Managed COO Rohith George believes the future for better AML compliance rests with technology advancement and adaptation.
Anti-money laundering (AML) laws are crucial for identifying, preventing and reporting suspicious financial transactions.
Globally, real estate has become an attractive channel for money laundering due to high transaction values and opaque ownership structures. Criminals often use real estate to move or clean illicit funds, which has driven governments to tighten regulations in this sector.
What is Tranche 2?
In Australia and other jurisdictions, Tranche 2 AML reforms aim to extend compliance requirements to non-financial industries, including real estate agents, lawyers and accountants. Under these new rules, real estate agencies will have to implement more robust processes for monitoring customer activity and transactions.
This includes conducting Know Your Customer (KYC) checks, enhanced due diligence, and identifying suspicious transactions – a responsibility traditionally shouldered by banks.
So what then are the challenges for traditional agencies?
Agencies that rely on manual processes and trust accounts will face several new hurdles under the Tranche 2 reforms. They will now need to:
- Monitor and assess customer activity for potential signs of money laundering.
- Analyse transactional patterns to identify suspicious payments.
- Increase administrative workloads by maintaining detailed records and complying with stricter reporting requirements.
These new demands can stretch resources and place a heavy administrative burden on smaller real estate firms, which often lack the expertise and infrastructure for complex AML processes.
One of the greatest challenges under the new regulations is the murky nature of what qualifies as “suspicious” activity.
Agents are expected to assess patterns in customer behaviour and payments, but without clear guidelines, determining what warrants a report becomes extremely difficult.
The consequences of underreporting are severe: If an agency fails to flag activity they deemed non-suspicious but is later found to involve illicit funds, they could face legal penalties, fines and reputational damage. This puts agents in a precarious position, as making assumptions on client behaviour without sufficient clarity increases the risk of either missing red flags or over-reporting legitimate transactions.
The real estate industry urgently needs better guidance and frameworks to navigate this uncertainty and fully understand the severity and responsibility tied to compliance.
Traditional versus automated compliance – the burden of manual processes
For agencies that rely on traditional trust accounts, Tranche 2 reforms present several administrative burdens:
- Increased paperwork for monitoring, analysing and documenting client behaviour.
- Time-consuming assessments of whether payments are suspicious or routine.
- Liability risks if suspicious transactions are missed due to human error or oversight.
- In an environment where regulations are still evolving and interpretation remains subjective, manual processes can overwhelm agencies, leaving them vulnerable to compliance failures and exposing them to unnecessary risk.
For many organisations, the burning question is how to automate AML compliance to remove the guesswork.
Platforms like Managed offer a practical solution by automating AML and KYC processes through secure payment gateways. Managed eliminates the need for manual trust accounts and replaces them with automated compliance tools, helping agencies reduce their administrative workload and flag suspicious activity in real time.
By using Managed’s built-in compliance frameworks, agencies can:
- Avoid making subjective assumptions about client behaviour by relying on automated detection systems.
- Ensure payments are monitored accurately and reported according to regulatory standards.
- Minimise risk and liability through robust, pre-built AML checks that meet legal requirements.
- With automation, agencies can focus on serving clients without being burdened by complex administrative tasks or the fear of missing illicit activities.
The success of Tranche 2 depends not just on agencies adopting new processes but also on regulators providing clear, actionable guidance.
Agencies need better support to understand what constitutes suspicious activity and how to navigate the grey areas effectively. Without this clarity, many firms may err on the side of caution and report excessive transactions, increasing workloads for both agencies and regulators. Conversely, underreporting due to confusion could leave agencies exposed to legal penalties.
With AML a serious issue for Australian business and the economy, and a focus point for regulators, the solution for a better compliance solution is directly connected to embracing technology.
While Tranche 2 reforms represent a significant shift for the real estate industry, they don’t have to be viewed as a burden. Agencies that embrace automated solutions like Managed can stay compliant without being overwhelmed by administrative work. At the same time, the industry must push for greater clarity from regulators on reporting requirements to ensure agents are equipped to fulfil their duties responsibly.
By leveraging technology and seeking better guidance, agencies can meet regulatory demands confidently, reduce their exposure to risk, and position themselves for sustainable growth in a compliant, transparent future.
Rohith George is the chief operating officer of Managed.
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