How to run your first client screening — a step-by-step walkthrough

Your agency has a program. You've done the risk assessment. Now a client walks in — and you need to actually run the screening before you can formally act as their agent.

This post walks you through exactly what that looks like in practice: what to collect, how to verify, how to screen for sanctions and PEPs, and what your records need to show.

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When does CDD apply?

CDD applies before you start providing a designated service to a customer. For real estate agencies, that means before you formally act as their agent in a property purchase, sale, or transfer.

In practice, the trigger is clear: before you accept someone as a client in a transaction, you must complete initial CDD. This applies to:

• Vendor clients (sellers)
• Buyer clients
• Anyone acting on behalf of a buyer or seller

It does not apply to property management arrangements that do not involve a sale or purchase.

One important note: if a client tells you they are acting for another party — a company, a family trust, or simply on behalf of another person — you need to identify both the person in front of you and the party they represent.

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Step 1: Collect the required information

For individual clients, the AML/CTF Act requires you to collect:

Companies, trusts, and other entities have different collection requirements. This walkthrough focuses on individual clients — the most common scenario for residential real estate.

[SCREENSHOT: AML Simple CDD collection form — individual client fields (name, DOB, address, acting for another party)]

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Step 2: Verify their identity

Collecting information is not the same as verifying it.

A buyer typing their passport number into an online form tells you what they claim their details are. Verification means checking that information against something reliable and independent — a source that cannot simply be self-reported.

The Act does not mandate any single verification method. All of the following are acceptable when properly applied:

Acceptable identity documents

Primary photographic ID — one document is sufficient:

• Australian driver's licence
• Australian passport
• Foreign passport
• State-issued proof of age card

If a client has no photographic ID: Use one primary non-photographic document (birth certificate, citizenship certificate, or Centrelink/DVA concession card) plus one secondary document (government-issued document with name and address, utility bill less than three months old, or ATO notice less than 12 months old).

[SCREENSHOT: AML Simple verification step — document type selection and verification method]

What to record

You do not need to keep copies of identity documents. What you must record:

• Document type, document number, issuing authority, and expiry date
• The verification method used
• Who performed the verification and when

[SCREENSHOT: AML Simple CDD record — completed verification entry with document details and method]

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Step 3: Screen for sanctions

Before completing the client's onboarding, screen them against the DFAT Consolidated List (Australia's autonomous sanctions register) and the UN consolidated list.

Sanctions screening checks whether the person you are dealing with — or any entity they represent — is a designated individual or organisation subject to Australian financial sanctions. Dealing with a sanctioned person or entity is prohibited regardless of whether you were aware of the sanction.

The screening needs to happen before or at the time you provide a designated service. It is not a one-time event — if a client's details change, or if a new sanction is imposed during a transaction, the ongoing monitoring obligation requires you to stay alert.

[SCREENSHOT: AML Simple sanctions screening — client name entered, results showing no matches]

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Step 4: Screen for PEPs

A Politically Exposed Person (PEP) is an individual who holds or has held a prominent public position — a senior government official, politician, judge, senior military officer, or executive of a state-owned enterprise — along with their family members and close associates.

PEP screening identifies whether your client falls into this category. It matters because:

• A foreign PEP automatically triggers Enhanced CDD (additional verification steps, senior management approval, source of funds and wealth checks)
• A domestic PEP may or may not trigger Enhanced CDD, depending on your risk assessment

PEP status does not mean you cannot deal with someone — it means you need to apply greater scrutiny.

[SCREENSHOT: AML Simple PEP screening — result showing client status]

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Step 5: Review the results and decide how to proceed

Once you have collected the client's information, verified their identity, and completed sanctions and PEP screening, you review the results.

No issues found (the typical outcome): CDD is complete. Record the results, note that initial CDD was completed on this date by this person using this method, and proceed with the transaction. Ongoing CDD obligations apply throughout.

Verification cannot be completed: If you cannot verify a client's identity through an acceptable method, the AML/CTF Act provides for this situation. The options available depend on the circumstances — your program document should specify how your agency handles clients who cannot provide acceptable identification. In general, the Act requires you to consider whether to proceed with or delay the transaction until identity can be verified, and to document your decision.

Sanctions or PEP match found: A confirmed match against a sanctions list means you cannot proceed with that transaction. A PEP match means Enhanced CDD is required before proceeding. In both cases, document the finding and consult your compliance officer. Do not tell the client that a match was found or that an SMR may be filed — this is the tipping-off offence, and it is a criminal offence under the Act.

[SCREENSHOT: AML Simple — completed CDD record summary with all steps confirmed]

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Your completed CDD record

After running a client through these steps, your record should show:

This record must be retained for seven years.

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Beneficial ownership: a note for company and trust clients

If your client is a company or trust, the obligations go further. You must identify any individual who holds 25% or more ownership interest or effective control of the entity. This is called beneficial ownership identification.

Complex ownership structures — particularly trusts with multiple layers, or companies with offshore ownership — may trigger Enhanced CDD. If you regularly deal with corporate or trust buyers and sellers, your program should document how you handle these situations. For this type of complexity, professional advice is particularly valuable.

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Keeping your CDD current: the ongoing obligation

Initial CDD is not a one-time tick. Ongoing CDD requires you to stay alert throughout the transaction:

• If a client's circumstances change (address, beneficial owner, red flags emerge), update the record
• If new information triggers a higher risk assessment, consider whether Enhanced CDD steps are needed
• At the end of a transaction, confirm the record is complete before archiving

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