Customer due diligence at auction — compressed timelines
How to handle AML/CTF customer due diligence when the buyer is only identified on auction day, and how to manage the settlement window that follows.
In short
CDD must be complete before settlement. Collect identity details at contract signing, send DVS verification within 24-48 hours, and treat any refusal or failed verification as a decision point: stop, escalate, and consider whether an SMR is required.
Auction is the hardest CDD problem in real estate. In a standard sale, the buyer is known weeks before exchange. At auction, the buyer is unknown until the hammer falls, and the contract is unconditional from that moment.
The legal position. Section 28 of the AML/CTF Act 2006 (Cth) requires CDD before providing a designated service. Section 29(c)(ii), together with Rules s 6-32(4) as amended by F2026L00353, provides a specified period for delayed CDD in real estate: the earlier of 28 calendar days after exchange of contracts, or 3 days before initially agreed settlement. Whichever comes first sets your deadline.
On auction day. At contract signing, collect the buyer's full legal name, date of birth, residential address, and whether they are purchasing in their own name or through a company, trust, or SMSF. Note the payment method for the deposit — a large cash deposit is a risk indicator and warrants additional scrutiny.
Within 24-48 hours. Send a formal identity verification request. DVS-backed electronic verification is the fastest path: the buyer receives a link, uploads their licence or passport, and the result returns within minutes. Do not wait until settlement is near.
Before settlement. CDD must be complete, identity verified, sanctions and PEP screening cleared, and any beneficial-ownership chain resolved before settlement proceeds. If verification fails or the buyer refuses, you face a decision. Proceeding to settlement without completing CDD breaches the Act. A refusal to verify should also prompt consideration of whether a suspicious matter report is required under s 41.
Bidder registration. Where state legislation requires bidder registration before auction (the position in NSW and several other jurisdictions), use the registration step to start verification. Pre-verifying registered bidders compresses the post-auction workload to confirmation only, and removes most of the timing pressure.
Corporate, trust, and SMSF buyers. If the successful bidder is an entity, the verification load is significantly heavier — entity confirmation, beneficial-owner tracing, and identity verification of each natural person controlling the entity. None of this can be completed at the auction table. Begin immediately after the hammer falls and confirm there is sufficient time before settlement to complete it. If the chain cannot be resolved within the specified period, settlement should not proceed.
The settlement clock starts at the fall of the hammer. Build the verification workflow for the hours and days after auction, not the weeks before.
Frequently asked questions
- What is the deadline for completing CDD after an auction?
- For real estate, the specified period under Act s 29(c)(ii) and Rules s 6-32(4) is the earlier of 28 calendar days after exchange of contracts, or 3 days before initially agreed settlement. Whichever comes first.
- Can the auction proceed if a registered bidder has not been verified?
- Yes. The CDD obligation crystallises when you commence providing a designated service to a customer — typically the successful bidder at the fall of the hammer. Registered-bidder verification is a sensible early step but not a statutory prerequisite to bidding.
- What if the buyer refuses to provide identity documents after auction?
- You cannot complete the designated service without CDD. A refusal to verify is itself a risk indicator and should prompt consideration of whether a suspicious matter report is required under Act s 41.