Real estate agents are not subject to the provisions of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act). However, real estate transactions most commonly go through a financial institution – for example, as loans, deposits or withdrawals.
At this stage, real estate transactions intersect with the regulated AML/CTF sector. Reportable transactions which intersect with the regulated sector (banks and other financial institutions) provide authorities with some visibility of potential money laundering through real estate.
Real estate fraud and vendor identification initiatives
The New South Wales Government introduced updated fraud prevention guidelines for the real estate industry in October 2012. These guidelines were introduced to combat identity fraud and scams in the industry.
The guidelines provide a set of practices and procedures for agents to confirm the identity of vendors or their appointed representatives, as well as a list of possible fraud warning signs and a proof of identity checklist.(5)
The guidelines were developed following two publicised incidents in 2010 and 2011 that resulted in properties being sold in Western Australia without the knowledge and consent of the lawful property owners.(6)
In response, the Western Australian Government strengthened the real estate industry's verification of identity practice. The practice recommends that conveyancers and other property professionals take reasonable steps to verify the identity of their clients and confirm their clients' authority to give instructions when dealing with a particular property.(7)
- NSW Government, 'Real Estate Fraud Prevention Guidelines', NSW Fair Trading, April 2013.
- ABC News, 'Taskforce to investigate real estate scam', 11 August 2011
- Government of Western Australia, 'Verification of Identity – Taking action against land title fraud', Western Australian Land Information Authority (Landgate), viewed 11 February 2015. See also, 'Guidance notes: Code of Conduct for Agents and Sales Representatives: client identification verification and real estate fraud prevention', Department of Commerce, Government of Western Australia, 2011.