When does CDD apply in real estate transactions?

One of the most practical questions agency principals ask is: "Does this transaction actually trigger AML/CTF obligations?"

The answer depends on whether the activity is a designated service under the AML/CTF Act. Get this wrong in either direction and there are consequences: over-complying wastes time; under-complying creates regulatory exposure.

This post works through the main transaction types so you have a clear starting point for your own assessment. For edge cases or mixed business arrangements, AUSTRAC guidance indicates you should consult AUSTRAC directly or seek legal advice — this post is general information and cannot substitute for a professional assessment of your specific circumstances.

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The core rule: what is a "designated service"?

The AML/CTF obligations — including customer due diligence (CDD) — apply when you provide a designated service. For real estate, the designated service is:

AUSTRAC describes a "broker" as a person who acts as an intermediary or agent for another person for consideration. A one-off private sale between individuals, for example, would not constitute carrying on a business.

Let's apply this to the most common scenarios.

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Sales agents and buyer's agents: yes, CDD applies

Sales agents (also called seller's agents or listing agents) and buyer's agents are both providing a designated service. You are acting as an intermediary for a client in the purchase, sale, or transfer of real estate for consideration. AUSTRAC explicitly names typical buyer's and seller's agent arrangements as designated services.

This means CDD applies to:

• Your vendor clients when listing a property for sale
• Your buyer clients when acting as their buyer's agent
• Anyone acting on behalf of a buyer or seller (you must identify both the intermediary and the principal)

CDD must be completed before you start providing the designated service — that is, before you formally begin acting as their agent in the transaction.

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Property management, leasing, and rentals: no, CDD does not apply

Here is the most important exclusion to know: property management, leasing, and rental management are not designated services under the AML/CTF Act's Tranche 2 reforms.

If your agency's only activity is managing rental properties — no sales, no buyer's agent work — your agency is not a reporting entity under Tranche 2 and has no AML/CTF obligations.

If your agency does both sales and rentals, only your sales activities are in scope. Your property management function sits outside the regime.

This exclusion is clearly established in AUSTRAC's guidance. It reflects a deliberate legislative choice: the AML/CTF risk profile of rental transactions is materially different from property sales.

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Property developers: yes, CDD applies

Property developers who sell or transfer real estate without using an independent real estate agent are providing a designated service.

AUSTRAC's guidance is explicit on this point: "Selling or transferring real estate without using an independent real estate agent (a practice commonly adopted by property developers and auctioneers) is a designated service."

So if your development company sells directly to buyers — project marketing, off-the-plan sales, or direct settlement — you are a reporting entity and CDD obligations apply to your buyers.

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Auctioneers: generally yes, with important nuance

Where an auctioneer is selling or transferring real estate without an independent agent involved, AUSTRAC guidance indicates this is a designated service. The same reasoning applies as for property developers: you are facilitating the sale or transfer of real estate in the course of a business.

However, there is important nuance here: where an auctioneer is conducting the auction on behalf of a real estate agent, the agent is typically the reporting entity — not the auctioneer. In that arrangement, the agent has the CDD obligations, not the auction house.

If you operate as an auctioneer in both arrangements — independently and on behalf of agents — AUSTRAC guidance indicates your obligations depend on your specific role in each transaction. Consult AUSTRAC or seek professional advice if your business structure involves mixed auctioneer arrangements.

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Conveyancing: generally yes

Planning or executing a transaction to buy, sell, or transfer real estate is listed as a designated service in AUSTRAC's guidance. This includes conveyancing services.

If your agency or a related entity provides conveyancing in connection with real estate transactions, AUSTRAC guidance indicates this falls within scope. The specific boundary of what constitutes conveyancing versus adjacent legal or settlement services may vary — seek professional advice for arrangements that are not straightforward.

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A common scenario: the mixed agency

Many agencies do both sales and property management. Here is how to think about it:

For a typical residential agency, the practical rule is: CDD applies to your sales activities, not your rental activities.

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What about edge cases?

Real estate businesses vary enormously. Some common edge cases where the answer is less clear:

Holiday let management: Generally treated as property management (not a designated service), but specific arrangements involving ownership transfer may change this. Seek professional advice if your holiday let business involves complex structures.

Vendor finance arrangements: Where the seller provides finance as part of the sale, the transaction may have additional complexity. AUSTRAC guidance on the core transaction (brokering the sale) still applies; the financing component may trigger separate considerations.

For any arrangement not covered by clear AUSTRAC guidance, the safest approach is to consult AUSTRAC directly or seek legal advice. Making an incorrect scope determination — in either direction — creates risk. See AUSTRAC's real estate guidance for the most up-to-date information.

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Start your AML program free — no account needed

Understanding where CDD applies is the first step. AML Simple helps you build the rest of your program: from your risk assessment to your CDD procedures, staff training, and annual compliance report.

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