Compliance shake-up: AML Tranche 2 reforms reveal liability gaps

According to Lawlab managing director Ian Perkins, the newly enacted Tranche 2 laws had exposed industry professionals to liability while revealing longstanding gaps in the transaction chain.

He said the reforms marked a decisive shift in accountability for real estate industry professionals, lawyers and financial advisers, who would be held individually responsible for ensuring their own compliance.

“For years, the property industry has operated on informal assumptions. A broker assumes the conveyancer has completed identity verifications, some conveyancers may have assumed the agent has sighted ID, and an agent assumes the adviser has checked source of funds,” Perkins said.

“Now that AML Tranche 2 is law, such assumed compliance becomes non-compliance with every professional now required to evidence their own checks.”

With identity verification processes varying significantly from business to business, Perkins said the legislation will expose the inconsistencies that have existed quietly for decades.

Perkins said that while real estate businesses that were not prepared would feel the impact immediately, the reforms should be seen as an opportunity to modernise.

“It will reduce fraud, improve consumer confidence, and lift professional standards, but it does require a mindset shift. Compliance isn’t transferable and must be proven,” Perkins said.

He said the reforms would accelerate digital adoption across the sector, with agencies moving quickly to replace the manual and assumption-based workflows.

“It’s important to work with industry partners to embed AML-compliant workflows into everyday practice so professionals can meet their obligations without slowing down transactions.”

“The real estate sector is collaborative by nature, but collaboration can’t replace compliance. AML Tranche 2 is now law, with those who act early the best placed to avoid disruption as well as potential penalties.”