Source of Funds in Property Transactions: Current AML/CTF Checks from July 2026

What does “source of funds” mean?

Source of funds means how the money used for a specific transaction was obtained.

It does not simply mean the bank account from which the money is transferred. For example, if a buyer transfers settlement funds from a savings account, the real question may be how those savings were built up. Were they from salary, business income, sale of another property, inheritance, investment returns, a bank loan, or a gift from family?

In a property transaction, source of funds may include:

• salary or employment income;
• business profits;
• sale proceeds from another property or asset;
• inheritance;
• family gift;
• dividends or investment returns;
• bank loan or mortgage;
• private loan;
• trust distribution;
• company funds; or
• funds transferred from overseas.

A lawyer may not need the same level of detail in every matter. The amount of information requested will usually depend on the nature of the transaction, the client profile, the structure being used, and whether there are any risk factors requiring further checks.

Why may your lawyer ask source-of-funds questions?

Since 1 July 2026, AML/CTF obligations have applied when a firm provides a relevant professional designated service. This includes services that directly advance certain real-estate transactions, but the obligations do not apply identically to every legal matter.

As a result, law firms may need to take additional steps to understand their clients and the transaction. In practical terms, this may mean asking questions such as:

• Who is the buyer or seller?
• Is the buyer acting for themselves or for someone else?
• Is the property being purchased by an individual, company, trust or other structure?
• Who ultimately owns or controls the entity?
• Where are the purchase funds coming from?
• Is any money coming from a third party?
• Are funds being transferred from overseas?
• Is the transaction consistent with the client’s known financial position?
• Are there any unusual instructions or urgent last-minute changes?

These questions are not an accusation of wrongdoing. They are part of a risk-based compliance process designed to prevent property transactions from being misused for money laundering or other financial crime.

What documents may be requested?

The documents required will depend on the matter. However, property buyers should be prepared to provide documents that explain both identity and funding.

For individual buyers

• passport or driver licence;
• proof of residential address;
• bank statements showing available funds;
• payslips or employment records;
• tax returns or notices of assessment;
• loan approval documents;
• contract of sale for another property if funds come from a previous sale;
• inheritance documents;
• gift letter or statutory declaration if funds are gifted by family;
• evidence of investment or share sale proceeds.

For company buyers

• company extract;
• details of directors and shareholders;
• information about beneficial owners;
• company financial statements;
• business bank statements;
• loan documents;
• evidence showing how the company obtained the funds.

For trust purchases

• trust deed;
• details of trustee and beneficiaries;
• trust distribution minutes;
• trust financial records;
• evidence of funds held by the trust;
• documents showing who controls the trust.

For overseas buyers or overseas funding

• foreign bank statements;
• remittance records;
• foreign loan documents;
• sale contract for overseas property;
• evidence of foreign business income;
• documents showing the original source of funds before transfer to Australia;
• English translations where necessary.

If documents are not in English, certified translations may be needed. It is better to identify this early rather than wait until settlement is approaching.

Will this delay settlement?

It can, if documents are left until the last minute.

Property transactions are time-sensitive. Settlement dates, finance approvals, foreign investment requirements, transfer duty obligations and lender deadlines can all interact with each other. If source of funds questions are raised late, it may create avoidable pressure before settlement.

The best approach is to prepare early, especially if your matter involves:

• funds from overseas;
• a company or trust structure;
• a family gift;
• a private loan;
• cash savings without clear records;
• multiple contributors to the purchase price;
• third-party payments;
• high-value residential or commercial property;
• a buyer or seller acting through a representative;
• urgent settlement.

In straightforward matters, the process may be relatively simple. For example, where a buyer is purchasing a home using an Australian bank loan and personal savings from employment income, the required checks may be more limited.

In more complex matters, your lawyer may need additional time to review documents, ask follow-up questions, or understand the structure of the transaction.

What if funds are gifted by family?

Family gifts are common in property transactions, especially for first home buyers or overseas family-supported purchases.

However, from an AML/CTF perspective, the issue is not only whether the buyer received the money. Your lawyer may also need to understand where the gift came from and whether the person giving the gift has a clear and legitimate source of funds.

For example, if parents are contributing part of the purchase price, your lawyer may ask for:

• a signed gift letter;
• identification documents for the gift provider;
• bank statements showing the transfer;
• documents showing how the gift provider obtained the funds;
• evidence that the money is a gift rather than an undisclosed loan.

This is particularly important where the gift is large, comes from overseas, or is inconsistent with the information available about the transaction.

What if the buyer is a company or trust?

Buying through a company or trust can be commercially appropriate, but it may involve more due diligence.

Your lawyer may need to identify not only the entity named on the contract, but also the people who ultimately own, control or benefit from that entity. This is often called beneficial ownership.

For a company, this may involve checking directors, shareholders and controllers. For a trust, this may involve reviewing the trustee, appointor, beneficiaries and trust deed.

Clients using companies or trusts should prepare documents before signing or soon after signing the contract. If the structure is complex, it may also be sensible to ensure that your accountant, finance broker and lawyer are aligned early.

Are these questions only for foreign buyers?

No. Australian buyers may also be asked source of funds questions.

However, overseas funding can require additional attention because documents may come from foreign banks, foreign businesses, offshore asset sales or family members outside Australia. Translation, verification and explanation can take longer.

Foreign buyers may also need to consider separate issues such as FIRB approval, additional foreign acquirer duty, land tax surcharge rules and finance arrangements. AML/CTF checks are not the same as FIRB or tax advice, but they may overlap in practice because the same transaction structure needs to be understood clearly.

Is this legal advice or a financial investigation?

Your property lawyer’s role is not to judge your personal finances. However, lawyers involved in relevant property transactions may need to satisfy legal and regulatory obligations before providing certain services.

In practical terms, this means your lawyer may need enough information to understand the client, the transaction, the ownership structure and the source of funds.

If the information provided is incomplete, inconsistent or unclear, further questions may be required.

How to prepare before buying property

Before entering into a Queensland property transaction, consider preparing the following:

• clear identity documents;
• evidence of savings or loan approval;
• documents showing the origin of large deposits;
• records for gifted funds;
• company or trust documents if buying through an entity;
• translation of foreign-language documents;
• explanation of overseas transfers;
• contact details for your accountant or finance broker, if relevant.

Good preparation can reduce the risk of delay and make the conveyancing process smoother.