# Overseas Deposits: Source-of-Funds Checks Before Settlement

Ten days out from settlement on an off-the-plan purchase, a $95,000 deposit lands in the trust account. It comes from a company in Singapore, not from the buyer, and the payment reference is a row of digits. The buyer explains it as "my uncle's business helping with the deposit" and asks whether that will be a problem. None of this is proof of anything. But the agency now has to be able to say where that money came from, and why a third party sent it, before settlement rather than after.

An overseas deposit is not suspicious just because it arrives through a remittance provider or from someone who is not on the contract. What matters is whether the agency can explain the payment: who sent it, how they relate to the buyer, where the money came from, and how it reached the trust account. If that explanation stays inconsistent or unexplained and the agency forms a suspicion on reasonable grounds, the matter is escalated and a Suspicious Matter Report (SMR) is considered.

This article is for real estate agencies and buyer's agents providing a [designated service](https://www.austrac.gov.au/new-austrac/designated-services-newly-regulated-entities/real-estate-designated-services), AUSTRAC's term for an activity covered by the AML/CTF regime. [Customer Due Diligence](https://www.austrac.gov.au/industry-and-business/obligations-and-guidance/your-amlctf-program/customer-due-diligence/overview-customer-due-diligence) (CDD) identifies the buyer. Source-of-funds questions attach to the money and the payment path, which is a separate piece of work. It is general information only, not legal advice or a decision about a particular customer or matter.

## Source of funds and source of wealth are different questions

[Source of funds](https://www.austrac.gov.au/industry-and-business/obligations-and-guidance/your-amlctf-program/customer-due-diligence/source-funds-and-source-wealth) is where *this specific* deposit came from: the sale of a property overseas, a named bank account, a particular loan, a gift from a named relative. AUSTRAC frames it as the origin of the particular funds involved in a transaction. Source of wealth is the origin of the person's *entire* wealth: how much they would be expected to have accumulated, and how they came to hold it, through a career, a business they own, an inheritance or investment returns. For a large or higher-risk overseas deposit you can need both, because the immediate origin of the payment only makes sense if there is also a plausible account of how the person came to hold that much money in the first place.

Keep the two labelled separately in the file. A buyer who can show the deposit came from selling an apartment in another city has answered source of funds. Whether their overall wealth is consistent with the purchase is a source-of-wealth question, and on a higher-risk matter you may still need to ask it.

## What to ask before settlement

Work through these and record the answers against the matter file:

1. **Who is the remitter?** Record the name shown by the payment provider, the country the payment is connected with, and the date and amount received.
2. **What is the relationship to the buyer?** Family, a company the buyer controls, an employer, a lender, an adviser. Compare the answer with the contract and the buyer profile.
3. **What is the source of the funds?** Ask how this payment was generated. Request supporting material where that is reasonable and consistent with the explanation given.
4. **How did the money move?** Note the trail through any remittance provider or intermediary into the trust account, with dates, amounts and references. A remittance receipt shows the transfer, not the underlying source.
5. **Why is a third party paying?** If the payer is not a party to the contract, record why the arrangement exists and who authorised it.
6. **Does the timing fit?** Compare the payment against the settlement timetable and earlier explanations. Last-minute changes, split amounts or pressure to accept funds before questions are answered are escalation triggers.

Keep the questions proportionate. The agency's risk-based AML/CTF program sets what evidence is reasonable for the customer, the matter and the payment pattern.

## Does using a remittance provider answer the question?

A remittance provider can be a reporting entity for its own designated services. That does not move the agency's obligations onto the provider. Record what the provider did, what information the agency actually received, what it relied on, and what is still unanswered. Money passing through a regulated provider does not remove the agency's own CDD, screening or risk assessment, and it does not mean every check has to be repeated without thinking about the actual arrangement. If the position is unclear, check AUSTRAC's current guidance and get advice.

## Red flags that justify a closer look

These patterns are not conclusions. They justify closer review, and an SMR assessment where there is no credible explanation:

- a person or entity with no explained connection to the buyer sends the deposit;
- the remitter changes between transfers, or several people send parts of the deposit;
- the buyer cannot explain the source, the route, or the reason for third-party funding;
- the payment arrives just before settlement with pressure to accept it without the usual checks;
- names, account details, amounts or dates do not line up with the contract, the file or the explanation;
- the arrangement looks structured to keep the total funding path out of view.

Capture the facts. Do not label the person or the remitter.

## Foreign PEP, domestic PEP, and sanctions are not the same

These three get collapsed together often, and they carry different obligations.

- **Foreign politically exposed person (PEP):** [enhanced customer due diligence](https://www.austrac.gov.au/industry-and-business/obligations-and-guidance/your-amlctf-program/customer-due-diligence/enhanced-customer-due-diligence) is **mandatory**. A [foreign PEP](https://www.austrac.gov.au/industry-and-business/obligations-and-guidance/your-amlctf-program/customer-due-diligence/politically-exposed-persons-pep) is someone who holds a prominent public position in another country, plus their close associates and family members. If screening returns a genuine foreign PEP match on the buyer or the remitter, EDD applies as a matter of course: senior management sign-off and closer source-of-funds and source-of-wealth work.
- **Domestic PEP or an international-organisation PEP:** the response is risk-based. Apply EDD where the agency's assessment of the customer and the transaction calls for it, and record why.
- **Sanctions:** different again, and not a risk-based judgement. Australian sanctions law prohibits dealing with an asset owned or controlled by a designated person or entity, requires the asset to be frozen, and requires the dealing to be reported to the Australian Sanctions Office and the Australian Federal Police. In practice that means the agency does not provide the designated service. Confirm the match through the agency's screening and review process, control the communication, and follow the legal reporting path. [DFAT's guidance for real estate professionals](https://www.dfat.gov.au/international-relations/security/sanctions/guidance-note/sanctions-compliance-real-estate-professionals) sets out what that involves.

