Can I rely on the solicitor's KYC instead of doing my own?

Most agents ask this question the same way: my buyer's solicitor has already verified them, so why am I doing it again and why is the client paying twice? The answer is that you can stop doing it again — the law expressly allows it — but only through one of three defined pathways, and only for part of what you owe.

Almost every explanation of reliance you will read, including AUSTRAC's own overview, describes two routes. For real estate there are three. The third is the one that fits your business best.

Why reliance is available here at all

Both sides of a conveyance are reporting entities providing designated services to overlapping customers.

Under table 5 item 1 of s 6, your designated service is brokering the sale, purchase or transfer of real estate in the course of carrying on a business — and the customer is both the seller and the buyer. You owe CDD to both sides of the transaction, not only to the party who signed your agency agreement. Under table 6 item 1, a solicitor or conveyancer assisting in the planning or execution of that same transaction has, as their customer, the person they act for.

So you and the buyer's conveyancer share the buyer as a customer. You and the vendor's solicitor share the vendor. The overlap is real, and reliance operates per customer. AUSTRAC names the analogous case — a conveyancer and a bank in a real estate transfer — as a reason the regime exists, and says reliance "can also help reduce the costs of undertaking initial customer due diligence".

Pathway A — a standing written arrangement (s 37A + Rule 6-29)

Where the arrangement is in force and its conditions were met, the Act other than Part 10 has effect as if you had complied with paragraphs 28(3)(c) and (d) — collection and verification of KYC information.

The arrangement must:

• be with a reporting entity, or a foreign person regulated under laws giving effect to the FATF recommendations on CDD and record-keeping;
• be with a party that has measures in place to comply with Part 2 (CDD) and Part 10 (record-keeping);
• be appropriate to the ML/TF risk you face, weighing the other party's nature, size and complexity, its products, its delivery channels, its customer types and its country exposure;
• let you obtain all the KYC information collected before you begin the designated service — or, where s 29 delayed CDD applies, within that window;
• let you obtain copies of the verification data immediately or as soon as practicable on request. AUSTRAC says it would not expect to see delays beyond one business day;
• document each party's responsibilities, including record-keeping.

Three things attach to this pathway that people underestimate. It must be in writing — a contract, MOU or standard operating procedure will do. Senior-manager approval is mandatory before you enter it, because Rule 5-5(1)(f) requires your policies to ensure it. And s 37B requires ongoing assessments at intervals set by risk and no more than two years apart, plus immediately on any significant change, with a written record within 10 business days of each. Section 37B is a civil penalty provision in its own right, and those records are kept for 7 years under s 114A.

If an assessment leaves you without reasonable grounds to believe the requirements are still met, the deeming switches off from that point until the grounds are restored. Formal reliance is a live obligation, not a signed document in a drawer.

Pathway B — case by case (s 38 + Rule 6-31)

Same deeming effect. No written agreement, no s 37B assessment cycle, no senior-manager approval trigger. Instead you must have obtained the identity information from the other firm, have reasonable grounds that reliance is appropriate to the risk, and satisfy Rule 6-31: the same reporting-entity and has-measures tests, the same risk-appropriateness weighing, reasonable grounds to believe you can get the KYC information in time and the verification data on request — and you must document the reasons you concluded all of that.

This is the low-ceremony path, and it is the natural fit for the one-off pairings that make up most agent-to-solicitor contact. The documented reasons are not optional. They are the difference between reliance and simply not having done CDD.

Pathway C — the participating arrangement (Rule 6-33)

This is the real-estate-specific pathway, and it is the one most commentary misses. It works off s 28(6)(b) — the Rules deeming a matter established — rather than the reliance sections.

Where your only designated service to the customer is table 5 item 1 or table 6 item 1, provided through an Australian permanent establishment, you are taken to have established on reasonable grounds the matters in s 28(2)(b), (d), (e) and (g) — the person on whose behalf the customer acts, beneficial owners, PEP and targeted-financial-sanctions status, and any further matter the Rules specify — if:

• for an individual customer, you have taken reasonable steps to establish the customer is who they claim to be;
• you have identified the customer's ML/TF risk on reasonably available KYC information;
• you have collected KYC information appropriate to that risk;
• you are a participant in an arrangement under which another participating reporting entity providing a designated service related to the same sale, purchase or transfer will collect and verify KYC information no later than 28 days after exchange of contracts;
• the arrangement lets you obtain that information and copies of the verification data at least 3 days before the initially agreed settlement day;
• the arrangement documents each participant's responsibilities, including record-keeping.

Beneficial ownership and sanctions screening are the two most expensive parts of CDD on a structured buyer. Pathway C is the provision that lets a conveyancer's work discharge them for you.

There is a mandatory catch. Rule 5-20 requires that if you participate in a Rule 6-33 arrangement, your AML/CTF policies must set out how you will verify the KYC information yourself, before settlement, if the pack does not arrive. A fallback path is a condition of using the pathway, not a nice-to-have — and it has to have enough runway left in it to actually complete.

