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Industry experts are warning that proposed reforms will burden real estate agents with extensive anti-money laundering duties, and could potentially add “significant costs, delays and disruptions” to property transactions.
The Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Bill 2024 was introduced to Parliament in September of this year and, if passed, would expand the government’s AML/CTF regime to ‘tranche 2’ entities including real estate agents.
Recent findings from the Attorney-General’s Department Impact Analysis have estimated the ongoing annual cost of the proposed regime as $2 billion per annum for the property industry, with Queensland’s property sector set to shoulder $250 million of that yearly cost.
At a federal Senate committee meeting held on 30 October 2024, the Real Estate Institute of Queensland (REIQ) called on the government to adopt a more “balanced and reasonable approach” to expanding the AML/CTF regime, as opposed to the model proposed in the recent bill.
Speaking at the hearing, the institute’s CEO, Antonia Mercorella, highlighted the peak body’s support for the regime’s objectives while raising concerns about its potential impact on Australian small businesses and “everyday” property buyers and sellers.
“The proposed framework doesn’t fully take into account the practical challenges faced by real estate businesses – namely the lack of resources and specialised expertise needed to meet these complex compliance requirements,” she said.
The CEO further noted that the cost of compliance to the regime was “unlikely” to be absorbed by businesses without cutting into final prices for buyers and sellers, adding that this would make “everyday real estate transactions more expensive for Australians”.
For larger institutions such as banks, Mercorella stated that these organisations have specialised teams and resources to handle AML/CTF checks, due diligence and reporting requirements.
Contrastingly, she stressed that most real estate businesses in Queensland are small, independent operations which often number “fewer than five employees”, and lack the expertise and systems to comply with AML/CTF obligations.
“The skills, knowledge and resources needed to undertake these tasks go far beyond the reasonable scope of a real estate professional’s training and expertise, and requiring them to assume this responsibility is highly inappropriate,” Mercorella said.
The REIQ instead advocated for a more collaborative and technology-driven approach to compliance, urging the government to implement solutions which would enable tranche 2 entities such as real estate agents, legal professionals, and financial experts to more easily share and relay information.
Mercorella said this model would “streamline and enhance” the compliance process and minimise costs, while also allowing real estate agents to facilitate “reasonable” compliance tasks, such as identify verification and reporting suspicious behaviour.
“Meanwhile, more complex and highly technical tasks, such as source of funds or source of wealth checks and Politically Exposed Persons (PEP) identifications, should be left to legal practitioners and accountants,” she said.
The CEO emphasised the institute’s support for the government’s efforts to combat money laundering and terrorism financing, but stressed the need for a legal framework that places the “appropriate burden on real estate professionals” while ensuring that the sector can continue to operate “smoothly and securely”.
“We believe that this approach offers a more balanced solution, one that achieves the desired objectives of the AML/CTF regime without placing unreasonable expectations on real estate professionals or compromising the efficiency of property transactions,” Mercorella said.
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