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Does Tranche 2 apply at contract signing or at settlement for property transactions?

CDD obligations attach when the designated service begins, not at settlement; the exact trigger varies by role (seller's agent, buyer's agent, conveyancer).

Overview

CDD obligations attach when you start providing the service, not at settlement. AUSTRAC's framework is explicit: if you wait until settlement to verify, you've been providing services to an unverified customer in the intervening weeks - exactly what the regime is designed to prevent. The exact trigger depends on your role.

Trigger point by role

  • Seller's agent (Table 5, item 1) - when the agency agreement is signed (for the seller); when the buyer's offer is accepted and the contract signed (for the buyer).
  • Buyer's agent (Table 5, item 1) - when the engagement to find/identify a property is signed (for the buyer); when the contract is signed (for the seller).
  • Property developer selling direct (Table 5, item 2) - when there's a commitment to sell or transfer, typically contract execution.
  • Conveyancer or lawyer (Table 6, item 1) - at contract signing or earlier; preparing contracts, conducting title searches or holding funds in trust all count, even if the deal falls through.

The deal-falls-over point

If you provided a designated service and the matter then collapsed, the CDD obligation still applied at the time you started providing the service. AUSTRAC has been clear that walking back CDD records because a transaction didn't complete isn't acceptable. There are provisions for Delayed Initial CDD, but they need explicit reasons.

Auctions and pre-1 July 2026 contracts

When property is sold at auction the buyer may only be known after the fall of the hammer; AUSTRAC permits initial CDD to be delayed where completing it before settlement would disrupt the ordinary course of business. A contract exchanged before 1 July 2026 but settling after that date generally doesn't require CDD, though it's recommended if settlement is significantly after 1 July 2026.

Practical implication

Build CDD into your buyer/seller onboarding rather than treating it as a contract condition - auction sellers may refuse "AML-conditional" terms. Ongoing monitoring runs from the start of the customer relationship through to settlement, re-screening automatically as PEP and sanctions lists update. See AUSTRAC's Real estate designated services and Professional designated services pages.

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