An agency is listing a vendor's home. A buyer, whom the agency does not act for, pays the deposit by bank transfer to the buyer's lawyer. Under reg 5B of the AML/CFT (Definitions) Regulations 2011, who is the agency's customer for due diligence?
Correct Answer
A) The vendor, because the vendor is the agency's client in the transaction.
Regulation 5B says a real estate agent's customer is its client, and excludes any party on whose behalf the agent is not carrying out real estate agency work. The one carve-back is a person who conducts an occasional transaction with the agent, such as paying $10,000 or more in cash. Here the buyer pays the lawyer, so the vendor is the only customer.
Why This Is the Correct Answer
The vendor is the client, and the buyer has no transaction with the agency itself.
Why the Other Options Are Wrong
Option B: The buyer, because the buyer is the one paying money in the transaction.
Regulation 5B excludes a party the agent is not carrying out agency work for, unless that party conducts an occasional transaction with the agent.
Option C: Both vendor and buyer, because agents must verify every party to a sale.
The customer is the agent's client; other parties are excluded unless they conduct an occasional transaction with the agent.
Option D: The buyer's lawyer, because the lawyer is handling the deposit funds.
The lawyer is not the agency's customer; the lawyer has separate AML/CFT duties as a reporting entity.
Background Knowledge for Compliance
Source: https://www.legislation.govt.nz/regulation/public/2011/0222/latest/whole.html
Exam Tip for Compliance
AML/CFT customer = your client; add a non-client only if they transact with you, such as a cash deposit.
Common Mistakes to Avoid on Compliance Questions
- •Running full customer due diligence on the buyer as though they were the agency's customer.
More Compliance Questions
A real estate advertisement states 'Best value in the area' without any supporting evidence. Under the Fair Trading Act, this statement is:
Under the Fair Trading Act 1986, which statement about advertising a property for sale is correct?
A client provides a bank cheque for $30,000 as a deposit and mentions recently selling cryptocurrency to fund the purchase. Under AML/CFT requirements, what is the appropriate next step?
An agent holds $180,000 in trust across four transactions. One agreement is validly cancelled because the purchaser's finance condition was not met, and both parties' lawyers confirm the $60,000 deposit is to be refunded to the purchaser. What is the correct trust account procedure?
Under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009, what is the minimum threshold for conducting customer due diligence when establishing a business relationship in real estate transactions?
- → An international client buying a $2.8 million commercial property provides a copy of their overseas passport but refuses any further identity checks or information, claiming diplomatic immunity. How should the agent proceed under AML/CFT requirements?
- → Which statement best describes the trust account requirements under the Real Estate Agents Act 2008?
- → An agency's trust account reconciliation reveals that interest earned on client deposits has been retained by the agency rather than distributed to clients. This practice is:
- → According to trust account regulations, how long must real estate agencies retain records of trust account transactions?
- → What is the primary purpose of the Consumer Guarantees Act 1993 in relation to real estate services?
- → Under the Consumer Guarantees Act 1993, if a real estate agent fails to exercise reasonable care and skill when marketing a property, what remedy might be available to the client?
- → A real estate agency's trust account shows a shortage of $5,000 during a routine audit. What is the most serious disciplinary order available under the Real Estate Agents Act 2008?
- → A real estate agent advertises a property as having a 'new roof' when they know it was repaired but not replaced. A buyer purchases based on this information and later discovers the truth. Which Acts could potentially apply to this situation?
- → Which statement best describes the primary purpose of trust accounts in real estate transactions?
- → A property advertisement states 'Guaranteed rental return of 8% per annum', although no one has contracted to pay that return. Under the Fair Trading Act 1986, this statement is:
People Also Study
Property Law & Legislation
56 questions
Agency Practice
89 questions
Sale & Purchase Process
63 questions
Professional Conduct & Ethics
46 questions
Related Study Resources
Previous Question
An agency filed a suspicious activity report about a listing in March 2026. The listing was later withdrawn. Under s 49A of the AML/CFT Act 2009, how long must the agency keep its copy of that report?
Next Question
An agency received a deposit on 1 June and the vendor has not asked for any statement. Under s 124 of the Real Estate Agents Act 2008, when must the agency give the person entitled a written account of the money?