Customer Due Diligence for Queensland Real Estate Agents: Who Is Your Customer?

A vendor signs an agency agreement. A buyer tables an offer. A developer sells off the plan. In each scenario, the Queensland agent in the middle has always known who they are acting for — but from 1 July 2026, they must also know who they are acting with, and document it rigorously. Customer due diligence is no longer an obligation that belongs only to banks and casinos. It is coming directly to every Queensland real estate office.

The reforms, legislated by the Federal Government in November 2024, involve the expansion of Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) regime from the financial sector into real estate transactions. For Queensland agents, that shift is not theoretical. It is a hard deadline with real penalties, and it changes the way every property transaction is initiated, conducted, and recorded.

This article focuses on the most operationally critical question agents are grappling with right now: under the new regime, who exactly is your “customer” for CDD purposes? The answer is both more expansive and more specific than most agents expect.

The Legislative Foundation: What Changed and When

The AML/CTF Act was passed in 2006, known as Tranche 1, and aimed at certain sectors such as banks, casinos, and bullion dealers. Real estate was conspicuously absent. That absence attracted sustained international criticism.

In 2015, the Financial Action Task Force (FATF) criticised AUSTRAC’s omission of so-called “Tranche 2” companies — those which may act as “gatekeepers” for money laundering or the financing of terrorism. Australia’s rating of non-compliance was a recurring embarrassment, and the risk of grey-listing — being internationally identified as a haven for financial crime — concentrated minds in Canberra.

The Australian Parliament passed the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2024 (Cth) on 29 November 2024. As well as simplifying the current AML/CTF regime, the Bill expands the regime’s application to services provided by certain high-risk businesses and professions — “Tranche 2 entities” — including lawyers, accountants, and real estate professionals.

When the Tranche 2 entities’ provisions commence on 1 July 2026, the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) will apply to approximately 70,000 additional businesses, bringing the total reporting entities to 90,000. Queensland agencies, regardless of their size or specialisation, are included.

Under AUSTRAC’s published timetable, enrolment for newly regulated businesses opens on 31 March 2026, giving agencies a short runway to formalise systems before the legal start date. The obligations themselves — including all CDD requirements — are operative from 1 July 2026.

One significant carve-out that Queensland property managers should note: property management and leasing were removed from the scope of proposed AML regulation during 2024, a shift welcomed by the Property Council because those transactions were seen as high-volume, lower-risk compared with sales. That tweak narrows the immediate impact on managers while keeping the focus on sale and purchase risks. If you manage rent rolls but do not conduct sales, your immediate obligations under Tranche 2 are materially reduced — but the position should be confirmed against final AUSTRAC guidance as it is released.

What Is a “Designated Service” for Real Estate Professionals?

The AML/CTF Act is triggered not by your licence category, but by the nature of the service you provide. The operative concept is the designated service.

If your real estate business provides one or more designated services that have a geographical link to Australia, you will have AML/CTF obligations. You are likely to provide these designated services if you broker the sale, purchase, or transfer of real estate on behalf of a buyer, seller, transferee, or transferor in the course of carrying on a business, or are a property developer or other business selling house-and-land packages, apartments off the plan, and blocks of land in new subdivisions.

AUSTRAC considers a broker to be a person who acts as an intermediary or agent for another person for consideration. To provide this designated service, you must be operating as a broker in the course of carrying on a business. A common indicator is that your services include negotiating on behalf of the person you represent, or seeking to find a person for the person you represent to transact with, in return for a commission.

There are boundaries. Incidental sales of real estate by a business and private sales of residential property are not captured. For example, where an individual runs their business on premises they own and negotiates and directly sells those premises to a buyer — this is not caught because the sale would not be carried out as part of a business of selling real estate.

The definition of “real estate” for AML/CTF purposes is also broader than many agents assume. The term covers any of the following interests in Australian land: a fee simple interest, a leasehold, a licence or right to occupy, and a land use entitlement — which means an entitlement to occupy land conferred through ownership of shares in a company, or units in a unit trust scheme, or a combination of a shareholding or ownership of units together with a lease or licence. That final category is directly relevant to Queensland body corporate transactions and company title property.

The Central Question: Who Is Your Customer Under AML/CTF?

This is where Queensland agents most commonly misread their obligations. The instinctive answer — “my client is the vendor, because that’s who I act for” — is legally incomplete.

AUSTRAC’s guidance resolves the question directly. When a real estate agent acts for the seller and brokers the successful sale of a house, their customer is both the buyer and the seller. This means they will have AML/CTF obligations in relation to both parties.

If you act for the seller and broker the successful sale of real estate, your customer is both the buyer and the seller. If you act for the buyer and broker the successful purchase of real estate, your customer is also both the buyer and the seller.

The implication is significant. Regardless of which side of the transaction you are formally representing, both parties to the deal are your customers for CDD purposes. You cannot limit your CDD obligations to the person who is paying your commission.

