New Anti-Money Laundering Laws are now in Effect
By Peter Biazos, Managing Director
The AUSTRAC “Tranche 2” reforms for anti-money laundering and counter-terrorism financing (AML/CTF) under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (AML/CTF), which went into effect on 1 July 2026, will bring many legal, accounting and insolvency practices into the regulatory framework for the first time.
In this article, our Managing Director, Peter Biazos, examines these new compliance obligations and their implications for trusted Advisors.
Background
This is a national change and will apply to designated services commonly provided by:
- Legal practitioners – property conveyancing, client account operations, company establishment, and trust-related services.
- Accountants – handling client funds, supporting the planning or execution of financial transactions, and creating companies or trusts.
- Conveyancers – facilitating the acquisition, sale, or transfer of real property.
- Real estate agents and brokers – arranging or brokering real estate transactions.
- Dealers in precious metals and stones – conducting high-value purchases, sales, or exchanges of precious items.
The expansion aligns Australia with international standards and imposes requirements on ‘tranche 2 entities’ similar to those already established in countries like the United Kingdom.
Classified as a reporting entity and supervised by AUSTRAC, the Commonwealth financial intelligence regulator, these practitioners are now required to meet anti-money laundering obligations whenever they provide a “designated service” as outlined above.
The primary objective of these obligations is to ensure that practitioners are alert to red flags that may indicate money laundering or terrorist financing and promptly report these concerns to AUSTRAC.
Activity-based, not profession-based
Importantly, the obligations related to Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) are activity-based rather than profession-based. This means that AML/CTF obligations arise when a practitioner begins providing a designated service.
This also means that B&T Advisory will become a reporting entity, particularly in instances where we are required to:
- begin managing or carrying out a sale of assets
- participate in, or act for a person in, a financing or restructuring transaction
- take control of and manage funds as part of a transaction (such as receiving, holding and controlling sale proceeds)
- trade on a business and make payments or handle funds as part of that activity.
Source: How designated services apply to insolvency practitioners | AUSTRAC
Core Obligations
Under the reforms, a Reporting Entity is required to:
- Enrol with AUSTRAC by July 29, 2026
- Assess the money laundering and terrorism financing risks that their services could be exposed to.
- Develop and implement a documented AML/CTF framework setting out internal policies, procedures, and controls to identify, manage, and reduce those risks
- Implement customer due diligence measures, including identity verification, enhanced checks for higher-risk clients, and ongoing transaction monitoring.
- Appoint a management-level AML/CTF compliance officer, who will be responsible for training staff to recognise red flags and know what to do when they see them.
- Keep records for 7 years by setting up a record-keeping system that enables storage and simple retrieval of the right records.
- Submit mandatory reports to AUSTRAC through its online portal, including suspicious matter reports and reports for cash transactions of $10,000 or more.
Source: Your obligations | AUSTRAC
Key Red Flags
The suspicious matters that practitioners should be aware of are warning signs of potential money laundering or terrorism financing that may require investigation. These include:
- Unusual payment methods
- Sources of wealth that are unclear or cannot be readily explained
- Unnecessarily complex ownership structures
- Limited face-to-face interaction with clients who seek anonymity or are reluctant to provide requested information
- Rushed or overly urgent instructions that often accompany transactions that lack a clear legal or commercial purpose.
- A rapid change of advisors without a clear reason.
Source: Risk insights and indicators of suspicious activity for accountants | AUSTRAC
A Suspicious Matter Report (SMR) must be lodged when you have reasonable grounds to suspect that a customer or transaction is linked to criminal activity. Standard timing for submission is:
- 24 hours of forming the suspicion if related to terrorism financing
- 3 business days for other suspicions.
Source: Suspicious matter reports | AUSTRAC
What Are the Penalties for Non-Compliance?
AUSTRAC has extensive enforcement powers. Corporations found in serious breach of these laws may face civil penalties of up to AUD 22.2 million per contravention, while individuals may be fined up to AUD 4.4 million. For the most severe violations, criminal penalties, including imprisonment, can apply.
While AUSTRAC typically works collaboratively with businesses to encourage compliance, it has shown that it will impose substantial penalties on those who repeatedly or intentionally fail to comply.
What do these changes mean for our Referrers and Clients?
For AML/CTF purposes, the client is the person or entity being assisted through the designated service, not necessarily the person who appointed the practitioner.
Customer Due Diligence is a core tenet of the obligations. It requires Practitioners to establish who the client is, whether the client is a company, trust, or another structure, and to identify the individuals who control it.
This will require further layers of identity verification, including requests for passports and drivers’ licences, as well as more detailed questioning about the ownership and control of companies.
These requests are legal requirements, and all information collected will be handled in accordance with our privacy policy and only used for the purposes required by law.
For our existing clients and referrers, these checks only apply when you next engage us for a new appointment.
Looking Ahead
This overview article is intended as a starting point only.
Australia’s Tranche 2 AML/CTF reforms are broad, and many practical questions will continue to be worked through as firms implement new processes and regulators provide more guidance.
There is considerably more to discuss than can be covered in one article. For lawyers and accountants, the key task at this stage is to identify which activities within their practices may constitute designated services and to begin preparing risk-based compliance processes.
As the reforms move from legislation to implementation, and as practical guidance and industry experience develop, we will continue to revisit these topics and share further insights relevant to professional practice.
This article is general information only and should not be treated as legal advice. Law and Accounting practices that are unsure whether they fall within the remit of the AML/CTF Act may need to obtain independent advice.
Important Resources:
Check if you may be regulated | AUSTRAC
Accounting program starter kit: Getting started | AUSTRAC