AML/CTF Program Part B: Customer Identification in Plain English
AML/CTF Program Part B governs how a real estate agency identifies and verifies every client before providing a designated service. It is the most operationally complex part of any AML/CTF program — and the component where inadequate design creates the most direct legal exposure for the agency and its principals.
If Part A is the governance architecture of an AML/CTF program, Part B is where compliance becomes operational. It is the set of procedures that every agent, associate, and staff member who works with clients must understand and follow every time a new client relationship begins.
Getting Part B right requires more than understanding what it must cover. It requires designing procedures that fit the specific client types your agency encounters, the ownership structures common in your market, the risk profile established in your ML/TF Risk Assessment, and the operational realities of how your agency actually works. That is why Part B is the component Lead Comply spends the most time on in every program design engagement.
This article explains what Part B is, what it must address, and why the complexity of each component makes professional program design the right choice for most Australian real estate agencies. AUSTRAC guidance on Part B is available at austrac.gov.au. The legislative requirements appear in the AML/CTF Act 2006 at legislation.gov.au.
| ⚠️ PART B MUST BE IN PLACE BEFORE 1 JULY 2026 Without a compliant Part B, a real estate agency cannot lawfully provide a designated service o any client. Customer identification and verification is not optional. AUSTRAC has been explicit: an agency that provides designated services without a functioning Part B procedure in place is in breach from the first client it serves after 1 July 2026. Part B is not a form. It is a set of documented procedures that must be designed around the agency’s specific client base, risk profile, and operational structure. |
What Is AML/CTF Program Part B?
Part B of the AML/CTF Program is the Customer Identification Program. It is the set of written procedures that governs how a reporting entity identifies, verifies, and monitors its customers before and during the provision of designated services.
Under the AML/CTF Act 2006 and AML/CTF Rules, Part B must establish documented procedures for six areas. Understanding what each area involves helps to understand why designing Part B correctly is a substantive undertaking — not a document drafting exercise.
| Part B is not the same as knowing what CDD requires. Many agency principals read articles about Customer Due Diligence, learn what it involves, and conclude they understand enough to design their own Part B procedures. The distinction matters: knowing that beneficial owner identification is required for company clients is knowledge. Designing a procedure that captures the full ownership chain for the trust, SMSF, and corporate structures common in your specific market — calibrated to your risk assessment, integrated into your onboarding workflow, and documented in a way that satisfies AUSTRAC — is professional program design. Lead Comply bridges that gap for every agency it works with. |
The Six Components Part B Must Address
Each of the six components below represents a distinct area of customer identification procedure. For each one, the standard AUSTRAC applies goes well beyond having a general understanding of the requirement.
| 1. Customer Identification Procedures What it covers: The information your agency must collect to establish the identity of every client before a designated service is provided — covering the specific data points required for each client type your agency serves. Why it is complex: The information required varies significantly between individual clients, company clients, trust clients, SMSFs, and partnerships. A single-procedure approach does not work. Each client type requires its own tailored identification pathway, designed around the ownership structures and client categories common to your market. |
| 2. Customer Verification Procedures What it covers: The methods your agency uses to confirm that the identity information collected is accurate, using reliable and independent sources — and the standard those sources must meet under the AML/CTF Rules. Why it is complex: Verification is the step most agencies get wrong. Accepting a photocopy of a licence is not verification. The procedure must specify what documents are acceptable, what the agent must check, how non-face-to-face verification is handled, and what to do when a document cannot be verified. Each of these involves judgment calls that a generic procedure cannot resolve. |
| 3. Beneficial Owner Identification What it covers: The procedure for identifying the natural person or persons who ultimately own or control a non-individual client — tracing ownership through companies, trusts, and other structures to the human being at the top. Why it is complex: This is the component AUSTRAC focuses on most heavily for real estate transactions. The structures Lead Comply encounters — discretionary trusts with corporate trustees, SMSFs with multiple members, offshore holding companies — each require a different tracing methodology. A single procedure cannot address all of them correctly. This is exactly why professional program design is essential. |
| 4. Enhanced Due Diligence Procedures What it covers: The additional steps required when a client or transaction presents elevated risk — including Politically Exposed Persons, high-risk jurisdiction clients, and transactions with unusual structural characteristics. Why it is complex: EDD is not a checklist. It is a risk-calibrated procedure that must reflect the specific elevated-risk scenarios your agency is likely to encounter based on your market and client base. Designing EDD procedures that are both comprehensive and practical requires an understanding of your risk profile that can only come from a completed ML/TF Risk Assessment — and experience applying EDD in a real compliance context. |
| 5. Ongoing Customer Due Diligence What it covers: The procedure for monitoring client relationships after initial identification, identifying changes in client circumstances, and updating client information when the risk profile of the relationship changes. Why it is complex: Ongoing CDD is the component agencies most often omit entirely from Part B, treating initial identification as the complete obligation. The procedure must specify what triggers a review, who conducts it, what is assessed, and how the outcome is documented. The triggers themselves require calibration to your client types and transaction patterns. |
| 6. Non-Face-to-Face Client Identification What it covers: The specific procedures that apply when a client cannot be identified in person — covering the additional controls required for remote or online client onboarding. Why it is complex: Non-face-to-face procedures must meet a higher standard than face-to-face identification because the risk of identity fraud is greater when the agent has not physically seen the client and their documents. Designing appropriate controls for digital onboarding — which is increasingly common in investment property markets with interstate and offshore buyers — requires specific experience with both the AUSTRAC standard and the practical realities of remote client engagement. |
| 🎓 FROM LEAD COMPLY’S COMPLIANCE EXPERIENCE In designing Part B procedures for real estate agencies, the component that consistently requires the most time and judgment is beneficial owner identification — not because the concept is complicated, but because the ownership structures encountered in Australian real estate transactions are extraordinarily varied. A trust purchasing through a corporate trustee, where the trustee is itself owned by a holding company controlled by a foreign national, presents a beneficial owner identification challenge that no generic procedure can resolve. Lead Comply has worked through these structures in a regulated compliance environment. Designing a procedure that handles them consistently and correctly — without stopping every transaction for an ad-hoc judgment call by whoever happens to be managing the file — is the value that professional Part B design delivers. |
The Four Client Types Part B Must Cover
Part B must contain specific identification and verification procedures for every type of client your agency is likely to serve. Generic procedures that apply a single approach to all clients regardless of their legal structure do not meet the AML/CTF standard.
