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AML

New AML Laws Are Here: What Our Clients Need to Know

From today, 1 July 2026, Australian lawyers are regulated under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006. Here is what that means for you and how your experience working with Bugden Allen will change.

A New Era for Law Firms and Property Transactions

Australia has long been one of the few developed countries where lawyers operated outside formal anti-money laundering (AML) regulation. That changes today. Australian law firms are now regulated under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) and the AML/CTF Rules 2025, which together brought the legal profession into the regime for the first time from 1 July 2026.

For Bugden Allen, a firm whose practice is built around property, owners corporations, bodies corporate, and strata law, this is a significant shift. We have spent considerable time preparing our policies, systems, and people so that we can meet these new obligations while continuing to deliver the service our clients expect.

This post explains what the changes mean practically for you as a client.

Which of Our Services Are Affected?

The AML/CTF Act applies whenever we provide what the legislation calls a “designated service.” For our clients, the most common examples are:

Buying, selling, or transferring real property -once a buyer is successful at auction or a private treaty price is agreed, the service becomes regulated.
Holding or managing client money as part of a property transaction – for example, holding deposits in trust or disbursing settlement funds.
Assisting with the sale, purchase, or restructure of a body corporate or legal arrangement – directly relevant to owners corporations and strata entities.
Equity or debt financing relating to a body corporate or legal arrangement.
Creating or restructuring a body corporate – including establishing or reconstituting strata schemes.
Providing our office address for use as a body corporate’s registered office or principal place of business address.

If we are providing advice, strategy or negotiation support without directly executing, settling or transferring assets -for instance, advising on a strata by-law dispute – this will not ordinarily constitute a designated service. However, if the scope of that work changes and we begin to assist in furthering a transaction, our AML/CTF obligations will apply from that point.

What Will Be Different When You First Engage Us?

The most immediate change you will notice is at the beginning of a new matter. Before we can start substantive legal work on any designated service, we are required by law to complete what is called Initial Customer Due Diligence (ICDD) and Verification of Identity (VOI). This means:

We will send you a secure digital request via our identity verification platform, InfoTrack, asking you to verify your identity online. This is a simple, guided process and can be completed remotely on your phone or computer.
We will ask you to complete a short Know Your Client (KYC) form covering basic information about who you are, how you are acting in the transaction, and the nature and purpose of our engagement.
For bodies corporate, owners corporations, and companies, we will also need to identify the entity itself – its ABN, its governing documents, and the individuals responsible for its governance. Depending on the circumstances, this may also extend to identifying beneficial owners.
Our systems will automatically run checks against international sanctions lists and politically exposed persons (PEP) databases as part of this process. This is a regulatory requirement and does not imply any concern about any particular client.

Importantly, we cannot begin substantive work on a matter until this process is complete. We ask for your cooperation in responding to identity verification requests promptly, as delays in completing ICDD will delay our ability to act for you.

Particular Implications for Owners Corporations, Bodies Corporate, and Strata Entities

A significant portion of our clients are owners corporations, bodies corporate, strata committees, and the managers and developers who work with them. These entities present some specific considerations under the new framework.

Entity-level verification

When we act for a body corporate or owners corporation, we are required to verify the existence and governance of the entity itself – not just the individual giving us instructions. Expect us to ask for documents such as your certificate of title, your rules or constitution, and details of the persons authorised to bind the entity.

Beneficial ownership

For non-listed entities, the AML/CTF Act requires us to identify and, in some cases, verify beneficial owners – that is, the individuals who ultimately own or control the entity. For developers and private companies involved in property transactions, this means we may ask questions about shareholding and control structures that go beyond what was previously required.

Multiple transactions, one verification

The good news is that once your identity is verified, that verification remains valid for two years. If we act for your owners corporation on a series of different matters over that period, you will not need to go through the full verification process each time – subject to any change in circumstances.

Property Developers: What to Expect

Developers working with us on land acquisitions, off-the-plan sales, and project finance will encounter the new framework most frequently, as almost every step of a development project will involve a designated service. In practice, this means:

ICDD and VOI must be completed before we act on instructions once a buyer and seller have agreed terms – not at the end of a transaction.
Where we are managing trust funds or holding deposits as part of a project, this itself constitutes a designated service and triggers our obligations.
Transactions involving the creation or restructuring of a body corporate – such as registering a strata scheme or setting up a community association – will require identification of the relevant parties including any beneficial owners, directors, trustees, and settlors.
If a development involves complex ownership structures or foreign investment, additional due diligence steps may be required.

