AUSTRAC has clarified when a leasehold interest or licence to occupy will be treated as “real estate” under Australia’s anti-money laundering and counter-terrorism financing regime.
The updated guidance is relevant to lawyers, conveyancers, property developers, real-estate businesses and clients involved in long-term leases, business sales, retirement-village arrangements and other transactions involving rights to occupy land.
The key point is that an agreement does not become “real estate” merely because it is called a lease. Equally, describing an arrangement as a licence does not necessarily place it outside the regime.
The legal and practical rights created by the arrangement must be examined.
Is this a new law?
No. AUSTRAC updated its guidance on 31 August 2026, but the definition and relevant professional-sector obligations arise under the existing Anti-Money Laundering and Counter-Terrorism Financing Act 2006 and associated rules.
The expanded AML/CTF obligations for newly regulated professional sectors commenced on 1 July 2026.
The update is therefore AUSTRAC’s regulatory interpretation of the existing legislation—not a newly enacted lease threshold. No separate transitional period was announced for the clarification.
AUSTRAC also states that its guidance reflects the regulator’s interpretation of the legislation. Australian courts remain responsible for finally determining how the law applies.
AUSTRAC made a further targeted update to its professional designated-services guidance on 18 September 2026. That update removed the implication that a business must itself be a “professional” before the item 3 designated service can apply. It does not change the more-than-30-year lease threshold, but it is relevant where a lease, business sale or property transaction also involves receiving, holding, controlling or managing another person’s money or property.
When is a lease treated as real estate?
According to AUSTRAC’s updated real-estate guidance, “real estate” includes a leasehold interest with a fixed term of more than 30 years.
The calculation excludes options to:
- renew the lease;
- extend the existing term; or
- obtain a further lease term.
This distinction can materially affect how a transaction is classified.
For example, consider a commercial lease with:
- an initial term of 20 years;
- a first option of 10 years; and
- a second option of 10 years.
Although the tenant may potentially occupy the premises for 40 years, the options are not added to the initial fixed term when applying AUSTRAC’s more-than-30-year test. The initial 20-year lease therefore does not qualify as real estate solely because of those options.
By contrast, a lease granted for a fixed term of 40 or 99 years may fall within the definition.
Examples identified by AUSTRAC include:
- 99-year leasehold interests;
- Crown and pastoral leases; and
- residential-site agreements where the leasehold interest in the land exceeds 30 years.
Which property interests are excluded?
AUSTRAC states that the real-estate definition excludes:
- leases with a fixed term of 30 years or less;
- easements and restrictive covenants;
- mortgagee interests;
- certain dwellings that are not attached to land where the resident owns the dwelling but leases the underlying site; and
- standalone licences that provide only limited contractual permission to occupy premises.
A service involving only one of these excluded interests will not be a designated service under the real-estate category.
However, that conclusion does not necessarily determine the AML/CTF treatment of the entire matter. A lawyer, conveyancer or other professional may provide a different designated service in the same transaction—for example, by receiving or controlling transaction funds or assisting with the creation, restructuring or transfer of a company or trust.
Each component of the engagement should therefore be assessed separately.
Lease or licence: why the document’s name is not decisive
A licence to occupy generally gives the licensee contractual permission to use premises without creating an independent interest in the land. A leasehold interest can create an interest in land and will usually give the tenant exclusive possession.
AUSTRAC identifies several features that may help distinguish the two:
- whether the occupant has exclusive possession;
- whether an interest in land is created;
- whether the interest can be registered on title;
- whether the rights can be transferred or sublet;
- the owner or operator’s continuing rights to enter and control the premises; and
- whether the occupancy rights arise from associated company shares or trust units.
No single label or feature should automatically determine the result.
For example, a retirement-village resident may enter an agreement described as a “licence to occupy”. If the agreement only permits the resident to occupy a unit, cannot be transferred or sublet, is not registered on title and is not connected with company shares or trust units, it may be a standalone contractual licence rather than real estate.
The position may be different where the right to occupy is linked to shares in a company or units in a unit trust.
What is a land-use entitlement?
The definition of real estate also includes certain land-use entitlements.