Australian real estate transactions involve four main client categories. Each carries different identification requirements, different verification standards, and different beneficial owner obligations. Lead Comply designs a complete procedure set for each one as part of every Part B engagement.
| Client Type | Why a Specific Procedure Is Required | Where Generic Procedures Fail |
| Individual clients | Identity and verification requirements differ between Australian residents, foreign nationals, and clients who cannot be identified face-to-face | Generic individual procedures rarely address the foreign national verification pathway or the non-face-to-face control requirements adequately |
| Company clients | Identification covers the company itself, all directors, and the beneficial owners who hold 25% or more of the shares or exercise control | Most generic procedures stop at company and director identification without establishing the beneficial owner tracing methodology |
| Trust clients | Identification covers the trustee, the beneficiaries, the trust deed, and the ultimate beneficial owners — each with its own verification requirement | Discretionary trust procedures require specific handling of the beneficiary class and the trustee’s own structure, which generic procedures address generically or not at all |
| SMSF clients | SMSFs require verification through the ATO SuperFund Lookup and identification of all members as both trustees and beneficiaries | SMSF procedures are consistently missing or inadequate in template-based programs because they require SMSF-specific knowledge to design correctly |
Why Part B Cannot Be Downloaded
The most important thing to understand about Part B is why a downloaded template or generic program document cannot satisfy the requirement. It is not because AUSTRAC has banned templates. It is because Part B, by its nature, must be designed around three things that are specific to your agency.
| Part B Must Reflect | Why a Template Cannot Do This |
| Your ML/TF Risk Assessment findings | Part B procedures must be calibrated to the risks identified in your risk assessment. A higher-risk client type requires enhanced procedures. A lower-risk profile may allow simplified verification in certain circumstances. A template is not calibrated to your risk assessment because it was not written from it. |
| Your specific client base | An agency serving primarily individual Australian resident buyers needs different procedures from one serving offshore investors purchasing through corporate structures. A template applies the same procedures regardless of who the agency’s clients actually are. |
| Your operational workflow | Part B procedures must integrate into how your agency actually works — when CDD is collected, who collects it, how verification is conducted, and where records are stored. A procedure that cannot be followed in practice because it does not fit the agency’s workflow will not be followed consistently, which creates compliance risk regardless of how well-written it is. |
| 🎓 FROM LEAD COMPLY’S COMPLIANCE EXPERIENCE The question Lead Comply is asked most often about Part B is: “Can we use the template our industry association provided?” The honest answer has two parts. First: an industry association template can provide a useful starting framework. It establishes the section structure and, in some cases, the general approach to individual client identification. Second: in every case Lead Comply has reviewed, the template requires substantial additional work before it can be considered a compliant Part B for the specific agency. The beneficial owner sections are invariably generic, the trust and company procedures are incomplete, the EDD triggers are not calibrated to the agency’s risk profile, and the non-face-to-face controls are either absent or inadequate for agencies with regular remote client contact. A template is a starting point. It is not a compliant program. |
The Relationship Between Part B and the Rest of the AML/CTF Program
Part B does not exist in isolation. Its procedures must flow directly from the risk assessment and be consistent with the governance framework established in Part A. Understanding this relationship is important for agencies that are tempted to design Part A and Part B separately or out of sequence.
| The correct sequence for AML/CTF program design: 1. Complete the ML/TF Risk Assessment first. The risk assessment identifies your client types, service risk, channel risk, and jurisdiction risk. This is the foundation everything else is built on. 2. Design Part A using the risk assessment findings. The governance framework, training obligations, and monitoring procedures in Part A must reflect the risk profile the assessment established. 3. Design Part B using both the risk assessment and Part A. Customer identification procedures must be calibrated to the risk assessment. The verification standard, EDD triggers, and beneficial owner procedures must reflect the client types and risk levels the assessment identified. Designing Part B before completing the risk assessment is like building a structure without a foundation. It may look complete. It will not hold up under examination. Lead Comply follows this sequence for every agency engagement. |
How Lead Comply Designs AML/CTF Program Part B
Lead Comply’s Part B design process begins after the ML/TF Risk Assessment is completed and Part A is drafted. The sequence matters because Part B procedures must be calibrated to the risk profile the assessment establishes.