Sellers’ Agents: When Does the Obligation Begin?

For a seller’s agent, obligations begin when an agency agreement is signed. At that point, they must conduct customer due diligence and prepare for potential suspicious matter reports. In practical terms, this means that onboarding a vendor listing now involves a CDD step before the property is even advertised.

A person acting as a seller’s agent starts providing a designated service to a seller or transferor when an agreement to broker the sale or transfer of a property is signed. In Queensland, that is typically the Form 6 Appointment to Act as a Selling Agent. From that moment, the clock on CDD starts.

Buyers’ Agents: Obligations Attach at Engagement

For a buyer’s agent, obligations attach when engagement begins. They must conduct customer verification processes before progressing.

A person acting as a buyer’s agent starts providing a designated service to a buyer or transferee when an agreement to find or identify a property is signed. Buyer’s agents operating in Queensland — a growing cohort in South East Queensland’s competitive markets — should not wait until an offer is made to commence CDD. The designated service has already commenced when the client engagement agreement is executed.

Property Developers Selling Directly

Selling or transferring real estate without an independent real estate agent as part of a business selling real estate is a designated service. This includes where the property developer or other business sells the real estate with their own in-house agents, sales or marketing employees rather than engaging an external agency for this work.

Developers who use an external agency for sales are not in scope under this particular designated service — but the agent handling those sales will be.

What Does Customer Due Diligence Actually Require?

Having established who your customer is, the next question is what you must actually do. CDD under the reformed AML/CTF Act operates at three levels: initial, ongoing, and enhanced.

Initial CDD

Initial CDD involves establishing certain matters about a customer on reasonable grounds before you start providing them with a designated service. This ensures you identify relevant ML/TF risks from the beginning of your relationship with the customer based on information reasonably available to you. You must establish the identity of your customer, their representatives, any person on whose behalf they are receiving a service, and any beneficial owner of the customer.

Agents must verify the identity of clients — both buyers and sellers — before or during the provision of a designated service. This includes collecting and verifying full legal name, date of birth, and residential address.

For individual customers, that verification process is relatively straightforward. For corporate buyers, trusts, and self-managed super funds — common structures in Queensland investment property transactions — the obligations go deeper. You will need to identify the ultimate beneficial owners behind such entities. For example, if the buyer is XYZ Ltd from Country X, who owns XYZ Ltd? If it is another company or trust, who owns that?

Initial CDD will also include reasonably establishing the identity of any person on whose behalf the customer is receiving a designated service — such as a beneficiary of a trust or foreign equivalent — and the identity of any person acting on behalf of the customer, and their authority to act.

The Counterparty Problem: CDD on the Party You Don’t Represent

This is the element that will create the most friction in day-to-day Queensland agency practice. Because the buyer and seller are both your “customers”, you must complete initial CDD on the party you are not formally acting for.

If you are brokering the sale, purchase, or transfer of real estate — for example, as a real estate agent — the customer is both the seller and the buyer. You must also complete initial CDD on the parties you are and are not acting for. For example, if you are acting for the seller, this means you must complete initial CDD for the seller and the buyer.

What happens when the counterparty refuses to cooperate? AUSTRAC has specifically addressed this, and the answer is important for agents who fear transactions will stall over CDD. You may delay completing initial CDD on the party you are not acting for. If that party does not cooperate with you to complete initial CDD, you are still taken to have complied with this obligation if you have taken all reasonable steps to establish the other party’s identity, including through reliance arrangements where possible, and recorded all of the steps taken to attempt initial CDD on this other party, including the difficulties faced.

The key word is “reasonable”. A complete absence of effort — no attempt made, no record kept — will not satisfy this standard.

Separately, AUSTRAC’s amendments to the AML/CTF Rules also introduced a deemed CDD for real estate agents in relation to CDD on counterparties where genuine attempts have been made to conduct CDD with no success. This provides a safety mechanism but not an exemption from the attempt itself.

Auctions: A Specific Problem with a Specific Solution

Queensland’s active auction market creates a practical difficulty: the identity of the buyer is frequently unknown until the hammer falls. When real estate is sold at auction, it is possible for a buyer to only be known after the fall of the hammer. You can delay initial CDD where completing initial CDD would disrupt the ordinary course of business. This will often be the case where the short time between the end of the auction and signing the contract of sale is not sufficient to complete initial CDD.

The delayed CDD provision applies — but it is not an indefinite carve-out. The AML/CTF Rules provide delayed CDD timeframes for certain real estate designated services. The delayed period lets you keep trading, but CDD must still be finalised within the allowed window. Agents should confirm current timeframes in AUSTRAC guidance as Rules are updated, since specific deadlines in this area have been subject to recent amendment.