A land-use entitlement may arise where the right to occupy land is conferred through:
- ownership of shares in a company;
- ownership of units in a unit trust; or
- company shares or trust units combined with a lease or licence.
The substance of the arrangement is important. The mere transfer of ordinary company shares does not automatically constitute a transfer of real estate. The relevant question is whether ownership of those shares or units gives the holder a right to occupy particular land.
This may arise in company-title properties, some retirement-village structures and other arrangements where land occupation is inseparable from an associated corporate or trust interest.
What does the clarification mean for business sales?
A typical business sale may include the assignment of a commercial lease with a remaining term considerably shorter than 30 years.
That short-term lease will ordinarily be excluded from the AML/CTF definition of real estate. However, it does not follow that every professional service provided in the business sale falls outside the regime.
The transaction may also involve:
- receiving, holding or controlling settlement funds;
- transferring shares in the company operating the business;
- transferring an interest in a trust or partnership;
- changing a company or trust structure;
- appointing directors, trustees or authorised representatives; or
- providing another professional designated service.
For this reason, a café sale involving the assignment of a five-year lease should not be classified solely by reference to the lease term. The whole scope of the solicitor’s or conveyancer’s engagement must be considered.
Granting or transferring a long-term lease
AUSTRAC’s guidance also affects property developers and other businesses that grant or re-grant long-term leasehold interests.
Where a business grants or re-grants a qualifying leasehold interest as part of carrying on a business selling real estate, the transaction may constitute a real-estate designated service.
Similarly, a lawyer or conveyancer who assists a client in planning or executing the sale, purchase or transfer of a qualifying leasehold interest may provide a professional designated service.
Relevant work may include:
- preparing or reviewing the transaction documents;
- investigating the registered leasehold interest;
- coordinating finance, payments or mortgage releases;
- preparing settlement documents; and
- lodging documents required to transfer the interest.
The precise point at which a designated service begins will depend on the nature and progress of the transaction.
What should clients expect?
Where a transaction falls within the AML/CTF regime, the reporting entity may need to complete customer due diligence before beginning the designated service.
Clients may be asked to provide information concerning:
- their identity;
- the identity of any company, trustee or other contracting entity;
- beneficial ownership and control;
- authority to act for another person or entity;
- the purpose and intended nature of the transaction; and
- source of funds or source of wealth where required by the applicable risk assessment.
Requests for this information do not necessarily mean that the client or transaction is considered suspicious. They form part of the reporting entity’s AML/CTF compliance obligations.
Practical questions to ask at the beginning of a matter
When a transaction involves a lease, licence or other occupancy arrangement, the parties and their advisers should identify:
- What is the fixed term of the arrangement, excluding options?
- Does the occupant receive exclusive possession?
- Does the agreement create an interest in land?
- Can the interest be registered, transferred or sublet?
- Is the occupancy right connected with company shares or trust units?
- Is the matter limited to the lease or licence, or does it also involve money, a company, trust, partnership or other legal arrangement?
- Is a developer or other business granting or re-granting the leasehold as part of a business selling real estate?
These questions help determine whether the arrangement itself is real estate and whether any other professional designated service may arise.
How Ensure Legal can assist
Ensure Legal can assist Queensland clients with:
- reviewing commercial leases and licences to occupy;
- identifying whether an arrangement creates a leasehold interest or contractual occupancy right;
- reviewing long-term Crown, site and development leases;
- advising on lease assignments forming part of a business sale;
- examining company-share or trust-unit arrangements linked to occupation rights; and
- coordinating the property, business-sale and transaction documents.
For advice on negotiating, assigning or renewing a lease, see our commercial leasing services.
The AML/CTF classification depends on the actual rights created and the services being provided. Clients entering an unusual or long-term occupancy arrangement should obtain advice before signing or committing to the transaction.
Read AUSTRAC’s real-estate guidance
Read AUSTRAC’s professional-services guidance
View AUSTRAC’s guidance-update register
This article provides general information only and does not constitute legal advice. The application of the AML/CTF legislation depends on the particular transaction, the rights created by the documents and the services being provided. Information reviewed 28 September 2026, including AUSTRAC guidance updates published to 18 September 2026.