We encourage developers who engage us on ongoing projects to reach out early so we can work through the onboarding process ahead of time and minimise any impact on transaction timelines.

Ongoing Monitoring: What Happens After Onboarding?

The AML/CTF obligations do not end at onboarding. We are required to monitor our client relationships on an ongoing basis and to periodically review the information we hold. In practical terms:

Most clients will be classified as low risk, which means a review of their information every three years. Medium-risk clients will be reviewed every two years, and high-risk clients annually.
If there is a significant change in your circumstances – for example, a change in ownership, a new conveyancing matter, or a change in the individuals authorised to act for your entity – we may need to update your information sooner.
From time to time, we may contact you to ask you to refresh or confirm identity information. This is a routine compliance step, not an indication of any concern.

We have built these review cycles into our practice management systems so that prompts happen automatically and do not fall through the cracks.

Why Are These Checks Necessary?

We appreciate that additional paperwork can feel like an imposition, particularly for longstanding clients where there is an established relationship. It is worth explaining why these requirements exist.

Property is globally one of the highest-risk sectors for money laundering. Large sums of money move through property transactions, and the complexity of ownership structures – trusts, companies, and off-the-plan arrangements – can be used to obscure the origins of funds. Australia’s legal profession has been subject to international scrutiny for the absence of formal AML regulation, and these changes bring us in line with comparable jurisdictions including the UK, the EU, and Canada.

For our clients, the practical implication is that the checks we conduct protect the integrity of the transactions we facilitate on your behalf, as well as our own. We are committed to making this process as straightforward as possible.

What We Cannot Do

There are two important constraints that arise from our new obligations that clients should be aware of.

We cannot begin substantive legal work without ICDD completion.

If you ask us to act and we have not yet completed identity verification, any documents we issue to you will be marked “UNVERIFIED CLIENT” until the process is finalised. We cannot settle a transaction, transfer funds, or take certain other steps on your behalf until verification is complete.

We cannot tell you if a report has been made to AUSTRAC.

In rare circumstances, we may be required to submit a Suspicious Matter Report to AUSTRAC. The law prohibits us from alerting you – or anyone else – that such a report has been made or is being considered. This is known as the ‘tipping off’ prohibition. We recognise this is an unusual constraint on our usual duty of open communication with clients, but it is a strict legal obligation.

Looking Ahead

The commencement of AML/CTF regulation for Australian lawyers marks a permanent change to the way legal services are delivered in this country. Over the coming years, clients can expect these processes to become a standard and unremarkable part of engaging a lawyer, just as they already are when opening a bank account or purchasing a financial product.

We will continue to refine our processes as regulatory guidance develops and as we gain practical experience with the new framework. Our goal is to meet our legal obligations in a way that is minimally disruptive for clients and consistent with the service standard you expect from Bugden Allen.

If you have questions about how the new requirements affect your matter or your relationship with the firm, please speak with your usual contact at Bugden Allen.

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This article is for general information purposes only and does not constitute legal advice. Specific AML/CTF obligations vary depending on the nature of the services provided and the client’s circumstances. Please contact Bugden Allen Group Legal for advice specific to your situation.

Bugden Allen Group Legal | www.bagl.com.au

Financial Hardship Reform: Protecting Vulnerable Owners or Creating New Risks for Owners Corporations

For years, the conversation around unpaid levies has been framed as a simple debt recovery issue. Owners Corporations levy fees, lot owners fail to pay, and recovery action follows. In practice, that approach has often prioritised enforcement over engagement, with recovery processes becoming entrenched before genuine attempts are made to understand the circumstances of the owner in arrears.

The Victorian Government’s response to the statutory review of the Owners Corporations Act 2006 (Vic) seeks to change that narrative.

Among the most significant reforms proposed are the introduction of a legislative financial hardship framework, restrictions on debt recovery while hardship applications are being assessed, mandatory consideration of payment plans, and limitations on the charging of penalty interest in certain circumstances.

At first glance, these reforms appear difficult to criticise. Few would disagree that genuine financial hardship should be recognised and accommodated. Many Owners Corporations have already adopted pragmatic approaches when dealing with owners experiencing illness, unemployment, family violence, or other significant personal circumstances.

