Customer due diligence at auction — compressed timelines and practical solutions
How to handle AML/CTF customer due diligence when the buyer is only identified on auction day, and how to manage the compressed settlement timeline that follows.
Auction is the hardest CDD problem in real estate. Under a standard sales process, the buyer is known weeks before exchange. At auction, the buyer is unknown until the fall of the hammer — and from that point, settlement is unconditional and proceeds within 30 to 60 days.
The AML/CTF Rules 2025 require CDD before or as soon as practicable after commencing the provision of a designated service. For auction, the "as soon as practicable" limb applies. AUSTRAC's guidance for real estate acknowledges the compressed auction timeline.
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 or trust. 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. Electronic DVS verification is the fastest method — the buyer receives a link, uploads their licence or passport, and verification returns within minutes. Do not wait until closer to settlement.
Before settlement. CDD must be complete, identity verified, and sanctions and PEP screening results reviewed before settlement proceeds. If CDD cannot be completed — because the buyer refuses to provide documents or verification fails — you face a decision. Proceeding to settlement without completing CDD is a breach of the Rules. A refusal to verify should also prompt consideration of whether a suspicious matter report is required.
Bidder registration. Some agencies require bidders to register in advance of auction. Where that is your process, initiate identity verification at registration — this resolves the timing problem entirely and reduces the post-auction workload to confirmation only.
Corporate and trust buyers at auction. If the successful bidder is a company or trust, the verification requirements are significantly more extensive — entity confirmation, beneficial owner tracing, and identity verification of each natural person. This cannot be completed at the auction table. If a corporate buyer is identified, begin the process immediately after auction and ensure sufficient time before settlement to complete it.
Every auction generates a CDD obligation from the moment the hammer falls. The settlement deadline is fixed. Build the verification workflow for the hours after auction, not the weeks before it.
What to do next: Establish a post-auction CDD checklist — collect identity details at contract signing, send electronic verification requests within 24 hours, and set a compliance deadline one week before settlement for the review to be complete.