The practical takeaway for Queensland auctioneers: build the post-auction CDD step directly into your settlement checklist, with a clear deadline and responsibility allocated within the agency.

Enhanced Due Diligence: When Standard CDD Is Not Enough

Not every customer carries the same risk. The AML/CTF regime adopts a risk-based approach, meaning the depth of due diligence must scale with the risk presented by the individual customer and transaction. The level of information you collect and verify to complete CDD will depend on the ML/TF risk profile of the customer. You must apply enhanced CDD in high-risk scenarios.

Politically Exposed Persons

A politically exposed person (PEP) is one of the highest-risk customer categories Queensland agents will encounter, particularly given the state’s appeal to interstate and international buyers from government and public sector backgrounds.

A PEP is an individual who holds a prominent public position or role in a government body or international organisation, either in Australia or overseas. Immediate family members and close associates of these individuals are also considered PEPs. PEPs often have power over government spending and budgets, procurement processes, development approvals, and grants.

AUSTRAC identifies three types of PEPs: domestic PEPs, foreign PEPs, and international organisation PEPs. A domestic PEP is someone who holds a prominent public position or role in an Australian government body. In Queensland, that can include state government ministers and their senior advisers, members of Parliament, senior judicial officers, and senior executives in state-owned corporations.

Foreign PEPs are automatically high risk under the AML/CTF Rules. For Queensland agents — who regularly interact with buyers from Southeast Asia, China, and the Middle East — this means that overseas government officials or their family members purchasing property must automatically trigger enhanced CDD, regardless of the purchase price.

Enhanced CDD for PEPs involves considerably more than standard identity verification. This includes getting senior management approval before starting or continuing a business relationship with the customer, or before providing a designated service to them; taking reasonable measures to establish the source of the customer’s and each beneficial owner’s wealth; and taking reasonable measures to identify the source of the customer’s and each beneficial owner’s funds.

Importantly, PEP status does not mean the customer is automatically involved in unlawful activity. You must assess the ML/TF risks of each customer, including PEPs, on a case-by-case basis. PEP identification is a risk indicator, not an accusation.

Source of Funds and Source of Wealth

Even outside the PEP context, enhanced CDD may be triggered by the nature of the funds being used. An 18-year-old student purchasing a high-value property with physical currency — to use AUSTRAC’s own example — would be identified as high risk by the real estate agency, triggering enhanced CDD. The agency would collect and verify information on the source of the cash and wealth of the customer. The customer provides that the physical currency was received through an inheritance and provides a grant of probate to verify this. That is the standard of documentary engagement enhanced CDD demands.

For Queensland agents accustomed to simply processing funds through a trust account without scrutinising their origin, this represents a fundamental change in professional practice.

Ongoing CDD and Suspicious Matter Reporting

CDD does not end at contract signing. CDD helps you understand who your customers are and the ML/TF risks they may bring to your business. CDD is separated into initial CDD and ongoing CDD.

Ongoing CDD means monitoring the customer relationship throughout the transaction for changes in risk profile, unusual behaviours, or transactions that do not align with what you know about the customer. You must take reasonable steps to monitor your customer to determine if any of the following becomes a PEP during your business relationship: by asking your customer questions when you reverify their KYC information in ongoing CDD or during other interactions; by periodically conducting open-source checks or checks through specialist databases; and by identifying transactions that suggest the customer’s circumstances may have changed.

Where suspicion arises, it must be reported. Agents will be required to lodge suspicious matter reports (SMRs) where they form a suspicion that a transaction may be connected to money laundering, terrorism financing, or other serious crime. SMRs are due within 24 hours of forming the suspicion if it relates to terrorism financing, or 3 business days for other suspicions.

Record keeping is not optional and not brief. Tranche 2 entities will need to keep certain records of the designated services provided to customers. In particular, businesses must keep records of KYC information and of relevant transactions for up to seven years after they have been concluded.

Shared CDD: Can You Rely on Another Party’s Work?

In a Queensland property transaction, multiple professionals — the selling agent, the buyer’s agent, the conveyancer, the solicitor — may each independently need to conduct CDD on the same parties. This has understandably prompted concern about duplication.

The AML/CTF framework anticipates this. In a property transaction, it is common for several participants — such as property developers, real estate agents, or solicitors — to need to conduct initial CDD on the same parties. In these circumstances, it may be possible, where appropriate, for a CDD arrangement to be put in place. This allows a designated service to rely on the applicable customer identification procedures carried out by another reporting entity regulated under the AML/CTF Act, and would need to be approved by an entity’s governing body or senior managing official, and appropriately documented.

AUSTRAC has also extended the timeframe to verify KYC information previously verified by another party to a real estate transaction. This is a significant concession to the practical realities of property transactions, and agents operating in high-volume markets should understand how reliance arrangements work before 1 July 2026 — and ensure any such arrangement is formally documented.

