AML/CTF Compliance & Tranche 2 Reforms
Australia's anti-money laundering and counter-terrorism financing (AML/CTF) regime will soon extend beyond banks, casinos and financial institutions.
Significant reforms to the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) mean a range of Australian professional service providers and businesses will become regulated by AUSTRAC for the first time.
From 1 July 2026, lawyers, accountants, conveyancers, real estate professionals, trust and company service providers, and dealers in precious metals and stones will be subject to compliance obligations if they provide a designated service.
If your business is captured by the Tranche 2 reforms, you may need to enrol with AUSTRAC, implement an AML/CTF program, conduct customer due diligence, identify beneficial owners, maintain records and comply with ongoing reporting obligations.
The penalties for non-compliance are significant. Whether you are a sole practitioner, small business or national organisation, understanding your obligations before the reforms take effect is critical.
Hunt & Hunt advises businesses across Australia, and international businesses operating in Australia, on the practical implications of the AML/CTF reforms. We help organisations develop compliance frameworks that are robust, risk-based, commercially practical and operationally sensible.
AML/CTF advice and guidance for
- law firms;
- accountants;
- conveyancers;
- real estate agents and buyers' agents;
- trust and company service providers;
- dealers in precious metals and stones;
- corporate groups and professional services businesses.
Who will be regulated under the Tranche 2 reforms?
The Tranche 2 reforms capture businesses and professionals that have historically sat outside the AML/CTF regime.
Legal practitioners and law firms
Legal practitioners and law firms may become reporting entities where they assist clients with designated services including:
- property transactions;
- business sales and acquisitions;
- company formation;
- trust establishment;
- corporate restructures;
- management of client funds in certain transactions;
- nominee and registered office services.
Many traditional legal services, including litigation and advocacy, remain outside the regime. Determining where obligations begin and end requires careful analysis.
Accountants and accounting firms
Accounting firms may be captured where they assist with company formation, trust structures, business acquisitions and sales, corporate restructures, client asset management and certain financing arrangements.
Conveyancers
Conveyancers involved in the transfer, acquisition or disposal of real property may be required to comply with AML/CTF obligations.
Real estate agents and buyers' agents
Property transactions have long been recognised internationally as a money laundering risk. Real estate professionals will need to understand customer due diligence and reporting obligations.
Trust and company service providers
Businesses involved in company formation, nominee arrangements, trustee services and registered office services are directly affected by the reforms.
Dealers in precious metals and stones
Jewellers, bullion dealers and other businesses dealing in high-value precious metals and stones may be subject to AML/CTF obligations.
What do the reforms require?
The reforms align Australia with international standards developed by the Financial Action Task Force and are designed to deter, detect and disrupt money laundering and terrorism financing.
If your business provides a designated service, you may be required to:
Enrol with AUSTRAC
Businesses providing designated services must enrol as reporting entities.
Implement an AML/CTF program
Reporting entities must develop and maintain a risk-based AML/CTF program appropriate to their business.
Conduct customer due diligence
Businesses must identify and verify customers and beneficial owners before providing a designated service.
Conduct ongoing due diligence
Customer relationships must be monitored and reviewed on an ongoing basis.
Meet reporting obligations
Businesses must submit reports to AUSTRAC, including Suspicious Matter Reports where required.
Maintain records
Know Your Customer information and transaction records must generally be retained for seven years after the date of the transaction or when the business relationship ends.
A risk-based approach
The AML/CTF regime is not a one-size-fits-all framework.
A suburban conveyancing practice faces different risks to a national accounting firm, property developer or corporate advisory business. Your AML/CTF program must reflect:
- the services you provide;
- your client base;
- geographic exposure;
- transaction types;
- delivery channels;
- the money laundering and terrorism financing risks relevant to your business.
Preparing for the Tranche 2 reforms
Step 1 – Confirm whether your business falls within scope
The starting point is identifying whether your business provides a designated service.
Step 2 – Appoint an AML/CTF Compliance Officer
This must be an individual who meets the eligibility requirements set out by the AML/CTF Act and AUSTRAC guidance.
