The short answer
Under the AML/CTF Act, each designated service has a named customer. AUSTRAC says the customer of a professional service is the person in the customer column of the Act’s table for that service, and that the facts of each case determine who that is.
The answer therefore changes with the service. It can be one client, both sides of a sale, or the people behind a company that does not exist yet. Customer due diligence applies to whoever the customer is, so this is worth settling before working through the checks. This page covers selected services. Others, such as equity or debt financing and selling real estate without an independent agent, have their own customer entries.
Source: AUSTRAC: Provided to a customer in table 6 (all items).
- Brokering real estate
Both the seller or transferor and the buyer or transferee.
- Assisting in a transaction or holding client money
The person you assist or act for, not the counterparty.
- Creating a company or express trust
The person, plus the proposed beneficial owners and directors, or the proposed trustee, settlor and beneficiaries.
- Acting as director, trustee or nominee
The nominator: the person on whose behalf you act.
- Buying or selling precious goods
The buyer or the seller, as the case may be.
The service decides who the customer is
Summary of the customer column for selected designated services, as extracted in AUSTRAC guidance. Conditions and exceptions apply to each service.
Separate evidence questions. An answer to one does not settle the others.
Real estate agents: both sides
For brokering the sale, purchase or transfer of real estate, the Act names both the seller or transferor and the buyer or transferee as the customer. AUSTRAC’s example is an agent who acts for the seller and brokers a sale: the agent’s customer is both the buyer and the seller, and the agent has AML/CTF obligations in relation to both.
The service starts at different times for each side. For a seller’s agent, AUSTRAC says it starts for the seller when the agreement to broker the sale is signed, and for the buyer when it is reasonably expected the transaction will proceed. That is typically when the offer has been accepted and the contract is signed. A buyer’s agent starts with the buyer when the agreement to find or identify a property is signed, and with the seller when the transaction is reasonably expected to proceed.
Sources: AUSTRAC: Brokering the sale, purchase or transfer of real estate; AUSTRAC: When you start providing a designated service.
Conveyancers, lawyers and accountants: the person you act for
For assisting with a real estate transaction, or with the sale or purchase of a body corporate (such as a company) or a legal arrangement, the customer is the person being assisted. A conveyancer acting for the buyer has the buyer as its customer, not the seller on the other side.
The same idea applies to holding or managing a client’s money or property for a transaction. AUSTRAC says a person does not become the customer simply because their money passes through your account while you act for someone else. If you hold money in escrow, your customer is your direct client, not the counterparty who paid it in.
Company and trust services: the people behind the structure
When the service is creating a company, the customer is the person instructing you and also the proposed beneficial owners and directors. For creating an express trust, it is the person and the proposed trustee, settlor and beneficiaries.
For acting as a director, secretary, trustee or nominee shareholder, or arranging for someone else to, the customer is the nominator: the person on whose behalf you act. For providing a registered office or principal place of business address, it is the person you give the address to. AUSTRAC’s example is a company using the address as its registered office, where the company is the customer. For selling a shelf company, it is the buyer or transferee.
Source: AUSTRAC: Items 5, 6, 7, 8 and 9 tables; Who is the customer.
Jewellers and precious goods dealers: buyer or seller
For buying or selling precious metals, stones or products where physical currency or virtual assets of $10,000 or more are involved, the customer is the buyer or the seller, as the case may be. If the dealer is selling, the customer is the person buying. If the dealer is buying, the customer is the person selling to it.
AUSTRAC says a sale paid only by card or bank transfer is not this designated service, so the question of who the customer is does not arise for it under the Act.
Source: AUSTRAC: Designated services table.
Invented example: money from the other side
A fictional accounting practice holds funds for a client who is buying a business. The seller’s adviser transfers a part-refund of the deposit into the practice’s trust account.
Using AUSTRAC’s escrow example, the practice might record that its customer is the buyer it acts for and that the seller has not become a customer because money arrived from that side. It might still look at whether the payment makes sense for the transaction. These are suggested steps for the example and do not decide the practice’s obligations.
Source: AUSTRAC: Receiving, holding, controlling or managing a person’s property: Who is the customer?.