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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.

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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