Sanctions and PEP screening for real estate agencies: a complete guide

Property is one of the most commonly used vehicles for money laundering and sanctions evasion worldwide. A single residential property transaction can move hundreds of thousands — or millions — of dollars between parties without attracting the scrutiny that the same amount would receive if it moved through a bank.

That is why sanctions screening and PEP identification are among the most critical obligations in Australia's new AML/CTF framework for real estate agencies. From 1 July 2026, your agency must screen every client before you provide a designated service — and continue screening them as long as the client relationship is active.

This guide covers what you must screen against, when, how, and what to do when your screening returns a result.

The fastest path: screening in AML Simple

AML Simple's screening module runs DFAT Consolidated Sanctions List checks from within your client file. When you add a new client and their identity is verified, you can run a sanctions screen in seconds. The result — clear or potential match — is recorded automatically against the client's record.

Daily list updates mean your clients are rescreened against the current list without manual effort. If a client who was clear at onboarding appears on the sanctions list six months later, AML Simple flags it.

For a step-by-step walk-through of running your first client screening, read How to run your first client screening in AML Simple.

Why real estate is a high-risk sector for sanctions evasion

AUSTRAC's risk assessment for the real estate sector is clear: property transactions are a well-documented vehicle for money laundering, terrorism financing, and sanctions evasion.

The specific risks for real estate agencies:

Concealing beneficial ownership: Sanctioned individuals or entities purchasing property through intermediaries, family members, or complex corporate structures to avoid detection
Over- and under-valuation: Artificially pricing transactions to move funds between parties
Use of cash or unusual payment methods: Transactions where the source of funds is obscured or where cash plays a larger role than is typical
Use of professional intermediaries: Legal firms, accountants, or financial advisers who insert themselves between the sanctioned party and the transaction

Real estate agents are not investigators, and the law does not require you to be. It requires you to have a documented, consistent process for screening and to act appropriately when screening raises concerns.

Source: AUSTRAC risk indicators for the real estate sector

What you must screen against

1. The DFAT Consolidated Sanctions List

The Department of Foreign Affairs and Trade (DFAT) Consolidated Sanctions List contains all individuals and entities subject to Australian autonomous sanctions regimes — sanctions imposed by Australian law as distinct from UN-mandated sanctions.

The list includes individuals and entities from dozens of countries subject to Australian sanctions regimes, as well as targeted financial sanctions imposed for reasons including terrorism, proliferation of weapons of mass destruction, and human rights violations.

Your obligation: You must not deal with a listed individual or entity. This means you cannot provide a designated service to a listed person, and you cannot facilitate a transaction that would benefit them.

Where to find the list: DFAT Consolidated Sanctions List. AML Simple checks against this list automatically and updates daily.

Source: Autonomous Sanctions Act 2011; DFAT sanctions guidance

2. UN Security Council Consolidated List

The United Nations Security Council Consolidated List contains individuals and entities subject to measures imposed by the UN Security Council — including Al-Qaida and ISIL-related designations, and country-specific sanctions regimes.

Australia is obligated under the Charter of the United Nations Act 1945 to give effect to these measures. Dealing with a listed party — including indirectly, through a transaction that benefits them — is a criminal offence.

For a detailed breakdown of Australian sanctions obligations including the UN list, read DFAT sanctions guidance for real estate agents.

3. Politically Exposed Persons (PEPs)

PEPs are not on a sanctions list — they are not prohibited parties. But they represent elevated risk because of their potential access to public funds and the higher likelihood that their assets may have been derived from corruption or bribery.

A Politically Exposed Person is an individual who holds or has held a prominent public function — domestically or internationally — including:

Heads of state and government ministers
Senior legislators, judges, and military officers
Senior executives of state-owned enterprises
Senior officials of international organisations (United Nations, World Bank, etc.)
Members of governing bodies of political parties in positions of significant influence

Close associates and family members of PEPs also carry elevated risk and should be identified and managed accordingly.

PEPs do not require enhanced CDD simply because they are PEPs — but their PEP status is a significant risk factor that you must factor into your overall client risk assessment. In most cases, transacting with a PEP will trigger enhanced CDD requirements.

For a full breakdown of PEP obligations in real estate, read PEP and sanctions screening: what real estate agents need to know.

When you must screen

At client onboarding

Every new client — whether buyer or seller, individual or entity — must be screened against the DFAT Consolidated Sanctions List before your agency provides a designated service.

Screening must happen as part of your client onboarding process, alongside CDD. It is not acceptable to take on a listing or begin acting for a buyer and conduct screening only after the transaction is underway.

On an ongoing basis

The DFAT list is updated daily. A client who was clear at the time of onboarding may appear on the list later — due to new sanctions being imposed, a new designation being added, or the client's circumstances changing.

Your program must describe how you conduct ongoing screening:

Automated re-screening: The most practical approach for agencies using AML Simple — the system checks all clients against the current list daily
Manual periodic re-screening: If you are not using automated tools, your program must specify the frequency of manual re-screening (monthly is the minimum for most agencies; more frequently if your risk profile is higher)
Event-triggered re-screening: When something changes in the client's circumstances that would affect their risk profile (a change in beneficial ownership, a new transaction type, information suggesting different risks)

How to identify PEPs

Unlike sanctions screening — which can be automated against a list — PEP identification requires your staff to ask the right questions.

At onboarding: ask directly

Your CDD process should include a specific PEP question, asked of every individual client:

"Do you, or does any beneficial owner of the entity you represent, hold or have you previously held a prominent public function — such as a senior political, judicial, military, or executive role — in Australia or any other country?"

