Money Laundering red flags in Australian real estate

The Australian real estate industry is a high-value sector that plays a significant role in property transactions, development, and investment. However, it has also been identified as a prime target for money laundering, given the volume and scale of transactions, the use of trusts and corporate structures and opportunities to conceal ownership.

Whether you operate a national firm, an independent agency, or a boutique buyers' agency, failing to identify and mitigate money laundering risks could expose your business to severe financial penalties, reputational damage and potential regulatory enforcement.

Although real estate agencies in Australia are not yet required to comply with Anti-Money Laundering (AML) obligations under Tranche 2 reforms, change is on the horizon. Learning from international examples, agencies can take proactive steps to avoid the risks associated with facilitating illicit financial activity—whether knowingly or unknowingly. If words aren't your thing then check out this visual of red flags for the real estate sector.

Lessons from overseas: The cost of non-compliance

In countries where real estate agents are subject to AML regulations, failure to comply has led to hefty fines and legal consequences:

In the UK in the 2023-2024 period, HMRC fined 254 estate agency businesses a total of over £1.6m for Anti Money Laundering (AML) breaches.  The fines ranged from £1,500 to over £50,000.

Across the ditch in New Zealand, the Department of Internal Affairs (DIA) keeps the real estate sector in line with the threat of individual penalties of up to two years imprisonment or a fine of up to $NZ 300,000. and a fine of up to $NZ 5 million for corporations.

These fines are a warning of what Australian agencies may face when Tranche 2  reforms come into effect in 2026. Now's the time to start thinking about what this means for your firm. 

Red flags in client behaviour and transactions

Identifying red flags during client interactions and transactions is key to preventing money laundering. Here are some common warning signs:

Client red flags

• Buyers or sellers reluctant to disclose their identity or the source of their funds.
• First-time buyers or foreign investors purchasing high-end residential or commercial properties without an obvious financial background
• Clients using nominees, trusts, or corporate structures with no clear business rationale.
• Buyers willing to pay significantly above market value without negotiating, which may indicate layering or integration of illicit funds.
• Clients requesting unusual settlement terms, such as extremely short settlement periods or unconventional financing arrangements.
• Reluctance to meet in person or provide identification documents that align with their financial profile.

Source of funds red flags

• Large cash deposits or transactions using cryptocurrency.
• Payments coming from high-risk jurisdictions with weak AML regulations (e.g., the Cayman Islands, Panama, or certain Southeast Asian nations).
• Purchases made through third-party transactions that do not align with the buyer’s known financial position.
• Buyers seeking to avoid standard due diligence procedures, such as Know Your Customer (KYC) checks.
• Last-minute changes in the source of funds, such as the sudden introduction of bridging finance or offshore loans.

Transaction red flags

• Properties being flipped multiple times in short succession with increasing values, which may indicate price manipulation.
• Requests to disburse deposits or overpayments to unrelated third parties.
• Settlement funds coming from multiple accounts or unrelated offshore entities.
• Unconventional payment structures, such as staged payments that do not align with typical mortgage or cash purchase arrangements.
• Buyers who wish to remain anonymous or engage in “sight-unseen” purchases for luxury properties.

Real-life example of money laundering in real estate

These red flags might seem abstract until you see them play out in a real case. AUSTRAC’s strategic analysis of money laundering through real estate has highlighted the following example:

A foreign national sought to purchase a luxury apartment in Sydney’s eastern suburbs, making an all-cash offer well above the asking price. The funds came from multiple offshore accounts, all linked to different companies registered in tax havens. The real estate agent did not question the origins of the funds, assuming the buyer was simply wealthy. However, AUSTRAC later identified that these funds were linked to a global money laundering operation tied to drug trafficking. The transaction was flagged, and the property was later seized under proceeds of crime laws.

This case underscores why Australian real estate agencies must remain vigilant, even before AML laws formally apply to the sector.

Getting ready now

AML compliance is mandatory for real estate agencies in Australia from mid 2026, but that's not long to change the way your business engages their clients. Start thinking about:

• Implementing basic due diligence – Establish internal policies for client screening, including KYC procedures and verification of source of funds.
• Being cautious with high-risk transactions – Look out for anomalies in price, payment method, and settlement conditions.
• Monitoring unusual payment structures – Be wary of cash payments, offshore transfers, or last-minute financing arrangements.
• Using publicly available tools – Conduct simple adverse media checks via Google, social media, and corporate registries.
• Training your team – Educate sales agents, property managers, and back-office staff on AML risks and suspicious transaction patterns.

Conclusion

Real estate remains one of the most attractive avenues for criminals looking to clean illicit funds, and Australian real estate agencies must be aware of the risks. While AML compliance may not yet be a legal requirement, understanding and recognising red flags is essential to protect your agency from being unknowingly caught in money laundering schemes.

By following a risk-based approach, developing robust policies and internal controls customised to your specific risks, and ongoing reminders of red flags real estate agencies can meet their obligations and defend against criminals. 

For further information, refer to AUSTRAC’s guidance on money laundering through real estate: AUSTRAC Strategic Analysis Brief (2015).