And note what Pathway C does not deem: the customer's identity under s 28(2)(a), the identity and authority of anyone acting on their behalf under (c), and the nature and purpose of the business relationship under (f). Those stay yours.

The timing that makes or breaks it

Reliance only helps if the other firm's work exists before your deadline. Rule 6-32 is what creates the room.

Delayed CDD under s 29 has its own conditions: the delay must be essential to avoid interrupting the ordinary course of business, the additional ML/TF risk must be assessed as low, and you must have policies to complete CDD as soon as reasonably practicable. It is not a free extension.

The practical read: the counterparty side is the prize. It is also where the double-verification complaint is loudest, because a buyer gets hit by the agent, their own conveyancer and their lender.

What reliance never does

1. It does not move liability. The deeming operates only if every prescribed requirement is satisfied. If the other firm's procedure was deficient, the deeming can fail and you are exposed on s 28(1) — which contravenes separately for each designated service.
2. It does not touch record-keeping. Part 10 is carved out of both s 37A(2) and s 38. You keep your own records under s 111 for 7 years from the end of the business relationship (s 111(2)), including the type and content of the data and your own risk analysis, and under s 114 you must retain the copy of the relied-on procedure where one is given to you.
3. It only covers collection and verification — s 28(3)(c) and (d). Your customer's risk rating, the nature and purpose of the relationship, authority to act, enhanced CDD under s 32, ongoing CDD under s 30, SMRs and TTRs, and your programme and risk assessment are untouched.
4. Risk ratings do not transfer. AUSTRAC is direct about this: the other firm's assessment may differ from yours, and you must conduct initial CDD, including enhanced CDD where required, in a way appropriate to the risk the customer presents to your business.
5. Reliance is not outsourcing. An electronic verification provider or a compliance platform is an outsourcing or agency arrangement (cf. s 37, which deals with collection and verification by an agent), not a reliable third party — AUSTRAC excludes them expressly because they are not supervised under the AML/CTF laws. That includes Korvos. Work done through a platform is your own CDD, and the liability is yours.
6. Tipping off still applies. A solicitor who has filed a suspicious matter report cannot tell you why they will not share. Never ask a firm to explain a refusal, and never record an inferred reason.
7. Privacy obligations apply before you share. AUSTRAC's own guidance goes only as far as telling you to make sure you're complying with your privacy obligations before disclosing KYC information to a third party. Our own read, not AUSTRAC's: passing a verified identity pack between two reporting entities needs a basis under APP 6 — in practice, the customer's express consent, captured at intake.

The part nobody tells you: the solicitor has to agree

The statutory pathway is clear. The adoption problem sits on the other side of the table.

The Queensland Law Society's Proctor advised solicitors in July 2026 to treat reliance agreements with real caution: reliance "should not be treated as a client-service add-on or referrer convenience"; different professionals learn different things about a client, so a solicitor's collected information may not cover what you need; professional indemnity cover may not automatically extend to reliance arrangements; and conflating AML/CTF reliance with ARNECC Verification of Identity creates a separate gap, because VOI is not CDD and cannot be repurposed as such.

Read that as: firms will accept being relied on far more readily than relying on you, and only where it costs them nothing and warrants nothing beyond "here is what we collected and verified". Any arrangement you propose should be near-zero effort for them.

So does the client actually pay less?

Sometimes. That is a pricing question, not a legal one, and it deserves an honest answer.

Reliance substitutes one cost for several others: counterparty due diligence on the firm, the written arrangement, the two-yearly assessments and their records, a mandatory fallback verification path, and retained residual liability. Against a verification that costs a few dollars through an electronic provider, the arithmetic only works at volume, with a small set of firms you deal with constantly. For a one-off transaction it is almost certainly more expensive than simply doing the check.

Where reliance earns its keep is not the fee. It is the beneficial ownership and screening work on structured buyers under Pathway C — the trust with a corporate trustee, the SMSF, the two-dollar development company — which is the genuinely expensive part of CDD and the part that most often stalls a settlement.

If you are already doing this informally

Many agents say they already rely on solicitors. On these provisions, that is lawful only if there is a documented pathway behind it. An informal understanding, with no arrangement, no records and no documented reasons, is not s 38 reliance — it fails Rule 6-31(e) at minimum — and it leaves you exposed on s 28(1) for every designated service you have provided on that basis.

The fix is not to stop. It is to put one of the three pathways behind what you are already doing, pick the one that matches how often you deal with the firm, and keep the records the pathway requires.

What to do next. Decide which pathway fits before you approach anyone: Pathway B for occasional firms, Pathway A or C for the two or three you work with weekly. Get the written arrangement drafted by your AML/CTF adviser or lawyer — this is the one document where a template off the internet is a genuinely bad idea, because a defect in it removes the safe harbour rather than merely weakening it. Set the reassessment reminders before you sign, not after. And write the Rule 5-20 fallback into your programme on the same day, because without it your AML/CTF programme is non-compliant (r 5-20 is a policies obligation under s 26F(3)(e); it is a Note to r 6-33, not one of its conditions).