The key constraint: you can rely on another party’s CDD only if that party is themselves a reporting entity regulated under the AML/CTF Act. If the other professional is not enrolled and subject to the same framework, their identity verification does not satisfy your obligations.

Building Your AML/CTF Compliance Programme

CDD does not exist in isolation. It is one component of a broader AML/CTF compliance programme that every Queensland real estate business providing designated services must have in place before commencing those services from 1 July 2026.

Your programme must include a risk assessment — you must identify and assess your money laundering, terrorism financing, and proliferation financing risks. It must also include AML/CTF policies: appropriate policies, procedures, systems, and controls to manage and mitigate your ML/TF risks and comply with your obligations. Your programme must be documented and approved by a senior manager of your business.

It must also be independently evaluated at least once every three years.

Businesses providing a designated service must also appoint an AML/CTF compliance officer to oversee the operation of the entity’s AML/CTF policies and updates. In a small Queensland agency, this may be the principal. In a larger multi-agent office, it should be a designated role with clearly documented responsibilities.

AUSTRAC has acknowledged the compliance burden on smaller agencies. AUSTRAC says the industry contribution levy “usually” applies only to medium and large businesses — typically those with earnings of A$100 million or more or very high reporting volumes. Most Queensland independent agencies will not face a levy, but all must build and maintain a compliant programme.

Staff training is not optional. Personnel due diligence and training ensure the people performing AML/CTF functions in your business have the right skills, knowledge, and integrity to meet your obligations and manage risk. AUSTRAC expects your business to conduct personnel due diligence and provide AML/CTF training so that personnel understand your obligations and know how to follow your policies, procedures, and systems.

Risk Calibration: Not Every Client Carries Equal Risk

One of the most important practical aspects of the Tranche 2 framework is that it is explicitly risk-based, not a blanket checklist applied uniformly to every transaction. The rules introduce more nuanced risk awareness and due diligence procedures based on customer risk levels and are designed to help businesses build robust compliance frameworks.

You may be able to apply simplified CDD in low-risk scenarios. A local owner-occupier buying their first home, with Australian-sourced funds, no unusual transaction patterns, and no PEP indicators, represents a fundamentally different risk profile to an overseas investor purchasing through a multilayered trust structure with funds arriving from a high-risk jurisdiction.

Your AML/CTF programme should reflect this. Consider your location — a high-end inner-city agency might have different risk factors than a rural town agency — and your client base. Do you frequently deal with overseas buyers, cash-heavy clients, or developers with complex financing? A boutique Noosa agency acting primarily in lifestyle property sales to domestic buyers will have a materially different risk assessment from a Brisbane inner-city agent serving offshore investors in high-density residential towers.

The risk assessment is not a bureaucratic formality. It is the document that justifies the level of CDD you apply — and a regulator reviewing your compliance will look at whether your procedures were proportionate to the risk you identified.

What This Means for Queensland Agents

At the heart of the Act is a clear message: know your customer, know your risk. For Queensland agents, that means understanding three things with absolute clarity before 1 July 2026.

First, your customer base is wider than your client list. AUSTRAC is unambiguous that both buyer and seller are your customers for CDD purposes, regardless of who you formally represent. Build your onboarding processes to capture identity verification from both sides of the transaction — and document every step.

Second, when in a transaction your obligations begin matters. A common misconception is that obligations begin at settlement. They do not. Obligations attach when a designated service begins. For a selling agent, that is the Form 6. For a buyer’s agent, that is the engagement agreement. Begin your CDD process at the point of instruction — not the point of exchange.

Third, the risk-based framework is your friend, used correctly. Not every client warrants the same depth of scrutiny. The 2024 Act emphasises a risk-based, outcomes-focused approach to CDD, requiring continuous monitoring and deeper customer understanding. Build a risk assessment that honestly reflects your client base, calibrate your procedures to it, and document your reasoning. Agencies that approach compliance as a framework rather than a checklist will be far better positioned — both for regulatory scrutiny and for the practical demands of high-volume transactional work.

Enrolment with AUSTRAC opens 31 March 2026. Transaction records, CDD documentation, and AML/CTF programme materials must be retained for a minimum of seven years. Non-compliance with the AML/CTF Act can result in civil penalties, infringement notices, and — in serious cases — criminal prosecution. AUSTRAC has broad enforcement powers including enforceable undertakings and licence suspension.

The agents who will navigate this transition smoothly are the ones who build their programmes now, train their teams properly, and integrate CDD into their client onboarding as a standard professional step — not an afterthought added at the last minute before settlement. Queensland’s property market is internationally watched. The compliance framework that is now arriving reflects exactly that reality.

For current legislative text, refer to the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) as amended by the AML/CTF Amendment Act 2024. Current AUSTRAC guidance for real estate professionals is maintained at austrac.gov.au. Agents should seek independent legal advice for their specific compliance circumstances.