CDD requirements for conveyancers — who do you need to identify?

What is CDD and why does it apply to conveyancers?

Customer Due Diligence (CDD) is the process of identifying and verifying the identity of your clients before or at the point of engagement. It is the foundation of an effective AML/CTF program — you cannot assess risk, spot red flags or file meaningful SMRs without knowing who you are dealing with.

For conveyancers, CDD must be conducted before you begin assisting in the planning or execution of a property transaction. This timing rule is specific to conveyancers and differs from the rules that apply to real estate agents.

Who must be identified?

You must conduct CDD on the client you are acting for — either the buyer or the seller, depending on which side you are acting. You are not required to conduct CDD on the other party to the transaction.

• Acting for the buyer (purchase matters): Conduct CDD on the buyer — and on any representative acting on their behalf
• Acting for the seller (sale matters): Conduct CDD on the seller — and on any representative
• Transfer matters: CDD applies regardless of whether money changes hands. Family transfers, gifts and estate transfers are all in scope.

If your client is a company, trust or SMSF rather than an individual, you must also identify and verify the beneficial owners and controllers of that entity — typically directors and shareholders holding 25% or more, trustees and appointors, or fund members.

CDD timing rules — it depends on the matter type

The timing of CDD differs depending on the matter type. This is one of the most important things to get right.

Sale matters

CDD must be completed at engagement — before you begin assisting the seller with the transaction. This means before contracts are reviewed, before any advice is given, and before any documents are prepared.

Transfer matters

Same rule as sale matters — CDD at engagement, before assisting in the planning or execution of the transfer.

Purchase matters — private treaty

CDD must be completed before settlement, but effectively at engagement. The exchange date acts as the practical outer deadline.

Purchase matters — auction

This is the most complex case. Where the buyer is only known after the hammer falls, initial CDD must be completed as soon as practicable after exchange — and before settlement or within 28 days of exchange, whichever is earlier.

What does identification involve?

For an individual, you must collect and verify:

• Full legal name
• Date of birth
• Residential address
• Occupation
• A government-issued photo ID (driver licence, passport, or equivalent)

Verification can be done in person (sighting the original document), electronically (using a DVS-connected service), or by certified copy where in-person is not possible.

You must also conduct a PEP and sanctions check — screening the client against politically exposed person lists and DFAT's consolidated sanctions list. A clear check result should be recorded and retained.

Enhanced CDD for high-risk clients

If you assess a client as high risk, you must conduct enhanced CDD (EDD). This includes collecting additional information such as source of funds, source of wealth, and adverse media checks. High-risk matters also require written approval from your AMLCO before proceeding.

Factors that might push a client to high risk include: foreign residence, PEP status, complex ownership structures, cash-heavy transactions, or previous suspicious activity.

Record keeping

All CDD records must be retained for 7 years from the date the business relationship ends or the transaction is completed. Use SimpleAML's Matter Register to record CDD electronically and export regular backups to secure storage.