AML/CTF Tranche 2 reforms for Australian lawyers
The Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024 (Cth) extends the AML/CTF Act 2006 (Cth) to "Tranche 2" entities — including Australian lawyers, accountants, real estate professionals and trust and company service providers — for designated services such as real estate transactions, company formation and trust management. Legal professional obligations begin from 1 July 2026.
Coverage
Australian law practices that provide designated services under the amended AML/CTF Act — including acting in real estate transactions, forming or managing companies or trusts, acting as a registered office, or managing client funds in the course of those services.
Legal basis
Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) as amended by the Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024 (Cth). AML/CTF Rules and AUSTRAC guidance.
The obligations
Determine whether the firm provides a designated service
Map the firm's services against the amended designated services list — particularly real estate, company and trust services, and management of client money.
Enrol with AUSTRAC before the start date
Enrol the firm as a reporting entity with AUSTRAC before the Tranche 2 obligations commence on 1 July 2026.
Develop an AML/CTF Program
Adopt a written AML/CTF Program with Part A (risk identification and management) and Part B (customer identification and verification).
Conduct an ML/TF risk assessment
Assess the money laundering and terrorism financing risk posed by the firm's designated services, clients, jurisdictions and delivery channels.
Apply customer due diligence to designated services
Identify and verify clients — and the beneficial owners behind them — before providing a designated service, using risk-based procedures.
Apply enhanced due diligence to high-risk matters
Conduct enhanced customer due diligence for politically exposed persons, high-risk jurisdictions and complex ownership structures.
Monitor ongoing client activity
Monitor transactions and client behaviour for changes that may indicate money laundering or terrorism financing, and review customer due diligence accordingly.
Report suspicious matters to AUSTRAC
Lodge suspicious matter reports (SMRs) within the prescribed time after forming a suspicion about a client or transaction.
Protect tipping off obligations and client legal privilege
Do not disclose the fact of an SMR to the client, and consider how client legal privilege interacts with information required to be disclosed.
Train staff and maintain records for seven years
Train all relevant staff on their AML/CTF obligations and keep customer due diligence and transaction records for at least seven years.
What happens if you do not comply
Civil penalties for contravention of the AML/CTF Act can reach tens of millions of dollars for body corporates, with additional criminal penalties for serious offences such as tipping off. AUSTRAC has a strong track record of enforcement.
Reporting requirements
Reporting entities must lodge suspicious matter reports, threshold transaction reports (for cash transactions of $10,000 or more) and annual compliance reports with AUSTRAC, in the form and time specified by the AML/CTF Rules.
What firms should do today
- Map which services the firm provides that are likely to be designated under Tranche 2
- Start an AML/CTF Program project well before 1 July 2026 so the firm is ready to enrol
- Identify a senior AML compliance officer and document their responsibilities
- Review engagement letters so customer due diligence sits at the start of every designated service
- Plan the training schedule for all fee earners, support staff and principals
Compliance with Quillio
Quillio helps firms prepare by organising client due diligence documents, beneficial ownership notes and correspondence on Australian-hosted infrastructure, keeping sensitive AML data inside a sovereign environment. See /resources/security.
This guide is general information about the Tranche 2 AML/CTF reforms only — not legal or compliance advice. The AML/CTF Rules applying to lawyers are still being finalised and firms should monitor AUSTRAC guidance closely.
Build compliance into your stack.
Quillio is built around AU compliance from the ground up — SOC 2 Type II + ISO 27001 + Australian data sovereignty. The free trial requires no credit card.
Start your free trial