Reporting groups and other compliance models for real estate

For real estate groups, particularly those operating under a franchise model, AML compliance presents unique challenges.

Typically, a franchisor licenses its brand, systems and business model to franchisees, who operate as independent businesses. While franchisees maintain control over their day-to-day operations, the franchisor typically sets guidelines to ensure consistency across the network.

As Tranche 2 reforms get closer, real estate groups will need to consider their structure and the implications for AML. Essentially there are three options:

1. A centralised approach in which Corporate leads on compliance responsibilities and activities are managed centrally.
2. A de-centralised approach where each franchisee chooses to “go it alone” and is responsible for their own compliance measures.
3. A hybrid approach in which Corporate provides oversight and guidance, while individual businesses retain some control.

Each option presents its own pros and cons, of which we will review later

Designated Business Groups (DBGs) become Reporting Groups

Before getting into more detail, real estate agencies should be aware of a key piece of the new legislation while they consider their approach.

Effective 31 March 2026, what was previously known as a “Designated Business Group” (DBG) will be replaced with “Reporting Groups”.

At the time of publication, AUSTRAC’s final rules have not yet been published. In their current draft, they introduced a reporting group similar to the previous DBG. This framework enables businesses under shared “control”, such as a real estate franchise network, to implement a single AML/ CTF program.

Members of the reporting group can share compliance information and rely on customer identification conducted by other members. In practice, this means a central compliance function within a corporate group can support all reporting group members, streamlining compliance efforts.

Option A

Centralised / Reporting Groups

A Corporate-led approach where compliance responsibilities are managed centrally.

How it works

• Corporate develops and enforces AML policies across all franchisees.
• Compliance processes are standardised and Corporate hires dedicated staff (e.g. AMLCO and analysts) to manage oversight.
• Regular audits and monitoring ensure franchisees remain compliant.
• Corporate provides training and centralised compliance tools to franchisees.

Option B

De-centralised / Go it alone

Each franchisee business owner responsible for their own compliance measures.

How it works

• Franchisees develop their own AML compliance programs.
• Each business must individually implement training, risk assessments and reporting procedures.
• Corporate may provide optional guidance but do not enforce uniform compliance measures.

Option C

Hybrid / Directed by Corporate

A middle-ground approach where Corporate provides oversight and guidance, while individual businesses retain some control.

How it works

• Corporate sets general AML guidelines and negotiates to supply group-wide compliance solution/s.
• Franchisees follow these guidelines but retain autonomy in implementation.
• Compliance tools (such as customer verification and screening systems) are provided for consistency.

Key considerations

Risk of non-compliance and brand protection

• Centralised / Reporting Groups

  Lowers the risk of brand or reputational damage by ensuring compliance is handled at a corporate level. Regular audits and standardised policies help mitigate noncompliance.
  
  

• De-centralised / Go it alone

  Increased risk of inconsistent compliance across franchisees, which could result in reputational damage if even one business fails to meet AML obligations.
  
  

• Hybrid / Directed by Corporate

  Provides oversight but depends on franchisees following guidance. Some risk remains if individual businesses do not fully comply.

Costs

• Centralised model / Reporting Groups
  

  Requires Corporate to hire compliance staff and invest in technology for monitoring and reporting. However, costs are likely lower in aggregate as resources are shared.
  
  

• De-centralised model / Go it alone

  Higher costs across the group as each franchisee must individually invest in AML systems, training and compliance personnel.
  
  

• Hybrid model / Directed by Corporate

  Shared investment in compliance tools, but franchisees may still bear some costs. Corporate can negotiate better group-wide terms for compliance software and services.

What others are doing

Next steps

• Discuss the compliance structures with your franchisees, management group and board before deciding which model, centralised, de-centralised or hybrid, best suits your business needs.
• Consider the costs and resource allocation required for each model and plan for implementation well ahead of the 31 March 2026 deadline. That’s when you have to be compliant.
• If opting for a centralised or hybrid model, explore compliance tools and technology solutions that can support group-wide AML efforts.
• Educate franchisees and key stakeholders on their responsibilities and provide training to ensure smooth adoption of the chosen approach. The sooner the better.
• Learn from international real estate groups that have already navigated AML compliance reforms and apply relevant insights to your business.