We discuss this important topic, and new obligations that come into force from 31 March 2026 under Tranche 2 of the act.

Understanding Your Obligations Under the AML/CTF Act

Summary 

Australia’s Anti-Money Laundering and Counter-Terrorism Financing Act 2006 governs how businesses prevent financial crime. From July 2026, approximately 90,000 new reporting entities will come under regulation, including legal professionals, accountants, and real estate agents. If your business provides designated services, you’ll need to enrol with AUSTRAC, implement compliance programmes, conduct customer due diligence, keep detailed records, and report suspicious transactions. Understanding these obligations now will help you prepare for the changes ahead. 

What Are Anti-Money Laundering Laws? 

Anti-money laundering (AML) laws stop criminals from disguising illegally obtained funds as legitimate income. The Anti-Money Laundering and Counter-Terrorism Financing Act 2006 is the main piece of Australian government legislation that regulates AUSTRAC’s functions. 

These laws require certain businesses to verify customer identities, monitor transactions, and report suspicious activity. The goal is simple: make it harder for criminals to use legitimate businesses to launder money or finance terrorism. 

Who Needs to Comply? 

If you provide one or more designated services that have a geographical link to Australia, you are a reporting entity. Currently, this includes banks, credit unions, casinos, bullion dealers, and digital currency exchanges. 

However, significant changes are coming. From 1 July 2026, legal professionals, accountants, real estate agents, and dealers in precious metals and stones will become reporting entities. This expansion, known as Tranche 2, will bring Australian law in line with international standards. 

What Are Designated Services? 

Designated services include financial services, bullion transactions, gambling activities, remittance services, and virtual asset services. From 2026, the definition expands to include property conveyancing, managing client trust accounts, establishing companies or trusts, and providing registered office services. 

The key point: you become a reporting entity based on the services you provide, not the type of business you run. 

Your Core Obligations 

Enrol with AUSTRAC 

You must enrol with AUSTRAC if you provide designated services. 

Important timeline for Tranche 2 entities: 

• 31 March 2026: Enrolment opens for newly regulated industries (it cannot be done earlier) 

• 1 July 2026: AML/CTF obligations commence for Tranche 2 entities 

• 29 July 2026: Enrolment deadline (28 days after obligations commence) 

Strategic consideration: With approximately 90,000 new reporting entities expected to enrol, AUSTRAC will face significant processing demands. Industry advisers recommend enrolling as early as possible after 31 March 2026 to avoid delays and ensure your compliance systems are fully operational before obligations commence on 1 July 2026. 

Develop an AML/CTF Programme 

Reporting entities must have an AML/CTF programme that sets out how they identify, mitigate and manage risks. This written document must be in place before you start providing designated services. 

Your programme should address customer due diligence procedures, risk assessments for different client types and services, ongoing monitoring processes, and staff training requirements. 

Verify Customer Identity 

Customer due diligence is fundamental. You’ll need to verify who your customers are before providing services. This includes collecting identification documents, confirming information through reliable sources, and assessing the customer’s money laundering and terrorism financing risk. 

Keep Detailed Records 

Detailed records must be maintained for at least seven years. This includes transaction records, customer identification information, and copies of reports submitted to AUSTRAC. 

Report to AUSTRAC 

There are four types of transaction reports reporting entities might have to make to AUSTRAC: 

• Threshold Transaction Reports (TTR): For transfers of physical currency of $10,000 or more 
• International Funds Transfer Instructions (IFTI): For instructions to send or receive money overseas, for transfers of any value 
• Suspicious Matter Reports (SMR): Must be submitted within 24 hours if related to terrorism financing, or within three business days for other matters 
• Cross-Border Movement Reports: About carrying, mailing or shipping physical currency valued at $10,000 or more to or from Australia 

Submit Annual Compliance Reports 

You must submit compliance reports to AUSTRAC between 1 January and 31 March each year, covering business activities for the previous calendar year. 