The question is not whether hardship should be recognised. The question is whether the proposed framework appropriately balances the interests of vulnerable owners against the financial realities faced by Owners Corporations themselves.

An Owners Corporation is not a government agency. It does not have access to public funding. It is a collective financial structure in which all obligations are met through contributions from lot owners. Every dollar that is not collected must ultimately be funded by other lot owners.

This is particularly significant in the current environment. Insurance premiums continue to rise. Utility costs have increased dramatically. Building compliance obligations are becoming more extensive. Many Owners Corporations are also confronting substantial rectification costs associated with ageing infrastructure, combustible cladding, water ingress and other building defects. With a growing proportion of Victorians now living in strata environments, both the scale of these pressures and the financial stakes involved are increasing.

Against that backdrop, delayed levy recovery does not simply create an administrative inconvenience. It creates a cash flow problem that can affect an Owners Corporation’s ability to meet its own obligations.

The Expert Panel has clearly recognised concerns regarding aggressive debt recovery practices. However, there remains a legitimate question as to whether the proposed reforms risk shifting financial hardship from one owner to many others.

A prolonged suspension of recovery action may provide relief to an individual owner, but it can also leave an Owners Corporation unable to recover funds required to pay insurance premiums, contractors and maintenance costs. In smaller schemes operating with limited financial buffers and fewer contributors, the impact can be immediate and severe.

Another issue is the potential for inconsistency. Approaches to hardship already vary significantly across the sector, and without clear standards a formal framework may entrench rather than resolve that variability.

The success of any hardship framework will depend heavily on how hardship is defined, assessed and reviewed. If the threshold is too low, Owners Corporations may struggle to recover legitimate debts. If the threshold is too high, the reforms may fail to provide meaningful protection for those they are intended to assist. The framework will also need to account for the practical question as to who is best placed to assess hardship, given that many Owners Corporations lack the expertise and resources to make complex financial or personal assessments.

These design challenges become even more acute when considering who the framework is intended to protect. Questions have been raised as to whether access to payment plans should extend to all lot owners or be limited to owner‑occupiers. On one view, financial hardship is not confined to any one class of ownership, and a uniform framework promotes consistency and fairness. On another, hardship protections should be directed primarily toward owners where there is a genuine risk of displacement from a principal place of residence.

Where a lot is used as an income‑producing investment, deferral of levies may operate less as a social protection and more as a reallocation of financial risk to other owners. Consideration of mechanisms that prioritise the payment of Owners Corporation fees from rental income streams may provide a more balanced response, aligning financial responsibility with the benefits derived from the asset.

That same principle extends to the design of any broader hardship framework. Rather than adopting prescriptive controls, the focus should be on ensuring that relief is structured, proportionate and difficult to exploit. This may, in practice, require limits around duration and repeat access, and a clear expectation that lot owners take responsibility for initiating and substantiating claims of hardship. Measures that preserve accountability, whether through conditional access to facilities or other incentives to engage, are not punitive, but necessary to ensure the system operates fairly across the scheme as a whole.

Ultimately, Corporations operate on a fixed, collective budget. Any regime that defers or reduces contributions must therefore be carefully calibrated. Prioritising support for owner‑occupiers most at risk, confining relief to defined periods, and retaining the ability to refuse arrangements that would materially undermine the scheme’s financial position are all mechanisms that help ensure hardship protections remain workable in practice. Without such guardrails, there is a real risk that well‑intentioned reforms will shift, rather than solve, financial stress.

The Government’s response provides broad support for hardship protections, but many of the practical details remain unclear. Questions surrounding evidentiary requirements, review mechanisms, timeframes and dispute resolution processes will ultimately determine whether the framework succeeds or creates additional conflict.

There is also a broader policy question. If financial hardship protections are to become a central feature of Owners Corporation governance, should government also consider mechanisms to support schemes that experience significant levy shortfalls as a result? At present, there is no clear indication that any external funding or risk-sharing mechanism will be introduced, meaning the financial burden appears likely to remain entirely with fellow lot owners.

The challenge for policymakers is therefore not whether hardship should be recognised. It is how to ensure that hardship protections do not unintentionally undermine the financial sustainability of the communities they are designed to protect.

As consultation continues and legislation is developed, the real test will be whether Victoria can strike a balance between compassion and practicality.

