Conveyancers who are ‘wilfully blind’ will be first targets

Conveyancers knowingly disregarding tough new AML-CTF laws will be among initial targets of enforcement action by financial crime agency AUSTRAC, according to chief executive Brendan Thomas.

The so-called Tranche 2 reforms, which apply to conveyancers, real estate agents, buyers’ agents, developers and lawyers, take effect from July 2026.

The revamp has been described as the biggest regulatory shake-up to hit the nation’s conveyancing industry in decades.

Thomas said enforcement efforts from July would focus on “businesses that are complicit or wilfully blind to illicit money in their business, or who are wilfully ignoring their obligations”.

The agency would not conduct audits but could deploy “a range of regulatory tools, including a power to appoint an external auditor and conducting investigations into possible breaches of the AML-CTF Act” when the laws took effect, he said.

“We have clearly outlined what our expectations are – be enrolled, have an AML/CTF program and compliance officer, have trained staff and be ready to report to AUSTRAC.”

Under the reforms, designed to bring Australia into line with international financial crime standards, conveyancers must register with AUSTRAC, conduct due diligence on clients, note large cash transactions, keep records and report suspicious activity.

Practitioners who commonly deal with high value cash transactions are among those most at risk of falling foul of the new legislation which gives courts power to impose civil penalties on companies of $33 million and up to $6.6 million on individuals. Australian Conveyancer previously highlighted that fines for breaches could amount to $19,000 a day.

Graeme Hughes, a Queensland-based strategic consultant, said once AUSTRAC education efforts ended, enforcement would likely start with infringement notices.

“While the reforms aim to scrub dirty money out of the Australian economy, the transition is creating a perfect storm for consumer privacy, service costs and transaction friction,” said Hughes, founder of Hughes Group.

He warned that, with the overhaul looming, many conveyancers faced skyrocketing compliance costs to ensure they stayed out of AUSTRAC’s initial sights.

Government estimates have shown businesses with a turnover under $200,000 a year will face upfront costs of $4040 and annual fees of $6020. “With compliance now a multi-million-dollar industry for a mid-sized firm, the costs of AUSTRAC enrolment, mandatory staff training and the requirement for independent audits are immense,” Hughes said.

Griffith University financial crime expert Andreas Chai urged conveyancers to prioritise their risk assessment and AML/ CTF programs before July.

“A key part of the risk mitigation process is to conduct customer due diligence before onboarding new clients if they are considered high risk and reporting any suspicious behaviour to the authorities,” Chai said.

“Conveyancers need to be trained about what is financial crime, what is suspicious behaviour and, when deemed appropriate, ask questions about where the money is coming from. “If there are reasonable grounds for suspicion, a suspicious matter report needs to be lodged with AUSTRAC.”

On conduct that could attract large fines, Chai said conveyancers should stay on top of customer due diligence.

Most conveyancers are not ready for the changes, with concerns including time, workload and compliance costs, according to recent research by digital property platform Pexa.