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The imminent expansion of the Commonwealth’s anti-money laundering and counter-terrorism financing laws will place real estate agents under intense scrutiny if they sell property later used in the booming illicit tobacco trade.
From 1 July 2026, agents who arrange sales without rigorous due diligence could face significant civil and even criminal repercussions under the Commonwealth’s new AML/CTF regime.
The illicit tobacco market has exploded in recent years, with reports that profits now outstrip the illegal drug trade, underpinning one of Australia’s fastest-growing organised crime economies.
Fiona Halsey, director at Perth-based law firm Halsey Legal Services, said the reforms marked a fundamental shift in responsibility, forcing commercial and residential sales agents to act as financial gatekeepers.
Once dominated by DIY criminals, the trade has evolved into a sophisticated enterprise involving international smuggling routes, complex financing networks, and increasing use of legitimate assets such as property to launder proceeds.
Halsey explained that while leasing remains excluded under Tranche 2 reforms, property sales are firmly in scope, meaning selling agents who unknowingly transact with players in the illicit tobacco trade could face substantial liabilities.
“Failure to comply with customer due diligence (CDD) requirements is a strict liability offence – it does not matter whether the agent knew about the illicit activity; failure to follow the process is itself a breach,” she said.
“From 1 July 2026, real estate agents involved in the sale of property are ‘reporting entities’ and must comply with AML/CTF obligations, including CDD, ongoing monitoring, and suspicious matter reporting.”
She warned that failure to verify a buyer’s identity, source of funds, or beneficial ownership would expose agents to prosecution regardless of intent or knowledge of criminal activity.
Penalties for breaches will be severe, ranging from civil fines into the billions to potential jail time for serious misconduct.
“Civil penalties: AUSTRAC has imposed penalties of up to $1.3 billion for repeated offences,” Halsey said.
“Criminal penalties: In cases of serious or repeated non-compliance, criminal prosecution is possible, including imprisonment.”
Agents will also be required to overhaul everyday selling practices to ensure they meet heightened compliance obligations under the new regime.
“Mandatory customer due diligence: Agents must verify the identity of all buyers and sellers, including beneficial owners, before a sale contract is executed,” Halsey said.
She added that monitoring would continue throughout the sale process, with record-keeping obligations extending for seven years.
“Agents must keep detailed records of CDD, risk assessments, and all reports for at least seven years,” she said.
Suspicious activity, including unusual payment methods, complex ownership structures, or inconsistent client behaviour, must be reported directly to AUSTRAC.
“Agents must report any suspicious activity to AUSTRAC, including unusual payment methods, complex ownership structures, or transactions inconsistent with the client’s profile,” Halsey said.
Halsey outlined that agencies must prepare robust compliance frameworks to meet the new obligations.
“This will depend upon risk assessment, both of the actual agency and the client(s),” she said.
“The range of activities could include customer identification and verification, source of funds and wealth checks, risk assessment, ongoing monitoring, record-keeping, suspicious matter reporting, staff training, and an AML officer.”
She stressed that reporting requirements will mirror those imposed on banks and financial institutions.
The reforms represent a dramatic escalation in responsibility for the property sector, positioning agents as frontline players in Australia’s fight against organised crime.
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