions to send or receive money overseas, for transfers of any value
- Suspicious Matter Reports (SMR): Must be submitted within 24 hours if related to terrorism financing, or within three business days for other matters
- Cross-Border Movement Reports: About carrying, mailing or shipping physical currency valued at $10,000 or more to or from Australia
However, not every reporting obligation applies to every developer or builder. The obligations depend on the designated services your business provides and the activities it undertakes.
Common Issues and Risks
Assuming AML Compliance is Someone Else’s Responsibility
Some developers assume banks, settlement agents or lawyers will undertake all AML checks.
However, the obligations may apply independently to the developer or builder if they provide a designated service.
Inadequate Customer Verification
You will often see complex corporate and trust structures which are common in property transactions. Failing to properly identify beneficial owners may result in non-compliance.
Poor Staff Training
With many builder and property developers, your sales teams are often the first point of contact with clients. Without proper training, suspicious indicators may be missed.
What Happens if You Get It Wrong?
AUSTRAC has broad supervisory and enforcement powers under the AML/CTF Act.
Depending on the seriousness of any non-compliance, consequences may include infringement notices, enforceable undertakings, civil penalty proceedings and, in appropriate cases, criminal prosecution.
The good news is that most compliance issues can be avoided by identifying your obligations early and implementing practical compliance systems before problems arise.
What Should You Do Now?
- If your business develops, markets or sells residential property, you should:1. determine whether your business provides a designated service;
2. review how your property sales are structured;
3. enrol with AUSTRAC if required;
4. implement an AML/CTF program appropriate to your business;
5. establish customer due diligence procedures; and
6. train staff involved in property sales.
For many businesses, the greatest challenge is not complying with the legislation, it’s determining whether the legislation applies in the first place.
Need Advice?
The application of the AML/CTF regime is not always straightforward. Two businesses selling similar properties may have different obligations depending on how their transactions are structured.
If your business develops or sells residential property and you’re unsure whether the new regime applies, our commercial lawyers can advise you on your obligations, assist with preparing AML/CTF programs and help you develop practical compliance systems tailored to your business.
FAQs.
Find answers to some of the most frequently asked questions about this topic.
Generally, AML obligations focus on designated services involving property transactions. A builder engaged solely to construct a dwelling on a client’s land may not be captured merely because they perform construction work. However, the position may differ where the builder is involved in selling land or completed properties.
Potentially yes. Developers and builders selling house-and-land packages directly to purchasers are among the businesses most likely to be affected by the new regime.
Customer due diligence involves identifying and verifying customers and, where applicable, beneficial owners. It also involves assessing the risk associated with a transaction and obtaining additional information where heightened risks exist.
A beneficial owner is the individual who ultimately owns or controls a company, trust or other entity involved in the transaction. AML laws require businesses to look beyond corporate structures and identify the real individuals exercising control.
Yes. If a developer forms a suspicion that a transaction may involve criminal conduct, money laundering or terrorism financing, reporting obligations will arise under the AML/CTF framework.
Non-compliance may expose a business to regulatory investigations, enforcement action, substantial financial penalties and reputational damage.