AML/CTF reforms for real estate: where management liability insurance may fit

AML/CTF reforms may change how some real estate businesses manage compliance risk in Australia.

AUSTRAC says, “If your real estate business provides one or more designated services that have a geographical link to Australia, you’ll have anti-money laundering and counter-terrorism financing (AML/CTF) obligations.”¹

For real estate principals, directors and senior managers, this is more than an admin change.

It may affect how your agency checks customers, trains staff, keeps records, reports suspicious matters and manages compliance risk. It may also raise questions about where management liability insurance fits.

Management liability insurance is not a replacement for AML/CTF compliance. It also does not cover deliberate or criminal conduct. But depending on the policy, the facts, and what is legally insurable, it may help cover legal costs associated with regulatory proceedings. 

What you should know

AUSTRAC says real estate designated services may include services provided by buyers’ agents, sellers’ agents, property developers, and other businesses that sell house and land packages, apartments off the plan, and blocks of land in new subdivisions.

AUSTRAC says, by 1 July 2026, you must have an AML/CTF program, have an AML/CTF compliance officer, train your staff and be ready to engage with customers and clients and report suspicious matters. 

That means agencies may need to look at their processes now, not when the reforms are already in place.

The rules may change how your agency works

AML/CTF compliance is not only about checking a customer’s ID.

It may involve understanding who your customer is, where funds may be coming from, whether a transaction looks unusual, and what records your business needs to keep.

AUSTRAC says, “You must keep general transaction records for 7 years from the day the record is created”.²

For many agencies, this may touch several parts of the business, including sales, property development, finance, operations, training and governance.

What could non-compliance mean?

AUSTRAC says that if a business does not comply with its AML/CTF obligations, AUSTRAC can take action to enforce compliance, seek a penalty, or both.

This may include civil penalty orders, enforceable undertakings, infringement notices and remedial directions.

The financial consequences can be significant, depending on the facts and the outcome of any action. Maximum penalties are up to $6.6 million for individuals (persons other than bodies corporate) and up to $33 million for corporations (body corporate)1. That is why real estate businesses may want to treat AML/CTF readiness as a business risk issue, not only a legal or compliance task.

Where management liability insurance may fit

For a real estate principal, the AML/CTF regime can create exposure at the director and officer level, not just for the business entity.

According to Marsh, management liability insurance can cover the legal costs of responding to AUSTRAC investigations, defending regulatory proceedings and, where legally insurable, certain civil penalties arising from those proceedings.

However, this depends on the policy wording, exclusions, the facts and whether the amount is deemed legally insurable at the time the matter goes to trial.

A policy cannot make deliberate, intentional or criminal conduct insurable. It also cannot pay a loss that the law says cannot be insured.

Is this needed? “Insurable at Law” is actually dependent on the Individual Case, not the insurance policy – a judge can deem at any time that the fines and penalties related to a breach are not insurable – based on the evidence and specific breach.

What real estate businesses can do now

Start by checking whether your business may provide a designated service.

Then review your AML/CTF preparation, governance responsibilities and insurance program together.

Marsh suggests reviewing management liability insurance coverage should sit alongside building your AML/CTF compliance program, not as an alternative to your obligations. 

Your management liability review should look beyond the policy schedule. Check the wording, exclusions, investigation costs, defence costs, statutory liability section, and any conditions that apply to regulator matters.

References

1. AUSTRAC, “Preparing for the changes if you’re newly regulated”, https://www.austrac.gov.au/industry-and-business/about-amlctf-reforms/preparing-changes-if-youre-newly-regulated, accessed 11 June 2026.
2. AUSTRAC, "Record keeping overview", https://www.austrac.gov.au/industry-and-business/obligations-and-guidance/your-amlctf-program/develop-your-amlctf-programs/record-keeping/record-keeping-overview, accessed 11 June 2026.
3. AUSTRAC, “Real estate designated services”, https://www.austrac.gov.au/new-austrac/designated-services-newly-regulated-entities/real-estate-designated-services, accessed 11 June 2026.
4. AUSTRAC, “Your obligations”, https://www.austrac.gov.au/industry-and-business/obligations-and-guidance/your-obligations, accessed 11 June 2026.
5. AUSTRAC, “Consequences of not complying”, https://www.austrac.gov.au/industry-and-business/obligations-and-guidance/consequences-not-complying, accessed 11 June 2026.

LCPA 26/2870