Everyone agrees vulnerable owners deserve protection. The harder question is who ultimately pays for that protection.

This article was first published on June 28, 2026 and was written by Julia Moroz, Partner and Michael Skolarikis, Solicitor in our Melbourne office.

common property electric vehicles EV charging NCAT NSW strata Owners Corporation strata committees strata reform

The Right to Charge: NSW Gives Strata Owners a New EV Pathway

Legislative Reform | New South Wales

Electric vehicles are becoming increasingly popular, and apartment owners want to charge them at home. Until now, getting a charger approved in a strata building has meant navigating the standard works approval process – general meeting votes, committee discretion, and by-laws that have sometimes been used to block installations outright.

That is about to change.

The Strata Schemes Legislation Amendment (Miscellaneous) Bill 2025 has passed the NSW Legislative Assembly and is currently before the Legislative Council. When enacted, it will give lot owners a standalone legal right to install an EV charging station on their lot – even where the installation requires work on common property.

How it works

The owner sends a written installation notice to the strata committee, along with information prescribed by the regulations. The committee then has three months to respond. If it doesn’t, approval is deemed granted. If it objects, it must do so in writing with reasons — and those reasons must be reasonable. A by-law that unreasonably prohibits EV charging on an owner’s lot will have no force or effect. If an owner considers the committee’s objection unreasonable, they can apply to NCAT for an order requiring approval.

The owner pays all installation costs and indemnifies the owners corporation for any ongoing maintenance costs and damage to common property. The process sits entirely outside the existing cosmetic, minor, and major works framework — it cannot be blocked by an existing works by-law.

What this means for your scheme

The practical risk for committees is not the first request – it’s the fifth. Individual chargers are manageable; a wave of simultaneous installations without any load management planning is not. The smartest thing a committee can do right now is develop a building-wide EV charging policy before the requests arrive, so there is a consistent and legally defensible framework in place.

Developers should also take note: buildings with adequate electrical capacity and governance documents that anticipate EV charging will be increasingly attractive to buyers.

How Bugden Allen can help

We can assist committees with EV charging policies, advise on what constitutes a reasonable objection, draft by-laws and governance documents for new developments, and represent owners or owners corporations in any NCAT disputes that arise. Contact our NSW team to discuss your scheme.

Further Information

For further information, the NSW Government’s Energy NSW website has guidance on making strata buildings EV ready: energy.nsw.gov.au. The Bill in its current form can be viewed on the NSW Parliament website.

building inspections major structural defects pre purchase inspections REIWA Annexure A residential sale contracts retaining wall defects WA property contracts

Major structural defects inspections under sale contracts – what do they cover?

A recent case has highlighted something that (almost) every person buying a home in WA should know: ‘Major structural defects’ in the context of a contract for the sale of a residential home in WA may not extend to defects of structures other than the residential building, i.e. the house

Many contracts for the sale of a residential home in WA use the REIWA standard form and incorporate the REIWA Annexure A Australian Standard Pre‑Purchase Inspection For Major Structural Defects, or a special condition in similar terms.

REIWA Annexure A in effect permits a purchaser to undertake an inspection of the property for the purpose of identifying major structural defects. If a major structural defect is identified in the inspection report, the purchaser is entitled to issue a notice requiring the seller to remedy the defect, failing which the purchaser can terminate the contract.

Identification of structural defects is important for any purchaser, especially during the conditional period of a sale contract. However, REIWA Annexure A (and its equivalents) can be considered as somewhat ambiguous in its terms. People often do not fully understand what is and is not covered at the time they sign the contract, only finding out too late when they are already in a dispute about their deposit or termination of the sale contract.

The recent judgment in White v Staples t/as Jim’s Building Inspections (Duncraig) [2026] WADC 49 expresses the view that REIWA Annexure A likely does not extend to defects of structures other than the residential building, i.e. the house, unless the house is somehow consequentially affected in a structurally significant way or the other structure is expressly incorporated into the inspection.

In that case, a purchaser is suing a building inspector for failing to identify significant defects with a retaining wall. The defence is essentially that there was no obligation to identify such defects, nor would any defects have given the purchaser any right to issue a notice requiring remediation or to terminate, because the retaining wall was not a part of the residential building, was not required to be inspected pursuant to the sale contract, and the defects are not otherwise captured by REIWA Annexure A.

