Global AML trends: Key considerations for Australian real estate agencies

Global trends show that property transactions are a prime target for money laundering while the Australian Federal Police confiscated more than $229 million worth of money laundered real estate in 2023 alone.

So it's not a coincidence that Australia’s real estate sector is also set to come under Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) regulations. These changes will require both large groups and small independent agencies to tighten compliance, conduct more rigorous due diligence and report suspicious transactions.

Geopolitical turmoil sanctions and their impact on real estate

International sanctions and financial restrictions have made it harder for illicit funds to move through traditional banking systems, increasing the likelihood that real estate will be targeted instead.

For Australian real estate agencies working with overseas buyers, particularly from high-risk jurisdictions, screening clients against sanctions lists and verifying their source of funds will be critical to avoiding penalties and reputational damage.

The rise of wealth migration and High Net Worth Individual (HNWI) money movement from autocratic regimes

More than 122,000 high-net-worth individuals (HNWIs) relocated globally in 2023 with many seeking stable property markets. While much of this wealth is legitimate, some funds may be linked to corruption, tax evasion, or illicit activity.

Australian real estate businesses will need to implement enhanced due diligence (EDD) for HNWIs, ensuring they conduct thorough source-of-wealth assessments before facilitating large transactions.

Organised crime a growing threat to the property market

INTERPOL’s 2022 Global Crime Trend Report identified organised crime as one of the most significant global threats. Criminal networks continue to exploit real estate markets, using high-value transactions to launder illicit funds.  While in Australia, AFP Assistant Commissioner Eastern Command Stephen Dametto notes, "Organised crime gangs are using money gained illegally to increase their wealth. They are buying homes, commercial property, investing in our financial systems and living large without the financial pressures felt by ordinary Australians.”

Real estate agencies will need to be on the lookout for red flags such as:

• Cash purchases with vague financial origins
• Frequent property resales to disguise money movements
• Complex corporate structures (offshore companies, nominee buyers, or trusts)
• Clients reluctant to provide information

With AML regulations expanding to include real estate, agencies will need to implement risk-based compliance measures and report any suspicious activities to AUSTRAC to avoid regulatory consequences.

Evolving money laundering tactics in real estate

As financial criminals adapt, real estate agencies face growing risks from new technologies and digital finance tools, including:

• Deepfake and AI-generated identity fraud
• Fake or manipulated documents used for verification
• Cryptocurrency-based transactions designed to bypass financial monitoring

To stay ahead of these threats, Australian real estate firms will need to invest in digital verification tools, upgrade fraud detection capabilities and ensure robust client authentication processes over and above VOI.

The resilience of cryptocurrency a favourite tool for criminals

Cryptocurrency continues to be a preferred method for laundering illicit funds due to its decentralised nature and built-in anonymity.

In 2022, illicit crypto transactions surged to $23.8 billion, highlighting its growing use in financial crime, according to Chainalysis. 

As Australian real estate agencies prepare for AML regulations, it's essential to recognise the risks associated with crypto-funded property purchases. Buyers using cryptocurrency should undergo enhanced due diligence, including verifying the source of funds and tracking how digital assets were converted into traditional currency.

To reduce exposure to financial crime, agencies should establish clear AML procedures for crypto transactions, ensuring all payments align with regulatory requirements and do not contribute to money laundering activities.

Conclusion

As AML laws expand to include real estate, agencies must adapt to new compliance requirements to safeguard their businesses.  By proactively implementing AML best practices, Australian real estate professionals can protect their firms, maintain market integrity and do their part in preventing criminals from using the property market to clean their illegal proceeds.