The wait is over. AUSTRAC has released its long-anticipated Tranche 2 “Reforms Guidance”, setting out how Australia’s expanded AML/CTF regime will apply to professional service firms from 1 July 2026.
Lawyers, accountants, real estate agents, trust and company service providers, and dealers in precious metals and stones will all be captured for the first time.
If you’ve been waiting for clarity — this is it.
The Five Core Obligations Explained
AUSTRAC’s new guidance clarifies how the five foundational obligations will operate for Tranche 2 entities:
Below is a practical breakdown of what AUSTRAC expects, and what it means in real terms.
1. Enrolment
- Firms must enrol with AUSTRAC within 28 days of providing any designated service.
- For most Tranche 2 entities, enrolment starts 1 July 2026.
- Virtual asset providers must register earlier — by 31 March 2026.
- Changes to business structure, control, or services must be reported within 14 days.
Challenge: Smaller firms may struggle to identify when their work crosses into a “designated service”, a key compliance trigger.
2. AML/CTF Program
Every entity must maintain a documented, risk-based AML/CTF Program covering:
- Risk assessment for money-laundering, terrorism-financing and proliferation risks
- Policies and procedures for CDD, record-keeping, and reporting
- Appointment of a Compliance Officer
- Governance oversight from senior management or partners
- Independent review at least every three years
Challenge: One-size-fits-all templates won’t meet AUSTRAC’s requirements. Programs must be specific, tested, and auditable.
3. Customer Due Diligence (CDD)
CDD is now central to every client relationship.
- Initial CDD: Verify the identity of clients, beneficial owners, and agents before services commence.
- Ongoing CDD: Monitor relationships and update risk profiles regularly.
- Enhanced CDD: Apply for high-risk clients, complex structures, or politically exposed persons (PEPs).
- Simplified CDD: Allowed only for low-risk clients, with tighter rules than before.
Challenge: Identifying beneficial owners in layered trust and company structures will require stronger data collection and client cooperation.
4. Reporting Obligations
Firms will now have to report directly to AUSTRAC:
- Suspicious Matter Reports (SMRs) — if you suspect money laundering or terrorism financing
- Threshold Transaction Reports (TTRs) — cash transactions ≥ A$10 000
- International Value Transfer Reports (IVTRs) — for cross-border funds transfers
- Annual Compliance Reports — confirming ongoing program effectiveness
Challenge: Building internal systems for timely reporting and staff escalation will be new ground for most professional practices.
5. Record-Keeping
- Keep all AML/CTF records for seven years — including risk assessments, CDD evidence, transaction records, and training logs.
- Legal professional privilege is protected but must be properly asserted and documented.
Challenge: Multi-office practices must ensure centralised, tamper-proof record storage.
Key Dates
| Date | Milestone |
| 16 Oct 2025 | AUSTRAC issues Reforms Guidance |
| Dec 2025 | Sector-specific guidance (law, accounting, property, trustees) |
| 31 Mar 2026 | Enrolment opens for virtual-asset providers |
| 1 Jul 2026 | Full Tranche 2 obligations commence |
What You Should Do Now
- Assess exposure – Identify which of your services are “designated”.
- Start your AML/CTF Program – Draft risk assessments and policies now.
- Appoint a Compliance Officer – Assign responsibility early.
- Plan for staff training – Everyone must understand the new rules.
- Design reporting workflows – Ensure you can detect and escalate red flags.
- Monitor AUSTRAC updates – The sector-specific guidance in December will refine expectations.
Why This Matters
For the first time, professional service firms will be fully included in Australia’s AML/CTF enforcement regime. This isn’t just about fines, it’s about safeguarding your licence, reputation, and client relationships.
Final Word
The AUSTRAC guidance issued tonight is the clearest signal yet: Tranche 2 is now active, and compliance planning starts immediately. Firms that start designing their AML/CTF frameworks in 2025 will be better prepared in 2026, rather than rushing at the last minute.
If your firm needs assistance with mapping exposure, developing a compliant AML/CTF Program, or training staff, contact AML CoreComply by DVT Mcleods.
As a firm that delivers designated services ourselves, we understand firsthand the regulatory, operational, and reputational risks Tranche 2 entities now face.
Our AML CoreComply team comprises forensic accountants, a Certified Anti-Money Laundering Specialist (CAMS), Associate Certified Fraud Examiners (CFEs), CPAs, and IPAs, all recognised for their technical expertise in AML/CTF law, risk management, and regulatory compliance.
We blend technical expertise with practical experience to assist professional firms in designing and implementing fit-for-purpose AML frameworks that protect clients, meet AUSTRAC requirements, and are effective in real-world applications.
