Reliance Agreements in Queensland – AML/CTF Compliance Explained

Under Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) framework, reporting entities must verify the identity of their customers before providing designated services. Many businesses complete these checks independently, but the law also permits a more efficient path. A reliance agreement allows one reporting entity to rely on customer due diligence (CDD) checks completed by another regulated entity, rather than duplicating the same process. For Queensland law firms, conveyancers, real estate agents and other reporting entities, understanding how these arrangements operate is essential for staying compliant while keeping client onboarding efficient.

What is a Reliance Agreement Under AML/CTF Law?

A reliance agreement, also known as a CDD arrangement, is an arrangement established under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) and the Anti-Money Laundering and Counter-Terrorism Financing Rules 2025. It allows a reporting entity to rely on the know your customer (KYC) information that another regulated entity has already collected and verified.

When you rely on KYC information collected and verified by a third-party reporting entity, or by a foreign business that is subject to AML/CTF regulation in its own jurisdiction, this is called reliance. The core purpose is simple: if one party in a transaction has already completed the customer checks, other parties should not need to repeat the same work.

Ongoing Arrangements and Case-by-Case Reliance

Reliance can be used in two ways under the AML/CTF framework. You can enter into an ongoing reliance agreement or arrangement with another entity, which covers a continuing business relationship. Alternatively, you can rely on another entity’s customer identification on a case-by-case basis for individual transactions.

An ongoing CDD arrangement is a standing agreement between the parties. It establishes the terms under which one reporting entity may rely on KYC checks performed by the other, and it operates across multiple transactions or clients over time. A case-by-case approach, by contrast, is limited to a specific matter and does not create an ongoing obligation. Both options are recognised by AUSTRAC, the agency that regulates the AML/CTF regime in Australia.

Whichever structure you choose, the arrangement must be documented. AUSTRAC guidance emphasises that CDD arrangements should be formalised so that obligations, responsibilities and access to records are clear from the outset.

Who can you rely on?

Reliance is not open-ended. You cannot rely on just anyone who claims to have verified a customer’s identity. The third party you rely on must be either:

• a reporting entity under the AML/CTF Act, or
• a foreign business that is subject to AML/CTF regulation in its home jurisdiction.

This requirement protects the integrity of the system. If the third party is not itself regulated, there is no guarantee that its customer checks meet Australian standards. AUSTRAC’s guidance on reliance on customer identification by a third party sets out the conditions that must be satisfied before you can rely on another entity’s KYC information.

Why use a Reliance Agreement?

The main benefit of a reliance agreement is efficiency. In a typical Queensland property transaction, several regulated businesses may each be required to verify the identity of the same buyer or seller. A law firm, a conveyancer, a real estate agent and a bank may all be involved, and each could be required to collect the same identification documents and run the same checks.

Reliance agreements address this duplication. AUSTRAC recognises that these arrangements may reduce duplication, streamline customer onboarding and avoid multiple reporting entities collecting the same information. For clients, the result is a faster, less intrusive experience. For businesses, the result is a reduction in administrative work and a more consistent approach to compliance across the transaction.

For lawyers and conveyancers in particular, reliance allows firms to share completed client checks with real estate agents and other parties involved in a transaction. Instead of every party independently collecting passports, drivers’ licences and other supporting documents, the work is done once and relied upon by the others.

What should a Reliance Agreement cover?

A practical reliance agreement needs to do more than simply state that one party will rely on another. Under the AML/CTF framework, the agreement should document the customer due diligence obligations of each party, including how KYC information will be collected, verified and shared.

Key matters that the agreement should address include:

• the scope of the reliance arrangement and which services or transactions it covers;
• which party is responsible for performing the initial CDD checks;
• how the relying party will access the KYC information and supporting records;
• record access and retention obligations, so that records can be produced to AUSTRAC if required;
• how the arrangement will be updated if the customer’s circumstances change; and
• termination rights and what happens when the arrangement ends.

AUSTRAC guidance notes that reliance arrangements should be documented and that reporting entities must be satisfied that the arrangement is appropriate. A template agreement can be a useful starting point, but it should be tailored to the specific relationship, the types of customers involved and the designated services being provided.

Reliance Agreements in Queensland Property Transactions

In Queensland, the practical use of reliance agreements has grown as legal and property professionals look for ways to streamline compliance. When a firm acts on a property sale or purchase, the same customer may also be dealing with a real estate agent, a bank and a conveyancing team. Without reliance, each of those parties collects its own copy of the customer’s identification and verification data.

By signing a reliance agreement, the parties agree that one of them will conduct the customer due diligence and the others may rely on that work. This is particularly valuable in residential conveyancing, where tight settlement timeframes make duplicate compliance checks a burden for everyone involved.

That said, a reliance agreement does not transfer all responsibility to the entity that performed the original checks. The relying entity must still understand its obligations under the AML/CTF Act and the Rules, and it must ensure that the arrangement is properly documented before it comes into effect.

Before you sign a Reliance Agreement

Before signing a reliance agreement, reporting entities should consider whether reliance is appropriate in the circumstances. AUSTRAC’s guidance is designed to help entities determine whether it is appropriate to enter into a CDD arrangement and what they must do if they do.

Legal practitioners are encouraged to review the terms carefully. The agreement should identify the parties clearly, reference the Act and the Rules, and set out the rights and obligations of each side. Practitioners should also confirm that the third party they intend to rely on is a reporting entity or an overseas business subject to equivalent AML/CTF regulation. If the third party is not regulated, reliance is not available.

It is also important to remember that relying on another entity’s checks does not remove the need to keep adequate records. The agreement should address how the relying party will access those records, because both parties may need to produce them to AUSTRAC on request.

Frequently Asked Questions

Here are answers to common questions about reliance agreements under Australian AML/CTF law.

What is a reliance agreement under AML/CTF law?

A reliance agreement is a documented CDD arrangement that allows one reporting entity to rely on customer due diligence checks completed by another regulated entity. It is established under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) and the Anti-Money Laundering and Counter-Terrorism Financing Rules 2025, so both parties can avoid duplicating the same KYC verification work.

Who can a reporting entity rely on?

You can rely on KYC information collected by a third-party reporting entity or by a foreign business that is subject to AML/CTF regulation in its own jurisdiction. The third party must meet these requirements before reliance is available. You cannot rely on an unregulated business, because there is no assurance its customer checks meet Australian AML/CTF standards.

Can reliance be used for a single transaction?

Yes. Reliance can be used either under an ongoing agreement or arrangement or on a case-by-case basis. An ongoing arrangement covers a continuing relationship across multiple matters, while case-by-case reliance applies to a specific transaction. Both options must be properly documented, even if the arrangement is limited to a single matter.

What should a reliance agreement cover?

A practical reliance agreement should cover the scope of the arrangement, the customer due diligence obligations of each party, how KYC information will be shared, and record access. It should also address what happens if a customer’s circumstances change and how the arrangement can be terminated. Reviewing the terms carefully before signing helps both parties understand their ongoing responsibilities under the Act and the Rules.

Contact our property and conveyancing team today to discuss any reliance agreement options.