AUSTRAC releases fresh guidance for Tranche 2 AML/CTF entities

Last Friday, Australia’s financial crime regulator AUSTRAC released fresh guidance for Tranche 2 entities that will be caught under the anti-money laundering and counter-terrorism financing (AML/CTF) regulatory regime from 1 July 2026.

The expanded regime will capture ‘gatekeeper professions’ such as real estate agents, lawyers and accountants that provide designated services, including assisting with real estate transactions and setting up trust and company structures.

“For too long, criminals have been able to take advantage of so-called ‘gatekeeper professions’,” AUSTRAC chief executive Brendan Thomas said.

“That changes next July when the new laws come into force and better equip us to combat the money laundering and terrorism financing threats posed by increasingly sophisticated criminal enterprises.”

Accounting body CPA Australia welcomed the intent of the Tranche 2 AML/CTF reforms, but raised concerns about the compliance burden and possible impacts on small businesses.

“The accounting profession supports the intent of the law but needs confidence in the guidance provided to comply with it,” CPA Australia’s regulations and standards lead, Belinda Zohrab-McConnell, said.

“Our profession is constantly dealing with increasing regulations that come with hefty penalties and deserves unambiguous clarity on how to navigate them."

AUSTRAC said that its fresh AML/CTF guidance was designed to help the newly regulated reporting entities understand and adhere to their new obligations.

The regulator has provided an online tool to allow firms to check if they are set to be captured under the new reporting regime.

Captured entities will see new responsibilities including an obligation to enrol and register with AUSTRAC, develop and maintain an AML/CTF program, conduct customer due diligence and report suspicious transactions and activities.

Key obligations outlined by AUSTRAC’s guidance included:

1. Enrol and register with [AUSTRAC]

2. Develop and maintain an AML/CTF program tailored to your business

3. Get your staff ready to implement your obligations

4. Conduct initial and ongoing customer due diligence (CDD)

5. Report certain transactions and suspicious activities

6. Make and keep records

Enrolment is set to open on 31 March 2026 for newly-regulated industries, the regulator noted. To enrol with AUSTRAC, businesses would need to provide basic business information relating to their structure, services, key personnel and contact details.

Businesses would also be required to develop and maintain an AML/CTF program and appoint a designated AML/CTF officer to be responsible for compliance in that area.

AUSTRAC noted that sector-specific guidance for Tranche 2 entities would be released at the end of January 2026.

“Businesses can expect more resources to follow, such as sector-specific guidance and starter kits for AML/CTF programs,” Thomas said.

“We have been clear about our expectations and what businesses need to do to meet their obligations before 1 July, but we don’t expect businesses to do it alone.”

However, CPA Australia raised concerns that there was a lack of consistency between AUSTRAC’s guidance and the wording of AML/CTF legislation regarding whether some typical accounting services were ‘designated services’ captured by the regime.

“Our concern is how accountants are supposed to rely on the AUSTRAC guidance when a substantial grey area remains when trying to identify a designated service. Our members’ biggest worry is making sure they stay on the right side of the law,” Zohrab-McConnell said.

She called on AUSTRAC to finalise its starter program kit guidance for sole practitioners and small firms as soon as possible.

“This was due to be released just before Christmas but has been deferred to late January,” she said.

“The wealth of guidance from AUSTRAC is commendable but there is much to wade through which can make it overwhelming. It is unlikely that smaller entrants to the reformed AML/CTF regime will consider anything until the starter kit comes out next year.”