Overview
Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) regime is set to expand significantly through the Tranche 2 reforms. These reforms will broaden the scope of entities and bring Australia’s framework more closely in line with international standards set by the Financial Action Task Force.
From 1 July 2026, businesses providing certain ‘designated services’ including legal professionals, accountants, conveyancers and real estate agents are expected to fall within the AML/CTF regime. These services may include:
- Real estate transactions (sale, purchase or transfer of land);
- Managing client money, accounts or assets;
- Establishing, structuring or restructuring legal entities;
- Acting in formal capacities (such as director, trustee or attorney);
- Business or legal arrangement transactions.
These reforms significantly expand the scope of reporting entities under the new AML/CTF regime.
The purpose of the reforms is to close gaps in the existing regime and reduce the risk that professional services, property transactions, corporate structures and high-value goods will be used to launder money or finance terrorism.
Key obligations
These newly regulated entities will need to establish a clear AML/CTF governance framework. This should identify the governing body, senior managers, and an AML/CTF and elect a compliance officer. They will be responsible for overseeing compliance, approving AML/CTF programs and ensuring day-to-day implementation.
Businesses will also need to develop and maintain an AML/CTF program. This program must include a risk assessment and AML/CTF policies, procedures, systems and controls. The risk assessment should identify the business’s exposure to money laundering and terrorism financing risks. The policies must explain how these risks will be managed and reduced.
Customer due diligence will also be a central obligation. Businesses must verify customer identities, identify beneficial owners and apply appropriate checks depending on the level of risk. Reporting entities will also need to monitor customer activity, report suspicious matters to AUSTRAC, keep records and provide AML/CTF training to staff.
Preparing for compliance
Businesses should begin preparing before the reforms commence. This may involve reviewing current policies, updating risk assessments, assessing systems and processes, training staff and ensuring senior management understands their compliance responsibilities.
The reforms represent a significant change for professional service providers. Early preparation will help businesses understand their obligations, reduce compliance risk and protect their services from criminal exploitation.
Our Corporate + Commercial team can assist your business in understanding and preparing your obligations under the AML/CTF reforms.
Please contact Lisa: lisa@morganenglish.com.au
