Reliance arrangements — can someone else do my CDD?
Whether you can rely on another reporting entity (such as a lawyer or bank) to do CDD on your behalf, and the conditions that apply.
The short answer is yes, in limited circumstances, with a written agreement, and only on certain other reporting entities. The longer answer is that "we just rely on the buyer's lawyer" — the way many agents currently think about it — does not satisfy the statutory requirement.
The framework. Sections 37A and 38 of the AML/CTF Act 2006 (Cth) permit a reporting entity to rely on another reporting entity (or a comparable foreign entity) to perform applicable customer identification procedures. The reliance is permitted 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, specifying which procedures are being relied on
- The third party agrees to provide the underlying records to you on request, within a reasonable time
- You take reasonable steps to satisfy yourself that the third party's procedures are adequate
Even where reliance is permitted, legal liability for the CDD remains with you. If the third party's CDD is deficient and AUSTRAC takes enforcement action, the action is against your agency, not the third party.
Who counts. From 1 July 2026, lawyers and conveyancers will themselves be 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. An unregulated third party — a referrer, a marketing partner, an offshore broker — cannot be relied on at all.
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, the agent has not satisfied its CDD obligation. The default position — no agreement — is that the agent must do its own CDD.
Operational implication. Reliance arrangements reduce duplicated work but introduce a paperwork overhead (the agreement, the audit process, the request mechanism). For most agencies, doing CDD in-house using DVS and sanctions screening will be simpler than negotiating reliance agreements with multiple counterparties.
If reliance is used, you will need a written agreement with each relied-on entity, an audit process to satisfy yourself their procedures are adequate, and a record-retrieval mechanism to produce CDD evidence on AUSTRAC request.
What to do next: Decide as a matter of policy whether your agency will perform CDD in-house, rely on third parties, or use a hybrid model — and if reliance is on the table, prepare a template reliance agreement.