Introduction
In recent years, multiple Australian law enforcement operations have arrested various offenders for alleged involvement in laundering tens of millions of dollars through the Australian property market. During a recent police investigation into suspected money laundering by a transnational organised crime group via Australian real estate, various predicate offences and sophisticated money laundering techniques were identified.
In this edition of Delta Tango's Tranche 2 AML/CTF implications analysis, we unpick elements of this alleged financial crime and highlight aspects for Tranche 2 entities, who from 1 July 2026 will be expected to have measures in place to identify, assess and report on such activity.
Background: Australia's property market awash with dirty money
The appeal of Australia's property market to organised criminals and money launderers is widely recognised by government and industry alike. Property transactions alone are estimated to surpass $600 billion annually in Australia, and AUSTRAC assesses Australia's domestic real estate sector as one of the four highest-risk sectors vulnerable to money laundering in Australia.
In its 2024 Money Laundering in Australia National Risk Assessment, AUSTRAC assessed the domestic real estate sector as a very high and stable money laundering vulnerability and a widely exploited asset type for money laundering in Australia. The alleged activities in this case study exemplify this threat and highlight techniques used in attempts to circumvent AML/CTF risk controls.
The organised criminal activity and predicate offences
Following recent police investigations, a transnational organised crime group was identified as likely involved in an array of predicate offences, all of which were generating proceeds of crime domestically that required laundering. As investigations progressed, police had cause to allege that the wider group was involved in:
- The illicit tobacco trade
- Fraud
- Illegal gambling
- Tax evasion
The money laundering operation and cycle
Once the transnational organised crime group had generated proceeds of crime from the above activity, they required a money laundering service: a method to place, layer and integrate dirty money.
It was identified that offenders separate from the group were allegedly willing to perform this service by obtaining multiple fraudulent mortgages worth millions of dollars. They are alleged to have provided fraudulent documents to banks, inflating incomes to reduce suspicion and enable the purchase of Australian property with fraudulent mortgages that could later be repaid with proceeds of crime.
Delta Tango assesses the placement phase to be represented by cash deposited at a financial institution or used in property purchase deposits or settlements. The layering phase is represented by subsequent mortgage repayments or other transactions after cash had been deposited. The integration phase is represented by successful acquisition of property that would then appear legitimately owned and available to the group.
In this scenario, the money laundering operation was identified and disrupted by police, leading to arrests, restraint orders, and seizure of illicit cigarettes, large sums of cash and luxury vehicles.
The "so what" for Tranche 2 entities
Although there are multiple other entities and touch-points with the financial system relevant to this alleged financial crime, from 1 July 2026 Tranche 2 entities will be expected to have measures in place to assist in identifying, assessing and reporting on such activity.
Understanding predicate offences
Predicate offences in Australia vary in nature, sophistication, complexity and visibility. They have one thing in common: they generate proceeds of crime that require laundering. Based on preliminary advice from AUSTRAC and consultation regarding the amended AML/CTF Exposure Draft Rules, reporting entities are expected to understand and monitor, where possible, serious money laundering predicate offences.
While expectations will be proportionate and relative to a reporting entity's risk profile, Tranche 2 entities should equip themselves with an understanding of key predicate offences in Australia that drive the need for money laundering.
Being KYC and CDD ready
While existing reporting entities such as banks would have been required to conduct basic KYC and CDD on any alleged offenders using their services, from 1 July 2026 any real estate agent or conveyancer involved in similar property transactions will also have to be KYC and CDD ready.
Tranche 2 entities will be expected to have basic AML/CTF risk controls in place, including an organisational ML/TF/PF risk assessment, a customer risk profiling framework, and policies, processes and systems to conduct initial KYC and assess risk.
- Whether a customer is a politically exposed person
- Whether a customer is recorded on sanctions, regulatory, law enforcement or adverse media lists
- Whether a customer is affiliated with state-owned entities or enterprises
- Source of wealth and source of funds for specific transactions
- Consistency of transactional activity with customer profile
- Nexus to any foreign jurisdiction
Understanding reporting obligations
One of the key expectations of Australia's existing and soon-to-be expanded AML/CTF regulatory regime is the reporting of certain information and transactions to AUSTRAC. Common reporting obligations include Threshold Transaction Reports, Suspicious Matter Reports, and International Funds Transfer Instructions, to be amended to International Value Transfer Service reports.
When comparing these requirements against elements of the alleged offending in this case study, Delta Tango assesses any real estate agent or conveyancer involved in similar property transactions would need to understand when reporting obligations are triggered.
- TTRs where physical currency over $10,000 is used in an individual transaction
- SMRs where customer identity, behaviour or activity raises suspicion
- Risk indicators such as anomalies during KYC/CDD, fraudulent supporting documents, large cash payments or activity inconsistent with the customer profile
- IVTS awareness where transfer of value with a foreign jurisdiction is facilitated
What next?
The case study presented in this implications analysis is one example of how criminals seek to launder money through Australia's property market. From 1 July 2026, Tranche 2 entities such as real estate agents and conveyancers will be required to have programs, policies, procedures and systems in place to identify, assess and report on such activity.
Anti-Money Laundering Compliance Officers and relevant staff will also be expected to develop an understanding of ML/TF/PF risks relevant to their business through formal training and education. With implementation approaching, Delta Tango's accredited professionals can assist with AML/CTF program development, risk assessment, KYC/CDD design, reporting readiness, record keeping, staff training and bespoke threat briefings.