Where a remitter or third party is relevant, screen that party too, on the information available.

## When an overseas deposit becomes an SMR

The reporting clock does not start when the money lands. It starts when the agency forms a suspicion on reasonable grounds, which in practice is often the point where the remitter answers stop reconciling with the contract and the file. The agency does not need to prove that an offence occurred. It needs to be able to show what it knew, what it asked, what stayed unexplained, and when the suspicion was formed.

From the day the suspicion is formed, [section 41 of the AML/CTF Act](https://www.legislation.gov.au/C2006A00169/latest/text) allows 3 business days to lodge the SMR, or 24 hours if the suspicion relates to terrorism financing. State public holidays change the business-day count, so check the calendar for the agency's state. The [SMR](https://www.austrac.gov.au/industry-and-business/obligations-and-guidance/your-amlctf-program/reporting-us/suspicious-matter-reports) is lodged by the reporting entity through AUSTRAC Online. AMLHive does not lodge it. Keep the payment decision and the reporting decision on separate records.

## Talking to the buyer without tipping off

The source-of-funds questions above are ordinary CDD and can be asked openly. What [section 123](https://www.austrac.gov.au/industry-and-business/obligations-and-guidance/your-amlctf-program/reporting-us/tipping), the tipping-off offence, prevents is telling the buyer or the remitter that those questions have hardened into a suspicion, that a report is being weighed, or that one has been lodged — where saying so *would or could reasonably be expected to prejudice an investigation*. The reformed section 123 has applied since 31 March 2025. Keep the questions in the register; keep the reporting decision off the call.

## What happens if the trail is not recorded

The agency can end up holding funds it cannot explain, delaying settlement while it reconstructs the payment path, losing time on the reporting decision, or leaving an evidence gap it cannot close later. CDD records are generally kept for 7 years from the end of the business relationship or the completion of an occasional transaction. Preserve the remitter identity, the questions asked, the payment trail and the decision.

## Where AMLHive fits

AMLHive gives the agency somewhere to run and record this work: CDD workflows, sanctions and PEP screening, source-of-funds capture fields on the matter, escalation notes, and SMR draft templates the compliance officer completes. It keeps the questions, the answers and the reasoning in one place so the authorised reviewer can see them. It does not decide the customer's risk, decide whether an SMR is required, or lodge anything with AUSTRAC.

AMLHive describes this as Your Virtual Compliance Officer — a guided workflow with the evidence attached, not a delegation of the decision. The reporting entity still decides the customer's risk, still decides whether to report, and still lodges anything that goes to AUSTRAC; AMLHive gives no legal advice and certifies no customer. Hands-on setup help is available through the Go-Live & Adoption service (contact for pricing).

For related reading, see [Existing Customers and CDD After 1 July](/Compliance/compliance-blog/existing-customers-cdd-after-1-july), [Real Estate AML/CTF Risk Indicators: What to Review](/Compliance/compliance-blog/real-estate-amlctf-risk-indicators), and AMLHive's [SMR filing guide](/Compliance/smr-filing-guide) for the full reporting framework.

[Start your 14-day free trial](/auth/signup) to organise CDD, screening and source-of-funds evidence around the agency's existing process.

## Sources

- [AUSTRAC: Customer due diligence overview](https://www.austrac.gov.au/industry-and-business/obligations-and-guidance/your-amlctf-program/customer-due-diligence/overview-customer-due-diligence) (page last-updated date to be confirmed on publication day; accessed 8 September 2026)
- [AUSTRAC: Source of funds and source of wealth](https://www.austrac.gov.au/industry-and-business/obligations-and-guidance/your-amlctf-program/customer-due-diligence/source-funds-and-source-wealth) (page last-updated date to be confirmed on publication day; accessed 8 September 2026)
- [AUSTRAC: Enhanced customer due diligence](https://www.austrac.gov.au/industry-and-business/obligations-and-guidance/your-amlctf-program/customer-due-diligence/enhanced-customer-due-diligence) (CDD reform applies from 31 March 2026 for existing reporting entities and 1 July 2026 for Tranche 2; page last-updated date to be confirmed on publication day; accessed 8 September 2026)
- [AUSTRAC: Politically exposed persons (PEP)](https://www.austrac.gov.au/industry-and-business/obligations-and-guidance/your-amlctf-program/customer-due-diligence/politically-exposed-persons-pep) (page last-updated date to be confirmed on publication day; accessed 8 September 2026)
- [AUSTRAC: Suspicious matter reports](https://www.austrac.gov.au/industry-and-business/obligations-and-guidance/your-amlctf-program/reporting-us/suspicious-matter-reports) (last updated 8 July 2026; accessed 8 September 2026)
- [AUSTRAC: Tipping off](https://www.austrac.gov.au/industry-and-business/obligations-and-guidance/your-amlctf-program/reporting-us/tipping) (reflects the reformed s.123 test; page last-updated date to be confirmed on publication day; accessed 8 September 2026)
- [Anti-Money Laundering and Counter-Terrorism Financing Act 2006, sections 41 and 123](https://www.legislation.gov.au/C2006A00169/latest/text) (compilation C2026C00274, current as at 1 July 2026; the reformed s.123 tipping-off test in force from 31 March 2025; accessed 8 September 2026)
- [DFAT: Sanctions compliance for real estate professionals](https://www.dfat.gov.au/international-relations/security/sanctions/guidance-note/sanctions-compliance-real-estate-professionals) (guidance note published 23 March 2026; accessed 8 September 2026)

*This article is general information only. It is not legal advice. Check AUSTRAC's current guidance and consult a professional adviser for your agency's circumstances before acting or lodging a report.*