A follow-up question about family members and close associates of PEPs is also appropriate for higher-risk client types.

For entity clients: look behind the structure

For company or trust clients, PEP identification is part of beneficial ownership verification. If any of the identified beneficial owners is a PEP or PEP associate, the entity client carries the elevated risk of that individual.

When to be sceptical

PEP self-reporting is voluntary and imperfect. If a client matches other risk indicators (unusual transaction structure, unusual source of funds, connection to a country with significant corruption risk), consider running their details through a commercial PEP database or seeking additional information before proceeding.

Handling a potential sanctions match

When your screening returns a potential match — a name that is similar to, or identical with, a name on the DFAT Consolidated Sanctions List — you must:

Step 1: Do not dismiss the match

The first reaction is often to assume the match is a false positive, especially for common names. Do not dismiss a potential match until you have gathered enough information to be confident the match does not apply to your client.

Step 2: Gather identifying information

Compare the listed individual's details (date of birth, nationality, known associates, addresses) with what you know about your client. A common name with a date of birth that does not match is likely a false positive. A common name with details that do match requires further action.

Step 3: Do not proceed with the transaction

If the match cannot be resolved as a clear false positive, you must not commence or continue the designated service. Proceeding while a potential match remains unresolved would constitute dealing with a potentially sanctioned party — which carries criminal liability.

Step 4: Escalate to the Compliance Officer

The Compliance Officer must be notified of any match that cannot be immediately resolved as a false positive. The Compliance Officer makes the decision about how to proceed, including whether to seek legal advice and whether to lodge a Suspicious Matter Report.

Step 5: Consider an SMR

Where a sanctions match cannot be resolved and you have reasonable grounds to suspect money laundering or terrorism financing, you must lodge a Suspicious Matter Report with AUSTRAC.

For a full guide to SMR obligations, read What is a Suspicious Matter Report and when must you lodge one?

Suspicious Matter Reports (SMRs)

Sanctions screening and PEP identification are two of the most common triggers for SMR consideration in real estate — but they are not the only ones.

An SMR is required whenever you suspect, or have reasonable grounds to suspect, that a transaction or activity involves:

Proceeds of crime (money laundering)
Financing of terrorism
Evasion of AML/CTF obligations

In a real estate context, common SMR triggers include:

A sanctions or PEP match that cannot be resolved as a false positive
A client who refuses to provide CDD documents without a credible explanation
Unusual source of funds (cash, overseas transfers, multiple parties contributing to the purchase)
A transaction structure that appears designed to conceal the beneficial owner
A purchase or sale that does not make commercial sense for the parties involved
A client who appears to be acting on behalf of an undisclosed principal

SMR filing deadlines:

Terrorism financing concerns: 24 hours
All other suspicious matters: 3 business days

The tipping-off prohibition: Once you have determined that an SMR is required, you must not inform the subject of the report — or anyone who might inform them — that you have filed or are considering filing an SMR. This is a criminal offence under the Act.

For the full guide to SMRs including when to lodge, what to include, and how AML Simple's SMR drafting tool works, read Suspicious matter reports for real estate agencies: a practical guide.

Source: AML/CTF Act 2006, ss 41–42

Threshold Transaction Reports (TTRs)

A Threshold Transaction Report is required for any transaction where your agency handles physical currency of A$10,000 or more, or the foreign currency equivalent.

Real estate transactions rarely involve physical cash at the agency level, but when they do — a cash deposit, for example — the TTR obligation applies automatically. There is no discretion: if the amount meets the threshold, the TTR must be filed.

TTR deadline: 10 business days from the date the transaction occurs.

For a complete breakdown of TTR obligations, read Threshold transaction reports for real estate agents.

Source: AML/CTF Act 2006, s 43

Building screening into your agency workflow

The practical challenge with screening is ensuring it happens consistently — that no client is onboarded without a screening check, and that ongoing screening actually occurs between transactions.

Recommended workflow with AML Simple:

At client onboarding: After collecting CDD information and verifying identity, run the sanctions screen from within the client's file. This takes around 30 seconds.
The result is recorded automatically — a "clear" result is logged; a potential match is flagged for review
Ongoing screening: AML Simple re-screens all active clients against the daily list update. If a previously clear client appears on the list, you receive a notification
PEP check: During the CDD interview, ask the PEP question directly. If the client is a PEP, document this in their file and flag for enhanced CDD

If you are managing screening manually (without AML Simple), build it into your onboarding checklist and set a calendar reminder for monthly re-screening of all active clients.

Common screening mistakes

1. Screening only at settlement The obligation is to screen before providing the designated service — not at the end of the transaction. If you discover a sanctions match after you have already been acting for a client for six months, you have already potentially breached your obligations. Fix: Screen at first contact, before you take the listing or agree to act for the buyer.

2. Dismissing matches too quickly A positive match — even for a very common name — should not be dismissed without gathering enough information to be confident it is a false positive. Fix: Record your match assessment process. "Name match only — date of birth does not match listed individual — confirmed false positive" is adequate documentation. "Dismissed as false positive" is not.

3. No ongoing screening Screening once at onboarding and never again does not satisfy the ongoing screening obligation. Fix: Use AML Simple's automated re-screening, or build a monthly re-screening step into your compliance calendar.

4. No PEP question in your onboarding process If you never ask, you will never know. Fix: Add a PEP question to your client intake form or CDD checklist. AML Simple's verification flow includes this question.

Key reference: DFAT's guidance for real estate agents

DFAT publishes specific guidance for real estate industry participants on sanctions obligations. This guidance is periodically updated and should be bookmarked by your Compliance Officer.

DFAT guidance for real estate agents and industry