For every real estate agency engagement, Lead Comply delivers a Part B that covers all six required components across all four client types. The procedures are:
- Tailored to the specific client types the agency actually encounters based on its market, services, and risk profile
- Written in plain English that agents can understand and follow in practice, not compliance language that requires interpretation
- Integrated into the agency’s existing client onboarding workflow rather than designed as a parallel process
- Calibrated to the risk assessment findings so that higher-risk clients and transactions receive the appropriate level of scrutiny
- Reviewed with the principal and compliance officer before adoption to ensure they reflect how the agency actually operates
- Accompanied by supporting templates: client identification forms, verification record templates, beneficial owner worksheets, and EDD checklists
Part B design is not a document drafting exercise. It requires genuine compliance expertise, knowledge of the AML/CTF Rules, experience with the client structures common in Australian real estate transactions, and the judgment to design procedures that are both legally compliant and operationally practical. That combination is what Lead Comply brings to every engagement.
| ✦ WHY REAL ESTATE AGENCIES WORK WITH LEAD COMPLY FOR PART B Part B design is the most common reason real estate agency principals contact Lead Comply. Not because they do not understand what CDD involves — most do, at a conceptual level. But because they recognise the gap between understanding a requirement and designing a procedure that meets it correctly for their specific agency. Lead Comply has worked through the ownership structures, the non-face-to-face challenges, the trust and SMSF identification questions, and the EDD calibration problems that make Part B genuinely difficult to get right. Every Part B Lead Comply delivers is a tailored, ready-to-adopt set of procedures — nota template with blanks to fill in. The next step is a free 30-minute Clarity Call. In 30 minutes you will know exactly what your Part B needs to cover, how far your current position is from the AUSTRAC standard, and what Lead Comply can do to get you therebefore 1 July 2026. |
| 📋 WHAT GOES WRONG IN PRACTICE — WHAT LEAD COMPLY SEES Three Part B failures appear consistently when Lead Comply reviews agency programs: 1 — A single CDD form applied to all client types regardless of structure. The same form used for an individual Australian resident is used for a discretionary trust with a corporate trustee and a foreign national beneficiary. The form captures none of the trust-specific information the AML/CTF Rules require. One form cannot serve four fundamentally different client types. 2 — Beneficial owner identification stops at the first level. The agency identifies the company director or the trustee and treats that as the beneficial owner. It is not. The beneficial owner is the natural person who ultimately controls the entity — which may be several ownership layers removed from the person who presents at the agency. Stopping at the first level is one of the most common Part B failures AUSTRAC identifies in real estate agency examinations. 3 — No EDD procedure exists at all. The Part B document addresses standard CDD. It contains no Enhanced Due Diligence procedure, no PEP identification process, and no high-risk jurisdiction handling. When a PEP client or an offshore purchaser from a high-risk country is encountered, there is no documented procedure for the agent to follow. |
| ✓ WHAT A COMPLIANT PART B LOOKS LIKE Separate identification procedures for each client type: individual, company, trust, SMSF. Verification procedures specifying acceptable documents, checking standards, and non-face-to-face controls. Beneficial owner identification methodology that traces through company and trust structures to the natural person. EDD procedures calibrated to the agency’s risk profile and triggered by identified risk factors. Ongoing CDD procedure with documented review triggers and escalation path. Non-face-to-face client identification controls for remote and online onboarding. Supporting templates: identification forms, verification records, beneficial owner worksheets, EDD checklists. Procedures written in plain English that agents can follow without additional interpretation. Formally adopted by the agency before 1 July 2026. Achieving all of this requires professional program design. Lead Comply can help. |
| Frequently asked questions on AML/CTF Program Part B: Can Part B be the same document as our standard CDD policy? — No. Part B must be formally adopted as part of the AML/CTF Program and must meet the specific content requirements of the AML/CTF Rules. A general CDD policy document does not satisfy these requirements. How long should Part B be? — Length depends on the agency’s client types and risk profile. A Part B covering all four client types with appropriate EDD and non-face-to-face procedures typically runs 20 to 35 pages of substantive content. Lead Comply provides this as part of every program engagement. Can we adopt Part B and update it later? — Yes — but the initial version must be substantively complete. Adopting a skeleton Part B with the intention of completing it later creates a compliance gap from 1 July 2026. Does Part B need to be reviewed like Part A? — Yes. Part B must be reviewed whenever the agency’s client base changes materially, when the risk assessment is updated, and at minimum annually. |
Book a free 30-minute Clarity Call with Lead Comply. In 30 minutes you will know exactly what your Part B must cover for your specific client base, where your current position falls short, and what Lead Comply can do to get you there before 1 July 2026.
