When reliance is available
AUSTRAC describes reliance as relying on know-your-customer information collected and verified by a third-party reporting entity or a foreign business subject to AML/CTF regulation. It can operate under an ongoing customer due diligence arrangement between the entities, or on a case-by-case basis. The third party must itself be subject to the AML/CTF Act or an equivalent foreign regime, and the relying entity must satisfy the conditions in the Act and Rules.
Reliance applies to customer identification procedures, not to the whole program. The relying entity still assesses risk, applies ongoing customer due diligence, monitors the relationship, lodges its own reports and keeps its own records. An agreement to share KYC does not convert one entity's compliance into the other's.
What the arrangement should contain
A written arrangement is not a substitute for a compliant third party. Verify the third party's status as a reporting entity or equivalent foreign business, keep the executed arrangement, and periodically test that the promised information actually flows when it is needed.
- The parties and the classes of customers or transactions covered
- Which identification procedures the third party will perform and maintain
- A commitment that the third party will give the relying entity the information it needs
- How changes to KYC information are notified, including ongoing CDD events
- The term, review cycle and the process for ending or suspending reliance
Case-by-case reliance
Case-by-case reliance is available where the statutory conditions are met for a particular customer. The relying entity should record the customer, the third party, the identification information received, the date and the reason the reliance was valid. In property transactions this commonly appears where a real estate agent relies on a lawyer's or conveyancer's completed onboarding for a shared purchaser - and the agent still completes its own risk assessment and its own remaining obligations.
Do not describe a referral, an introduction or an email of documents as reliance unless the conditions are met. Receiving a copy of a driver's licence is not the same as relying on another entity's completed applicable customer identification procedures.
Record the boundaries
AUSTRAC can ask either entity to demonstrate its own compliance. A reliance arrangement that leaves both parties believing the other one 'did the CDD' is a failure. Each party should be able to show what it relied on and what it did itself.
- Which entity identified and verified the customer
- Which entity assessed risk and applied enhanced measures
- Who monitors the relationship and on what triggers
- Who would lodge an SMR or TTR, and how information is protected
Official sources
Use these primary AUSTRAC pages to confirm the current rules and apply them to your circumstances.
Frequently asked questions
Does reliance remove the need for a risk assessment?
No. Reliance applies to customer identification procedures. Each reporting entity remains responsible for its own risk assessment, ongoing customer due diligence, monitoring, reporting and record-keeping.
Can a real estate agent rely on a lawyer's checks?
Yes, where the conditions are met, typically under an ongoing arrangement or case-by-case reliance. The agent must still complete its own risk assessment and the obligations that remain with it, and both parties must meet the statutory conditions.
Is a referral of documents the same as reliance?
No. Reliance is a statutory mechanism with conditions. Sending or receiving copies of documents without meeting those conditions is not reliance and does not satisfy either party's obligations.
Do we need AUSTRAC approval for a reliance arrangement?
The AUSTRAC guidance describes reliance under the Act and Rules; the conditions and record-keeping requirements apply, and the arrangement should be documented and verified. Where the position is complex, take advice on the current provisions.
Put it into practice
Cassandra AML turns these obligations into a working system: designated-service decisions, customer due diligence, screening, monitoring and reporting records — hosted in Sydney, free to start.
This guide is general information for Australian professionals. It is not legal advice and does not replace the AML/CTF Act, the AML/CTF Rules or AUSTRAC guidance. Confirm your specific obligations with AUSTRAC or a qualified legal adviser. See our editorial and correction standards.