Tranche 2 AML/CTF Reform: What Professional Services Need to Know
The Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024 is the most significant expansion of Australia's AML/CTF regime in 20 years. From 1 July 2026, tens of thousands of professional services firms become reporting entities for the first time.
AUSTRAC enrolment: 31 March 2026 | Full compliance: 1 July 2026
Affected businesses should begin building their AML/CTF program now. As of March 2026, the government has indicated no intention to extend the 1 July 2026 deadline.
What is Tranche 2?
Australia's AML/CTF regime has historically focused on the financial sector — banks, remittance dealers, and digital currency exchanges. Professional services such as lawyers, accountants, and real estate agents were largely outside the regime, despite being identified by FATF as high-risk sectors for money laundering.
“Tranche 2” refers to the second tranche of entities to be captured by the AML/CTF regime. The reforms were driven by persistent pressure from FATF and a recognition that Australia was out of step with comparable jurisdictions including the UK, EU, and New Zealand, which have already brought professional services within their AML/CTF frameworks.
In its 2015 mutual evaluation, FATF rated Australia as “non-compliant” on the recommendation requiring professional services to have AML/CTF obligations. In 2023, FATF's follow-up report maintained significant concern. The 2024 amendment legislation directly addresses this gap.
The reforms also modernise the existing regime — simplifying the program requirements, introducing a new risk-based approach to customer identification, and updating definitions to cover new financial products and services.
Why does Tranche 2 matter for Australia?
Australia's next FATF mutual evaluation is expected in 2026. A failing rating on Tranche 2 obligations would carry serious consequences for Australian businesses operating internationally and for Australia's standing in the global financial system. The government has indicated there will be no further delays.
AUSTRAC has estimated that approximately 75,000 new entities will be brought into the AML/CTF regime under Tranche 2 — making this the largest single expansion of regulated entities in Australian AML history.
Which industries are affected?
Tranche 2 captures four main categories of professional services. Not every service provided by these industries is a designated service — only those listed in the amended Act.
Legal professionals
Law firms, solicitors, barristers, conveyancers
Designated legal services include:
Note: Legal professional privilege does not exempt a lawyer from AML/CTF obligations. The obligations apply to the provision of the service, not the content of legal advice.
Accountants and tax agents
Accounting firms, chartered accountants, tax agents, and certain bookkeepers and auditors providing designated services
Designated accounting services include:
Real estate professionals
Real estate agents, property managers, buyers' agents, conveyancers
Designated real estate services include:
Trust and company service providers (TCSPs)
Corporate secretaries, registered agents, professional trustees
Designated TCSP services include:
Dealers in precious metals and stones
Jewellers, bullion dealers, precious metal traders
Any transaction of $10,000 or more in precious metals, gemstones, or jewellery triggers reporting entity status. This includes cash and non-cash transactions above the threshold. Dealers must conduct CDD on customers at or above this threshold and maintain transaction records.
Key dates and deadlines
AML/CTF Amendment Act 2024 passed
The legislation formally extends AML/CTF obligations to professional services and modernises the compliance framework.
AUSTRAC enrolment opens for Tranche 2 entities
New reporting entities must enrol with AUSTRAC. This is the first formal step in becoming a registered reporting entity.
Full compliance obligations in effect
All Tranche 2 entities must have their AML/CTF program in place, staff trained, and customer identification procedures operational.
First annual compliance report due
First annual compliance report to AUSTRAC covering the period from 1 July 2026 to 31 December 2026.
New obligations under Tranche 2
All Tranche 2 entities share the same core obligations as existing Tranche 1 reporting entities. Here is a summary of what will be required from 1 July 2026.
AUSTRAC enrolment
Register with AUSTRAC as a reporting entity before providing designated services. Enrolment is required by 31 March 2026.
AML/CTF program
Establish a written AML/CTF program including a Part A (general) and Part B (customer identification) before 1 July 2026.
Customer identification
Identify and verify the identity of customers before providing a designated service. Apply risk-based CDD including enhanced measures for high-risk customers.
Beneficial ownership
Identify and verify beneficial owners of corporate and trust customers — any natural person who ultimately owns or controls 25% or more.
Suspicious matter reporting
Report suspicious matters to AUSTRAC within 24 hours (terrorism financing) or 3 business days (other suspicious matters).
Staff training
Train all relevant staff on AML/CTF obligations, how to identify suspicious activity, and the tipping-off prohibition. Training must be documented.
Ongoing due diligence
Monitor customer relationships, keep information current, and re-assess risk when circumstances change throughout the business relationship.
7-year record keeping
Retain all KYC records, transaction records, and reports for a minimum of 7 years. Records must be retrievable on AUSTRAC request.
Annual compliance report
From 2027, all Tranche 2 reporting entities must lodge an Annual Compliance Report with AUSTRAC by 31 March each year covering the preceding calendar year. The report confirms your AML/CTF program is in place, has been reviewed, and meets the required standards.
How to prepare: step-by-step
With the 1 July 2026 deadline approaching, firms that have not started preparing are already behind. Here is a practical roadmap.