Step 3 – Assess your risks
Understand the money laundering and terrorism financing risks associated with your business.
Step 4 – Enrol with AUSTRAC
Businesses providing designated services must register as reporting entities.
Step 5 – Develop your AML/CTF program
Policies, procedures, controls and governance frameworks must be documented and implemented.
Step 6 – Establish customer due diligence procedures
Develop processes for identifying customers and beneficial owners.
Step 7 – Train your staff
Employees must understand their obligations and be able to recognise suspicious activity.
Step 8 – Monitor and review compliance
AML/CTF compliance is an ongoing obligation requiring periodic review and updates.
How Hunt & Hunt can help
Our team assists businesses at every stage of compliance.
We advise on:
- whether your services are designated services;
- AUSTRAC enrolment requirements;
- AML/CTF program design;
- risk assessments;
- customer due diligence procedures;
- beneficial ownership identification;
- politically exposed person screening;
- source of funds and source of wealth diligence;
- Suspicious Matter Reports;
- tipping-off obligations;
- record keeping and privacy requirements;
- staff training;
- compliance reviews and audits;
- AUSTRAC investigations and enforcement action.
We deliver practical advice designed to help businesses meet their obligations while minimising disruption to day-to-day operations.
Related services
Businesses affected by the AML/CTF reforms may also benefit from advice in related areas, including:
- corporate governance, risk and compliance;
- business structuring and transactions;
- commercial law;
- property law;
- financial and credit products and services, including licence requirements;
- privacy and data protection;
- regulatory investigations;
- dispute resolution.
Speak with our AML/CTF team
Whether you are assessing your obligations for the first time, implementing an AML/CTF program or responding to AUSTRAC enquiries, Hunt & Hunt can help your business navigate the Tranche 2 reforms with confidence.
Frequently asked questions
Tranche 2 refers to the extension of Australia's AML/CTF regime to lawyers, accountants, conveyancers, real estate professionals, trust and company service providers, and dealers in precious metals and stones.
No. Obligations generally arise when a lawyer or law firm provides a designated service. Many legal services remain outside the regime.
Designated services are specific activities identified under the AML/CTF Act that trigger compliance obligations.
A beneficial owner generally includes individuals who own or control a customer entity, including those holding greater than a 25 per cent interest.
A Suspicious Matter Report is submitted to AUSTRAC where a reporting entity forms certain suspicions about a customer, transaction or activity.
The law restricts disclosure of certain information to a third party where doing so would or could prejudice an investigation or alert a person to regulatory scrutiny. Tipping off is a criminal offence.
KYC information and transaction records generally must be retained for seven years.
AUSTRAC has a range of enforcement powers including infringement notices, enforceable undertakings, remedial directions and civil penalty proceedings.
Whether obligations apply depends on the services provided. Specific advice should be obtained based on individual circumstances.
Compliance costs vary depending on the size, complexity and risk profile of the business.
AUSTRAC is Australia's anti-money laundering and financial intelligence regulator. It administers and enforces the AML/CTF regime, monitors compliance by reporting entities and works with law enforcement agencies to detect and disrupt money laundering, terrorism financing and other serious financial crimes.
The Tranche 2 reforms extend Australia's AML/CTF regime to lawyers, accountants, conveyancers, real estate professionals, trust and company service providers, and dealers in precious metals and stones where they provide designated services. Whether a business is captured depends on the services it provides and the specific circumstances of those services.
The Tranche 2 reforms commence from 1 July 2026. Businesses that provide designated services should begin preparing well in advance by assessing their obligations, implementing compliance frameworks, developing AML/CTF programs and training staff.
Penalties for non-compliance can be significant. Depending on the circumstances, AUSTRAC may take enforcement action including infringement notices, enforceable undertakings, remedial directions and civil penalty proceedings. Serious breaches may expose businesses and individuals to substantial financial penalties and other regulatory consequences.
Businesses should begin assessing their obligations as early as possible to ensure systems, policies and training are in place before compliance obligations commence.
