Customer due diligence for real estate agents: what Tranche 2 requires

Customer due diligence, or CDD, is the part of the new anti-money laundering regime that will touch your day-to-day work the most. In plain terms, it means you must know and verify who your customer is before you provide a designated service. From 1 July 2026, Australian real estate agents are reporting entities under the AML/CTF Act through the AML/CTF Amendment Act 2024, known as Tranche 2, and CDD is now one of your core obligations. This guide walks through what that looks like for a sales agent. It reflects AUSTRAC guidance as at July 2026, and it is general information, not legal or compliance advice, so rely on AUSTRAC and your own adviser for your specific situation.

The reassuring news first: CDD is a process you can set up once and run consistently. It is not a maze. It asks you to do a handful of sensible things in a sensible order, and to keep a record that you did them.

What CDD actually asks of you

At its heart, CDD is about identity. Before you provide a designated service in connection with the sale, purchase or transfer of real estate, you need to establish who your customer is and verify that they are who they say they are. The regulator, AUSTRAC, expects this to be more than a name on a contract. It is a real check, backed by a real record.

CDD is not a single event. It has a few layers that work together:

• Initial CDD: identifying and verifying your customer before you provide the service.
• A customer risk rating: your judgement about how much money laundering or terrorism financing risk that customer presents.
• Enhanced CDD: the extra steps you take when a customer is higher risk.
• Ongoing CDD: keeping your understanding of the customer current through the engagement, not just at the first meeting.

For background on how CDD fits into the wider set of duties, see our overview of what AML/CTF Tranche 2 means for Australian real estate agents.

Both the vendor and the purchaser are your customer

This is the point that surprises most agents, so it is worth stating plainly. Where you broker a sale, both the purchaser and the vendor are customers of the same reporting entity. You have AML/CTF obligations to both parties.

Many agents naturally think of one side as their client. Under Tranche 2, that framing does not release you from your duties to the other party. Your CDD process needs to capture identity and verification for both the vendor and the purchaser. Building that in from the start is far easier than bolting it on halfway through a transaction.

Risk rating and when enhanced CDD applies

Not every customer carries the same risk, and the regime does not treat them as though they do. Once you have identified a customer, you form a customer risk rating. A lower-risk customer can be handled with standard checks. A higher-risk customer calls for enhanced CDD, which means doing more to satisfy yourself about who they are and where their money is coming from.

Two screening steps sit alongside this. You screen customers for politically exposed persons, known as PEPs, and you screen against targeted financial sanctions. Where it is relevant to the risk in front of you, you also consider source of funds and source of wealth. Those last two are about understanding whether the money involved makes sense for the person involved, and they matter more as risk rises.

You do not need to treat every customer as a suspect. The point of a risk rating is to let you spend the most attention where the risk is genuinely higher, and keep the routine cases routine.

The timing question: before the service, with one narrow exception

The practical question agents ask most is: when does this need to happen? The general rule is that initial CDD must be completed before you provide the designated service. You verify who you are dealing with first, then you act.

AUSTRAC recognises that real estate does not always run to a tidy timetable. It allows delaying initial CDD in limited cases where completing it first would disrupt the ordinary course of business. The example that matters most to agents is auction. There is often only a short window between the fall of the hammer and signing the contract of sale, and it may not be practical to complete every check in that gap. Conditions apply to this allowance, so treat it as a narrow, defined exception rather than a general licence to check later. When in doubt, complete CDD up front and check the current AUSTRAC guidance for how the delay works in practice.

Ongoing CDD and record-keeping

CDD does not stop once the first check is done. Ongoing CDD means keeping your understanding of the customer current as the engagement continues, so that what you know still reflects who you are dealing with.

Whatever you do, keep the record. The AML/CTF Act requires you to keep records for 7 years. That covers the identity and verification material you gather during CDD, along with your risk ratings and screening. A process that records as it goes will save you from trying to reconstruct anything after the fact.

Setting up a CDD process you can run every time

Putting this into practice does not require reinventing your business. It requires a repeatable routine:

• Identify and verify both the vendor and the purchaser before you provide the service.
• Give each customer a risk rating, and apply enhanced CDD where the risk is higher.
• Screen for PEPs and against targeted financial sanctions.
• Consider source of funds and source of wealth where relevant to risk.
• Keep your understanding current with ongoing CDD, and keep all records for 7 years.

CDD works hand in hand with getting yourself on AUSTRAC's books. If you have not yet dealt with the registration side, our guide to AUSTRAC enrolment for real estate agents under Tranche 2 covers the enrolment deadline and what registering your designated services involves.

What this means for your week

None of this is dramatic on its own. Taken together, though, CDD adds real admin and time pressure on top of a week that was already full. Every vendor and every purchaser now carries a verification step, a risk decision, and a record to keep. That makes the hours you protect elsewhere matter more.

This is where a system that runs your prospecting follow-up and chasing for you, in your own name, earns its place. NeuraCall handles the outbound follow-up so your hours go to the work only you can do, including the compliance work that now sits squarely on the agent. It does not do your CDD for you, and it is not a substitute for AUSTRAC guidance or your own adviser. It simply gives you back the time that Tranche 2 quietly takes.

The short version

CDD means verifying who your customer is before you act, treating both the vendor and the purchaser as your customer, rating each for risk, doing more where risk is higher, screening for PEPs and sanctions, keeping your understanding current, and holding records for 7 years. The general rule is to check first, with a narrow allowance to delay where an auction or similar leaves no practical window. Build the routine once, run it every time, and rely on AUSTRAC and your own adviser for the detail that applies to your business.