Determine if you are a reporting entity
Review your services against the designated services list in the amended AML/CTF Act. If you provide any designated service, you are a reporting entity. If you are unsure, seek legal advice.
Appoint an AML/CTF compliance officer
Designate a senior person responsible for AML/CTF compliance. They will be accountable for the program, staff training, and regulatory reporting. In a small firm, this may be the principal or managing partner.
Conduct a risk assessment
Assess the money laundering and terrorism financing risks your business faces — considering your clients, services, geographic footprint, and delivery channels. This risk assessment underpins your AML/CTF program.
Build your AML/CTF program
Draft your Part A and Part B documents. Part A covers governance, risk management, training, and oversight. Part B covers customer identification procedures. Use industry-specific templates to accelerate this process.
Train your staff
Deliver AML/CTF training to all staff before 1 July 2026. Training must cover your obligations, how to identify suspicious matters, and the tipping-off prohibition. Document completion with dates and signatures.
Enrol with AUSTRAC by 31 March 2026
Register as a reporting entity through AUSTRAC Online. You will receive an AUSTRAC enrolment number which is required for lodging reports.
Implement customer identification
Roll out your CDD procedures for new and existing clients. Determine how you will verify identity — electronically, by document, or through a combination. Ensure your CDD processes are consistent and documented.
Establish ongoing monitoring
Put in place processes to monitor client relationships, detect suspicious activity, and trigger re-verification when client circumstances change. Set review schedules based on client risk ratings.
How IntelliCompli helps Tranche 2 entities
IntelliCompli was designed with Tranche 2 firms in mind. The platform provides everything a professional services firm needs to meet its AML/CTF obligations — without needing to hire a dedicated compliance team.
Industry-specific program templates
Pre-built AML/CTF program templates for legal, accounting, real estate, and TCSP businesses. Guided editing walks you through every required section.
Reform readiness checker
Automated gap analysis against the Tranche 2 requirements with a progress tracker and prioritised action list to ensure you are compliant by 1 July 2026.
Staff training modules
Interactive AML/CTF training designed for professional services. Quiz-based assessment, certificate generation, and 7-year training record retention.
Simplified CDD workflows
Client onboarding with integrated KYC verification. Automated sanctions and PEP screening. Risk-based routing to standard or enhanced due diligence.
Suspicious matter reporting
Guided SMR workflow with evidence capture, supervisor approval, 24-hour countdown, and automatic AUSTRAC submission.
Annual compliance report builder
Pre-populated annual report builder drawing from your program records, training data, and reporting history. Helps you stay on track for the 31 March deadline.
Frequently asked questions
When does Tranche 2 come into effect?
The Tranche 2 reforms were enacted by the Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024. AUSTRAC enrolment for new reporting entities opens from 31 March 2026, and full compliance obligations are in effect from 1 July 2026. Affected businesses should begin preparing their AML/CTF programs immediately.
Does Tranche 2 apply to all lawyers and accountants?
Not all services provided by lawyers and accountants trigger Tranche 2 obligations — only 'designated services' as defined in the amended AML/CTF Act. For lawyers, this covers certain legal services involving real property transactions, company and trust formation, and managing client funds. For accountants, it covers services such as tax advice, financial statement preparation, and asset management where money laundering risk is present.
What if my firm doesn't enrol with AUSTRAC by the deadline?
Failure to enrol with AUSTRAC by the required date is a contravention of the AML/CTF Act and carries civil penalties of up to $22.2 million per contravention for a body corporate. AUSTRAC has indicated it will take a graduated enforcement approach for new entrants demonstrating good-faith compliance efforts, but wilful non-compliance will be pursued.
Do sole practitioners need to comply with Tranche 2?
Yes. There is no small-business or sole practitioner exemption. Any person or entity that provides designated services under Tranche 2 must comply, regardless of business size. However, the complexity and cost of the required AML/CTF program should be proportionate to the size and risk profile of the business.
What does an AML/CTF program for a law firm look like?
A law firm's AML/CTF program must include a risk assessment specific to legal services, a Part A document covering governance, training, and oversight, and a Part B document covering customer identification procedures. It must identify the types of matters that trigger CDD, specify how to handle PEPs and high-risk jurisdictions, and establish procedures for suspicious matter reporting.
Related guides
AML/CTF Compliance Guide
Foundational overview of all AML/CTF obligations under the AML/CTF Act 2006.
Customer Due Diligence Checklist
What CDD you need to conduct on clients under the new regime.
KYC Verification Guide
How to verify client identity under Australian law — document, electronic, and biometric methods.
Disclaimer: This content is provided for general informational purposes only and does not constitute legal, financial, or professional compliance advice. While we endeavour to keep this information accurate and up to date, legislation and regulatory guidance change frequently. You should seek independent legal or compliance advice specific to your circumstances before acting on any information in this guide. See our Privacy Policy for how we handle your data.
Get Tranche 2 ready before 1 July 2026
IntelliCompli provides everything professional services firms need to meet their Tranche 2 obligations — program builder, staff training, CDD workflows, and reform readiness tracking. Start today.