The purchase price is agreed. Settlement is approaching. Then something shifts – the deposit doesn’t come from the account your team expected, a “family gift” turns out to be a loan from an unrelated company, or a buyer who described themselves as self-funded suddenly needs a third party to top up the balance at the last minute. 

Nobody has done anything obviously wrong. But something doesn’t quite add up.

Is this just an unusual transaction – or a situation that warrants a deeper compliance check? 

For Australian conveyancers, this is no longer a hypothetical. Since 1 July 2026, conveyancers have been AUSTRAC-regulated entities under the AML/CTF Act, which means customer due diligence – including, where relevant, Source of Funds – is now part of day-to-day practice, not a distant regulatory concept. The challenge most firms face isn’t collecting documents. It’s recognising when a customer’s funding and circumstances warrant a closer look and having a consistent way to act on it. 

The Real question isn’t “Do we have the Money?” 

Most conveyancers already confirm that funds are available and will clear in time for settlement. That’s a practical, transactional question. 

The compliance question is different: 

Does the source of the money make sense in the context of this customer and this transaction? 

The source of Funds is understanding where the money being used for a specific transaction has come from, to the extent that this is relevant to the customer’s risk profile and your firm’s due diligence (CDD) obligations. It isn’t about treating every buyer as a suspect. It’s about having enough understanding of the funding to know whether it’s consistent with what you’d reasonably expect, given who the customer is and what they’ve told you. 

When it isn’t consistent, that’s the signal to look closer – not a signal that something illegal has happened.

7 Source of Funds red flags Conveyancers shouldn’t ignore 

None of these automatically means wrongdoing. Each of them may warrant further review, depending on the customer’s circumstances and your firm’s risk assessment. 

1. Unexpected third-party funding 

The buyer describes themselves as self-funding the purchase, but some or all of the deposit or balance arrives from a person or entity not previously disclosed. This may have a simple explanation – a parent helping out, a business partner contributing – but it’s worth understanding who the third party is and why they’re involved before assuming that. 

2. Last-minute funding changes 

The funding arrangement changes close to settlement, without a clear reason. A late switch in the source or structure of funds is one of the more common points where a conveyancer’s existing understanding of the customer stops matching reality. 

3. Complex ownership or transaction structures 

Multiple companies, trusts, or intermediaries sit between the buyer and the money, making it harder to see who ultimately controls the transaction. Trusts and corporate structures are common and legitimate – but where they add complexity without a clear commercial reason, they may warrant additional questions about beneficial ownership. 

4. Funds inconsistent with the customer’s circumstances 

The scale or nature of the funding doesn’t sit comfortably with what the customer has previously told you about their income, occupation, or financial position. This is where earlier CDD information becomes useful – it gives you something to compare the transaction against. 

5. Unexplained large transfers 

A significant sum of money appears in the transaction chain without a reasonable, verifiable explanation. The issue isn’t the size of the transfer on its own – it’s the absence of a plausible account of where it came from. 

6. Higher-risk jurisdiction involvement 

Funds originate from, or move through, jurisdictions that may warrant closer consideration based on the customer’s overall risk profile. This should be assessed in the context of your firm’s risk-based approach, not treated as an automatic red flag in isolation. 

7. Reluctance or inconsistencies 

The customer gives conflicting explanations at different points, or is reluctant to provide reasonable supporting information when asked. Genuine buyers with legitimate funding are usually able and willing to explain it. Persistent vagueness or resistance is itself worth noting.

A red flag doesn’t automatically mean something is wrong.

This is worth stating plainly: a red flag is not proof of criminal activity. 

Plenty of legitimate transactions involve funding that looks unusual on the surface – family assistance, informal loans, proceeds from selling another asset, refinancing, inheritance, or business proceeds. These are all common, genuine sources of property funding. 

A red flag should trigger a process, not a conclusion: 

Pause → Understand → Assess → Document → Escalate where appropriate 

The question isn’t “is this suspicious?” in isolation. It’s “can this be reasonably explained, and is that explanation consistent with what we already know about this customer?” 

What should a Conveyancer do when something doesn’t add up?

A practical, risk-based sequence: 

1. Pause and identify the inconsistency – be specific about what doesn’t match, rather than acting on a vague feeling. 

2. Review the customer’s existing information – what has already been collected during onboarding and CDD? 

3. Consider the customer’s risk profile – does this fit a pattern already identified in your risk assessment? 

4. Request additional information or documentation where appropriate – proportionate to the concern, not a blanket document dump. 

