Australia has obligations and responsibilities on an international level to prevent money laundering, terrorism financing and proliferation financing domestically. A 2015 review conducted by the Financial Action Task Force, the watchdog responsible for international Anti-Money Laundering/Counter-Terrorism Financing (AML/CTF) compliance, identified significant deficiencies in Australia’s AML/CTF framework which resulted in reforms to the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (the Act) that came into effect on 31 March 2026 and 1 July 2026.
The main aim of the reforms is to mitigate the risk of money laundering and terrorism financing in Australia. Through the introduction of more stringent customer identification processes, and a requirement for companies to self-identify risks associated with their services, the reforms mandate a more hands on approach focussed on individual compliance and reporting.
Which businesses are captured by the new Tranche 2 AML/CTF obligations?
One of the most significant reforms introduced in 2026 is the expansion of the definition of “designated services” and the introduction of “Tranche 2” obligations, which imposes reporting obligations on further entities including:
- Accountants
- Conveyancers
- Jewellers
- Lawyers
- Precious stone and metal dealers
- Real estate professionals
How do the AML/CTF Reforms affect strata managers?
The Minister for Home Affairs has announced an exemption to Strata Managers being considered real estate professionals, unless they represent company title schemes. Whilst all strata managing companies do not necessarily provide designated services, as best practice, all Strata Managers should be alert and exercise caution in the event of any suspicious transactions.
Strata Managers managing company title schemes where they are the Secretary of the Scheme or their business address is the address for service for the company title may be required to enrol and register through the AUSTRAC website and implement AML/CTF policies, procedures and risk mitigation measures.
If you are unsure whether your company is required to enrol, you should go to the AUSTRAC website and complete the survey to confirm.
What AML/CTF Policies Should Strata Management Companies Implement?
Strata management companies confirmed to be outside the exemption, and managing company title schemes should implement policies including:
- Customer Due Diligence (CDD) to verify the identity of clients and beneficial owners. This will ensure only properly identified individuals are authorised to provide instructions to the strata manager relating to a scheme’s funds.
- Risk Assessments identifying the most significant risks for the strata managers and providing options for mitigation or escalation.
- Compliance Officer and personnel designated to oversee the implementation and ongoing training and compliance with the AML/CTF program.
- Record keeping documents and instructions for submitting Suspicious Matter Reports and Threshold Transaction Reports (TTRs).
Why is AML/CTF training essential for strata management staff?
Staff members who deal directly with customers, manage, or assist with the management of company title schemes, including relevant strata managers, assistant strata managers and front of house office staff must undergo training to understand warning signs and risks associated with transactions and customers.
What is threshold transaction reporting and when is it required?
As best practice, all strata management companies should implement a policy around how to handle and report threshold transactions. Any payment made in cash over $10,000.00 must be reported to AUSTRAC within 10 business days of the transaction occurring. TTRs must be submitted through AUSTRAC’s online portal and must include:
- Your business or company.
- The date of the report.
- Details of the individual completing the report (usually the person who received the funds or the compliance officer for the company).
- Details of the customer who made the cash payment.
- Any other party involved in the cash payment.
For more information on threshold transaction reporting, please view AUSTRAC’s website.
What is a suspicious matter report and when should it be lodged?
Sometimes, when individuals are participating in fraudulent acts or payments, they will deposit or make payments of a large amount in smaller amounts just under $10,000.00 (for instance, they may make several payments of $9,999.00 to avoid triggering threshold transaction reporting).
If repeat amounts are being paid in such a manner, the Strata Manager should report the transactions to AUSTRAC in the same manner as outlined above for TTRs.
Strata Managers should not report repeat transactions that are payments of strata levies (for instance, if every month a Lot Owner pays $9,950.00 as payment of Strata Levies, this would not be considered a suspicious matter and reporting would not be required).
How should strata managers manage property ownership changes for AML/CTF compliance?
When a Lot in a strata scheme or a community association is sold, the Purchaser’s representative must send to the Strata Manager a Notice of Interest confirming the sale pursuant to section 22 of the Strata Schemes Management Act 2015 (NSW) and section 20 of the Community Land Management Act 2021 (NSW).
The Notice should include:
- Name and address of the new Lot Owner
- Date of settlement
- Address of the Lot in question
- Signatures of the representatives of the Purchaser and Vendor
Once the Strata Manager has received the Notice, they should add the new Lot Owner to the register and send an acknowledgement email or letter to the address on the Notice.
Strata Managers should maintain due diligence regarding these notices, and if any details are missing from the Notice, they should immediately contact the Purchaser’s representative to update and confirm the details.
Should strata managers conduct their own verification of identity checks?
Strata Managers should note a thorough verification of the new Lot Owner may be required as a risk mitigation measure, despite the Purchaser’s representative’s obligations to complete the verification of identity process. We recommend Strata Managers complete their own verification of identity as best practice and should familiarise themselves with all Lot Owners to ensure no fraudulent activity or payments are made or received.
What are the safest payment methods for strata levy transactions?
Once a new Lot Owner is added to the register, they will be set up with an account for payment of levies. We recommend your Strata Managing Company utilises a payment system through secure platforms such as:
- BPAY
- StrataPay
- DEFT Payments
The platforms have security measures in place to prevent fraudulent activity and heightened authentication options, including with unique client identification numbers and frequent changes to passwords.
How can strata managers detect potential fraudulent payments?
Whilst the payment platforms have stringent methods in place to prevent fraudulent activity, Strata Managers should monitor all payments and note any repeat payments of the exact same amount (outside usual levy amounts) or unexplained changes in accounts paying the levies.
Summary
Australia’s 2026 AML/CTF reforms mark a significant shift in the compliance obligations of businesses involved in financial transactions, including many operating within the strata sector. By implementing robust customer due diligence, risk assessment, reporting and record-keeping processes, strata managers can play an important role in preventing money laundering and terrorism financing. Proactive compliance, ongoing staff training and vigilant monitoring of transactions will help protect strata schemes, ensure regulatory compliance and reduce the risk of fraudulent activity within the industry.
This post appears in Strata News #807.
Anna Hahm
Grace Lawyers
E: Anna.hahm@gracelawyers.com.au
Holly Mack
Grace Lawyers
E: enquiries@gracelawyers.com.au
Leave a Reply