This interpretation would extend to many structures which purchasers may assume is covered by their structural inspection, such as patios, pergolas, carports, sheds, and fencing.

The judgment was given in the context of a costs application following a summary judgment application, but is nevertheless important for anyone involved in a sale contract dispute in WA. The proceedings will be an interesting one to follow should they progress.

This article was first published on June 25, 2026 and was written by Jonathan O’Connor, Senior Associate in our Perth office.

Alucobond decision Building defects cladding liability combustible cladding defect claims Federal Court owners corporations Strata Law

From Product Defect to Building Defect: What Owners Corporations Should Learn from the Alucobond Decision

The Federal Court’s decision in Owners – Strata Plan No 87231 v 3A Composites GmbH (No 10) [2026] FCA 351 is one of the most significant cladding decisions delivered in Australia in recent years.

At first glance, the case appears to be about combustible cladding. More specifically, it concerned claims brought against the manufacturers and distributors of Alucobond PE and Alucobond Plus, products used on buildings throughout Australia.

However, the most important lesson from the judgment may have very little to do with cladding itself.

Instead, the decision raises a broader question for owners corporations, strata managers and building owners: When defects emerge in a building, where should responsibility actually sit?

The Case

The proceeding was brought as a class action on behalf of owners of buildings that incorporated Alucobond PE or Alucobond Plus cladding.

The applicants alleged that the products were unsafe, non-compliant and not of acceptable quality. They also alleged that representations made about the products were misleading.

Following an extensive trial involving fire engineers, chemists and building experts, the Federal Court rejected the claims.

The Court ultimately concluded that the products themselves could not be characterised as inherently defective in the manner alleged by the applicants.

Why the Decision Matters

What makes the judgment particularly interesting is the Court’s reasoning.

Rather than treating the issue as a simple product liability dispute, the Court focused on the reality that building safety cannot be assessed by looking at a construction product in isolation.

Whether a building presents an unacceptable fire risk depends on numerous factors, including:

the design of the building;
the fire engineering strategy;
the manner in which the product was specified;
how it was installed;
the certification pathway adopted; and
the regulatory framework that applied at the time of construction.

In effect, the Court recognised that the same product may produce very different outcomes depending on how and where it is used.

This distinction is significant because it shifts attention away from the product itself and towards the decisions made throughout the design and construction process.

What This Means for Owners Corporations

For many owners corporations, combustible cladding has historically been viewed as a product problem.

This judgment suggests that approach may be too simplistic.

If liability depends on building-specific circumstances, recovery efforts may require a much deeper investigation into the conduct of those involved in the development process. Builders, architects, fire engineers, building surveyors, certifiers and consultants may all become relevant depending on the circumstances of the project.

While this does not necessarily make recovery impossible, it does make it more complex.

Unlike a claim focused on a single product manufacturer, building defect claims often require detailed evidence regarding who made particular decisions, what standards applied at the time and whether those decisions contributed to the loss ultimately suffered by the owners corporation.

A Broader Lesson Beyond Cladding

Although the case concerned combustible cladding, its implications extend well beyond cladding disputes.

Many building defect claims involve similar questions.

Waterproofing failures, façade defects, structural movement, fire safety issues and building services defects often arise from a combination of design decisions, product selection, workmanship and certification processes.

The Alucobond decision serves as a reminder that building defects rarely have a single cause.

The temptation is often to search for one responsible party. In reality, responsibility is frequently shared among multiple participants who each played a role in creating the risk.

The Importance of Early Investigation

Perhaps the most important takeaway for Victorian owners corporations is the importance of acting early.

Where recovery options depend on project-specific evidence, delays can significantly impact a claim. Documents become harder to locate, participants move on, memories fade and limitation periods continue to run.

Owners corporations should not wait until defects become critical before investigating their position.

Understanding who was involved in the design and construction of a building, and preserving the evidence needed to assess potential claims, is often just as important as identifying the defect itself.

Final Thought

The Federal Court’s decision may be remembered as the cladding class action that failed. However, its longer-term significance may be something quite different.

The judgment challenges the idea that combustible cladding is simply a product liability issue. Instead, it reinforces a principle that many defect practitioners encounter every day: building failures are often the product of decisions, not just products.

For owners corporations, that distinction may prove critical when considering how, and against whom, recovery action should be pursued.

This article was first published on June 23, 2026 and was written by Julia Moroz, Partner in our Melbourne office.