5. Consider whether enhanced due diligence (EDD) is warranted – based on the level of risk identified. 

6. Document the review and its outcome – including what was asked, what was provided, and why a decision was reached. 

7. Escalate internally where required – to your AML/CTF compliance officer or equivalent. 

8. Consider reporting obligations where applicable – assessed against the relevant legal thresholds, not applied automatically. 

Not every red flag leads to an SMR. Whether a Suspicious Matter Report is required depends on the specific circumstances and the applicable legal test – this is a decision for your firm’s compliance officer, not something to apply mechanically to every unusual transaction.

What documents can help establish Source of Funds? 

There’s no single mandatory document list – what’s reasonable depends on the customer’s circumstances and the level of risk involved. Depending on the situation, supporting information may include: 

• Bank statements showing the accumulation or transfer of funds 

• Loan or finance approval documentation 

• Sale-of-asset records (e.g. proceeds from selling a property or business) 

• Inheritance documentation (grant of probate, executor correspondence) 

• Gift documentation, including a statement from the giver 

• Financial statements for business owners or self-employed customers 

• Investment or superannuation redemption records 

• Other reasonable evidence that supports the explanation given 

The right approach is proportionate: request what’s reasonably needed to resolve the specific inconsistency, not a standard checklist applied regardless of risk. 

Source of Funds vs Source of Wealth – Don’t Confuse the Two 

Both are relevant tools in customer due diligence, but they answer different questions. Which one is relevant – and how deeply to go – depends on the customer’s risk profile and the specific circumstances of the transaction. 

When Source of Funds connects to Enhanced Due Diligence 

Source of Funds and Source of Wealth information often feed into a broader risk-based decision: 

Risk identified → Additional information requested → EDD applied where appropriate → Review → Documentation 

Not every Source of Funds question escalates to EDD. But where a customer is assessed as higher risk – because of the transaction structure, jurisdiction, PEP status, or inconsistent information – additional measures may be appropriate under your firm’s AML/CTF program. 

The problem with managing Source of Funds checks manually 

For most conveyancing practices, this process still runs on email threads, shared drives, and institutional memory: 

• Supporting documents arrive by email and get saved in inconsistent places 

• Different staff follow different informal processes 

• Follow-up on outstanding information is easy to lose track of 

• Risk information sits separately from the customer’s file 

• There’s no single view of which matters have open compliance actions 

• Retrieving evidence later – for an audit, a file review, or an AUSTRAC request – takes far longer than it should 

None of this is a reflection on individual staff. It’s what happens when a compliance process depends on memory and manual coordination rather than a structured workflow. 

Ready to make your conveyancing AML workflow easier to manage? 
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Source of Funds should be part of a bigger Compliance workflow 

Treating Source of Funds as an isolated document request misses the point. It only adds real value when it’s connected to the rest of your compliance process: 

Client Onboarding → KYC/KYB → Screening → Risk Assessment → Source of Funds / Source of Wealth (where appropriate) → EDD (where required) → Review / Investigation → Ongoing Monitoring → Record Keeping 

Each stage informs the next. A funding inconsistency is easier to spot – and easier to justify a decision about – when it’s viewed alongside the customer’s risk rating, screening results, and onboarding information, rather than in isolation. 

AML Guardian helps Conveyancers manage the bigger picture 

This is exactly the gap AML Guardian is built to close. Rather than treating Source of Funds as a one-off email request, AML Guardian is designed to help conveyancing businesses manage their AML/CTF compliance workflow more efficiently – connecting the pieces so nothing depends on one person remembering where a document went. 

Depending on your firm’s setup, this can include support for: 

AML Guardian doesn’t remove the professional judgement involved in assessing a red flag – and it isn’t a substitute for legal advice. What it does is give your team a consistent, documented workflow so that when something doesn’t add up, there’s a clear record of what was asked, what was found, and why a decision was made. 

See how AML Guardian can help you manage KYC, KYB, risk, EDD, Source of Funds documentation and ongoing compliance in one platform. Book a Personalised Demo.

Manual vs Centralised: The Operational Difference 

When something doesn’t add up, your process should tell you, what happens next 

The goal isn’t to make every property transaction complicated. Most transactions are exactly what they appear to be. The goal is to have a clear, consistent, and documented process for the smaller number that need a closer look – so your team knows what to do, can act proportionately, and can show their work if asked. 

Ready to make your conveyancing AML workflow easier to manage? 
See how AML Guardian can help you manage KYC, KYB, risk, EDD, Source of Funds documentation and ongoing compliance in one platform. 
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