Preparing for Tranche 2 

If you’re a legal professional, accountant, or real estate agent, you should start preparing no later than Q4 2025 as many processes and contracts with outsourced providers may take some months to bed in. 

Key preparation steps include identifying which services you provide that are designated services, conducting a money laundering and terrorism financing risk assessment, developing your AML/CTF policies tailored to your risk profile, reviewing customer due diligence processes, and training all relevant staff members. 

Given the timeline, you’ll have approximately three months between when enrolment opens (31 March 2026) and when you must be compliant (1 July 2026). However, preparing your systems, policies, and training well before March 2026 will position you to enrol promptly and manage the transition smoothly. 

Legal Professional Privilege 

Questions remain around how legal professional privilege will interact with obligations under the AML/CTF Act. However, legal professional privilege remains protected, and the reforms do not override the duty to client confidentiality. You’ll only need to report activity that falls outside the scope of legal advice. 

Consequences of Non-Compliance 

Taking these obligations seriously matters. AUSTRAC has enforcement powers including civil penalties, criminal prosecution, and public disclosure of non-compliant entities. Even minor oversights can result in enforcement action. 

Getting Started 

Don’t wait until the last minute. Start by determining whether your business provides designated services, reviewing AUSTRAC guidance materials specific to your industry, appointing someone to lead your compliance efforts, and considering whether you need external support or compliance software. 

Your professional association can provide valuable resources and guidance. The Law Society, accounting bodies, and real estate institutes are all developing materials to help members navigate these changes. 

Final Thoughts 

Anti-money laundering laws protect Australia’s financial system from criminal abuse. While compliance requires effort and resources, it also demonstrates your commitment to operating with integrity. 

The expansion to Tranche 2 entities reflects Australia’s commitment to meeting international standards and closing regulatory gaps. By preparing now, you’ll be ready when obligations commence in mid-2026. 

 

Frequently Asked Questions 

When do the new AML/CTF obligations start for lawyers and accountants? 

AML/CTF obligations commence on 1 July 2026 for Tranche 2 entities. Enrolment opens on 31 March 2026, and you must enrol within 28 days of providing a designated service (by 29 July 2026 at the latest). 

When should I actually enrol with AUSTRAC? 

While the legal deadline is 29 July 2026, industry advisers strongly recommend enrolling as soon as the portal opens on 31 March 2026. With approximately 90,000 new entities enrolling, early enrolment will help you avoid processing delays and ensure you’re fully operational by 1 July 2026. 

Do I need to comply if I only occasionally provide designated services? 

Even if you only provide a designated service occasionally or just once, you are still considered to be carrying on a business under the AML/CTF Act. 

What happens if I don’t comply? 

AUSTRAC can impose civil fines, pursue criminal charges, and publicly disclose your firm’s name. Enforcement action can result from major violations or minor oversights. 

Will I need to breach client confidentiality? 

Legal professional privilege remains protected, and you’ll only need to report activity that falls outside the scope of legal advice. 

How long do I need to keep records? 

Detailed records must be maintained for at least seven years. 

What is the geographical link test? 

To have a geographical link to Australia, you must provide a designated service at or through a permanent establishment located in Australia. 

Do I need to report every transaction over $10,000? 

You must report threshold transactions for transfers of physical currency of $10,000 or more. Electronic transfers have different reporting requirements. 

Where can I get more information? 

AUSTRAC provides comprehensive guidance at https://austrac.gov.au. Your professional association can also provide industry-specific resources and support. AUSTRAC is releasing sector-specific guidance and starter kits throughout 2025 and early 2026. 

 

How can HHG Legal Group help?

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*The information provided in this website serves as a general guide and does not constitute legal advice. It is based on our research and experience at the time of publication. Please consult our knowledgeable legal team for any specific inquiries or advice relevant to your circumstances, as the content may not have been updated subsequently.