AML/CTF reforms are coming to real estate – and software alone won’t save you

Some may have even received reassuring messages from industry bodies, franchise groups, or AML software providers suggesting compliance will be straightforward – largely solved by signing up to the right platform.

The reality is far less comforting – when it comes to the full AML/CTF obligations, nothing is easy.

Complying with AML/CTF is not straightforward as the legislation is complex and the liabilities are significant, and for many real estate businesses it will not be cheap. Good AML software may help, but it will not do all of the heavy lifting.

This is not a criticism of the Australian Transaction Reports and Analysis Centre (AUSTRAC). The regulator is doing exactly what it has been tasked with: implementing complex legislation passed by Parliament and bringing Australia into line with global standards. However, a real risk lies in the growing gap between the complexity of the obligations and the simplicity with which they are being marketed to the industry.

Tranche 2 is not a box-ticking exercise

The Tranche 2 reforms represent a structural change in how real estate businesses must operate. From mid-2026, agencies will be required to develop and maintain formal AML/CTF programs, conduct documented risk assessments, implement customer due diligence procedures, train staff, monitor transactions and report suspicious activity.

The AUSTRAC Industry Guidance and Starter Kit package released last week makes one thing clear: this is not a plug-and-play exercise. It is a compliance framework that must be embedded into daily operations. The AUSTRAC documents are really helpful; however, they reveal the depth of judgement, documentation, and internal process now expected of real estate businesses that every sales business will need to master.

For an industry built on speed, agility, relationships and sales activity, this represents a significant shift, particularly when the activities required to comply will be foreign to sales agents as well as vendors and purchasers, all of whom will be impacted by these new laws.

The cost nobody is talking about

What has received remarkably little attention is the true cost of implementation, particularly for small and mid-sized agencies. The most significant cost is not recurring software licences or even the ongoing software usage charges, but the sales agents’, support staff’s, and principals’ time.

In many agencies, AML responsibility will fall to principals, senior agents or practice managers who will be appointed as the compliance officer for business, which carries with it significant statutory and legal responsibilities and liabilities. Developing policies, tailoring risk assessments, training staff and embedding new processes could realistically take many, many hours.

Even conservative estimates suggest internal personnel costs alone could reach $30,000 to $50,000 in year one, without even factoring in external advice, technology platforms or audits. Ongoing annual costs will also be unavoidable and significant.

These are additional pressures to an industry already grappling with margin pressure, rising operating expenses and cyclical market conditions.

The hidden commercial impact: Time away from selling

For sales businesses, the greatest impact may not directly appear in the expense line at all.

Every hour a sales agent spends in compliance training, completing documentation or managing AML processes is an hour not spent listing, negotiating or selling property. In a commission-based industry, that lost time translates directly into lost revenue.

Over the implementation period, even a modest compliance workload can result in tens of thousands of dollars in unrealised commission per agent. Across a multi-agent office, the commercial impact becomes significant.

This opportunity cost is rarely acknowledged, yet it will be felt quickly and unevenly – particularly by smaller businesses without dedicated support staff and especially where the principal is also a selling agent.

The important questions all real estate sales businesses should be asking

AML/CTF compliance is going to be a permanent feature of real estate, and sales businesses should be looking for supporting organisations that can play a more substantial and supportive role.

The key questions a real estate business should be asking are:

• What practical operational support is available to me beyond a specialist software provider?
• How can I obtain AML policies and risk frameworks tailored to MY real estate business?
• How can I provide the most effective support and ongoing training as required by the legislation?
• How can I meet the impending and evolving compliance obligations without causing my business to suffer?

Alignment with a specialist AML/CTF software platform will be helpful, and there are some excellent (and not so excellent) options available, but software alone does not equal compliance.

A call for realism, not resistance

This is not an argument against the regulation, as the time for this has long since passed. Nor is it a call to delay reform, as the fundamental purpose of the AML/CTF regime has genuine merit and, in reality, Australia had no option but to meet modern standards.

It is simply a call for honesty.

AML compliance is complex because the legislation is complex. Real estate businesses that underestimate this – or rely on assurances that technology will totally “solve” the problem – risk being caught unprepared.

The right question is no longer, “Which software service should we select?”

It is, “How can I be helped to do this properly without overwhelming my business?”

The answer will matter long after July 2026 arrives.

Andrew Cocks is the owner and managing director of Richardson & Wrench (R&W). Prior to acquiring the network, in 2009 took on the role of executive director and transformed R&W for the 21st century. In that time, he has instigated a total brand overhaul, restructured the management and operations, re-engaged the network and added 25 new offices in NSW and Queensland.