12 June 2026
8 min read
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From 1 July 2026, Australia’s Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) reforms will bring parts of the real estate sector into sharper regulatory focus. For property developers, one question is already emerging – could the ‘travel rule’ apply to how project funds, deposits or digital value move through a transaction?
The travel rule is best understood as a transparency obligation for transfers of value. It focuses on how value moves around a transaction, especially where funds or digital value are routed through arrangements that begin to resemble payment facilitation.
In practice, most property developers will not be directly subject to the travel rule simply because they sell real estate and receive purchase money. In a standard sale, the movement of funds is usually handled by banks, payment providers, lawyers, conveyancers, escrow agents or settlement platforms, rather than by the developer itself.
The position can change where a developer moves beyond a traditional seller role and becomes more involved in handling or directing value, particularly through arrangements outside standard banking and settlement processes or by effectively performing functions usually handled by banks, payment providers, escrow agents or settlement intermediaries. Examples include non-standard payment structures, direct virtual asset payments, wallet-like or escrow-style arrangements, and tokenised or fractionalised real estate models.
For developers, the practical question is simple – are you just receiving sale proceeds through standard channels, or are you helping to move, hold, route, exchange or make value available for someone else? If the answer is not obvious, the issue should be checked early and reflected in your AML/CTF program.
Developers will be captured as reporting entities under the Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024 (Cth), Schedule 3, Part 1, where they provide the designated service of selling or transferring real estate in the course of carrying on a business and the sale or transfer is not brokered by an independent real estate agent.
That is the first step in the travel rule analysis. However, being a reporting entity for real estate activity does not, of itself, mean that the travel rule applies to every property transaction. The next step is to determine whether, in a particular scenario, the developer is actually performing a function within a relevant transfer of value chain, such as an ordering institution, intermediary institution or beneficiary institution.
A practical way to frame this analysis is to ask:
The travel rule focuses on transfers of value, not the transfer of land title. The conveyance of real estate itself is not what triggers the rule. The relevant question is whether the developer is involved in moving money, virtual assets or other regulated value around the transaction. It targets payment and value flows around property activity, including deposits, staged payments, reimbursements, third-party disbursements, cross-entity movements within project structures, settlement routing arrangements, and virtual asset payments.
Two points matter commercially:
Where it applies, ordering institutions must collect payer details and the payee’s name, verify payer details where required, and pass the relevant transfer information through the value transfer chain. Intermediary and beneficiary institutions must take reasonable steps to monitor whether that information has been received and apply risk-based responses to any gaps, including requesting further details where appropriate.
The AML/CTF rules also require systems and controls to respond to information requests from other institutions in the chain as soon as practicable. A response within three business days after receiving sufficient information to process the request is treated as satisfying this requirement.
Travel rule obligations are role-based. The key question is whether, in a particular transfer of value, the developer is performing the function of an ordering institution, intermediary institution or beneficiary institution in the value transfer chain. The answer depends on the transaction structure, how value is moved, and whether the developer is providing the relevant designated service for that activity.
An ordering institution role arises where an instruction is accepted to transfer value on behalf of a payer in the course of business. In standard property transactions, the ordering institution role will usually be performed by the payer’s bank, payment provider, remitter or virtual asset service provider, because that entity accepts the payer’s instruction and initiates the transfer. The developer is generally the commercial recipient of the purchase money, rather than the ordering institution.
However, the role may arise where a developer-controlled arrangement holds funds and an instruction is accepted to direct those funds to third parties. Whether this results in ordering institution obligations depends on whether the developer is providing the relevant transfer of value designated service for that activity.
If the transfer is objectively reasonably incidental to the broader service being provided, the developer will generally not be providing the ordering institution designated service for that activity, and the travel rule will not apply.
An intermediary institution role arises where a transfer message is received and passed on, without accepting the original payer instruction and without making value available to the payee. This is generally a less common role for developers, but it may arise where a developer or related group entity sits in the middle of transfer messaging flows.
The focus is on monitoring whether the necessary details have been received, determining whether to pass on the message or take other risk-based action if details are missing, and responding to information requests in a timely way. The reasonably incidental concept is not framed in the same way for intermediary messaging activities, so caution is warranted where an operating model places a developer in the middle of the transfer messaging chain.
A beneficiary institution role arises where transferred value is made available to a payee in the course of business. In most standard property transactions, the developer may be the commercial payee, but the beneficiary institution will usually be the bank, payment provider or other institution that receives the transfer and makes the funds available to the developer.
A developer will generally only need to consider this role where its own structure receives, holds, controls or makes value available for another person. Whether this results in beneficiary institution obligations depends on whether the developer is providing the relevant transfer of value designated service for that activity.
For many developers, the most important off-ramp is the reasonably incidental exception for ordering institution and beneficiary institution analysis. If a transfer of value is objectively reasonably incidental to another service, the developer will generally not be providing the relevant designated service for that activity, and the travel rule will not apply.
This is an objective test. It is not enough to simply describe a transfer as incidental. Red flags include arrangements that resemble a standalone funds movement service, clients using a developer-controlled structure as a substitute for a bank account, or a portal or wallet-like function being used primarily to move money.
Many technical carve-outs in the AML/CTF rules are more relevant to banks, payment providers and virtual asset businesses because they send and receive transfer messages. For developers, the practical focus should be on whether their structure places them in the value transfer chain and, if so, whether their AML/CTF program deals with missing information, information requests and risk-based responses.
If a development or connected transaction involves virtual assets, expectations become more prescriptive. Policies are expected to address issues such as wallet type, counterparty status where relevant, and whether required details can be handled securely and confidentially.
In the AML/CTF program, property developers should explain how money laundering, terrorism financing, and proliferation financing risks are managed where the operating model involves transfers of value. At a minimum, the transfer of value component should document role determination, the handling and protection of required details, responses to information requests, monitoring arrangements, response principles for missing or incomplete details, and contingency controls for disruption events.
If your development model involves non-standard payment flows, escrow-style arrangements, virtual assets, tokenisation or the direct handling of buyer funds, now is the time to assess whether your AML/CTF program is ready for 1 July 2026.
If you are unsure whether the travel rule could apply to your structure and what practical steps may be required, please contact us here.
Disclaimer
The information in this article is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.
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