Reliance arrangements — can someone else do my CDD?

The short answer is yes, in limited circumstances, with a written agreement, and only on certain other reporting entities. "We just rely on the buyer's lawyer" — the way many agents think about it — does not satisfy the statutory test.

The framework. The Act sets out two reliance routes. Section 37A covers reliance under a written agreement or arrangement — where the agreement is in force, the requirements prescribed by the Rules were met when it was entered, and the relied-on entity has carried out the procedure on the customer, the first entity is treated as if it had complied with paragraphs 28(3)(c) and (d). Section 38 covers case-by-case reliance — where the other person has carried out the procedure, the first entity has obtained the information, has reasonable grounds to rely given the ML/TF risk, and the Rules requirements are satisfied.

Reliance is available only if:

• The third party is itself a reporting entity under the AML/CTF Act 2006, or a foreign entity subject to equivalent AML/CTF regulation.
• A written agreement governs the reliance and specifies which procedures are being relied on (s 37A route), or the case-by-case conditions in s 38 are met.
• The third party agrees to provide the underlying records on request, within a reasonable time.
• You have taken reasonable steps to satisfy yourself that the third party's procedures are adequate.

The AML/CTF Rules 2025 go further: the arrangement must be recorded in writing, and it is your responsibility to make a written record showing how the conditions for reliance were satisfied. A handshake or a general practice does not qualify.

The s 37B obligation — regular assessments. Where you rely on a section 37A agreement, the Act adds an ongoing duty. Section 37B requires you to carry out assessments of the agreement in accordance with the Rules, on the frequency the Rules prescribe, and prepare a written record of each assessment within 10 business days of completing it. Section 37B(2) makes this a civil penalty provision in its own right — a failure to assess is enforceable against you separately from any CDD failure. If the assessment leads to a reasonable conclusion that the Rules requirements are no longer being met, the reliance under s 37A stops applying from that point (s 37A(3)–(4)). The practical effect: formal reliance is heavier to maintain than people expect.

Liability stays with you. Even where reliance is properly in place, the CDD obligation remains your obligation. If the relied-on entity's work is deficient and AUSTRAC takes enforcement action, the action is against your agency, not the third party. The senior-manager approval requirement in Rules s 5-5(1) reflects that — reliance is a senior-manager decision, not a clerical one.

Who counts. From 1 July 2026, lawyers and conveyancers are themselves reporting entities under Tranche 2, so reliance on them becomes legally available. Banks, accountants where they provide designated services, and other Tranche 2 professionals are also candidates. A referrer, a marketing partner, or an offshore broker that is not regulated cannot be relied on.

Why "the lawyer handles it" doesn't work. Many agents assume that because a buyer or seller has engaged a solicitor, the solicitor's CDD covers the agent. Without a written reliance agreement that names the solicitor, specifies the procedures relied on, and obligates the solicitor to provide the records on request, the agent has not satisfied its CDD obligation. The default position — no agreement — is that the agent does its own CDD.

The operational call. Reliance reduces duplicated work but introduces overhead: the agreement, the adequacy assessment, the record-retrieval mechanism. For most agencies, doing CDD in-house using DVS verification and sanctions screening is simpler than negotiating reliance agreements with multiple conveyancing firms.

If you choose reliance, you will need a template agreement, an adequacy review for each relied-on entity, and a process for producing CDD records to AUSTRAC on request.