%20(2).png)
Simple Answers for Lawyers in Preparation for AUSTRAC’s AML/CTF Reforms
- Amy Bell
- Jun 4
- 4 min read
Updated: Jun 5
It's understandable that Australian lawyers might feel a bit lost with the upcoming AUSTRAC AML/CTF reforms, often referred to as "Tranche 2."
It's a significant expansion of the regime to include "gatekeeper professions" like lawyers, conveyancers, accountants, and real estate agents. The goal is to close loopholes that criminals exploit to launder money and fund illegal activities.
8 Questions and Answers for Lawyers ahead of AML/CTF Reforms
Here are some questions we have been asked by lawyers ahead of the Tranche2 Reforms, and our answers, to give you peace of mind.
What exactly are "designated services" that will trigger these new obligations for my firm?
The simple answer to that question is that it's not all legal services.
It's specifically services where you help clients with things that are often used for money laundering. This includes:
Buying, selling, or transferring real estate.
Buying, selling, or transferring legal entities (like companies or trusts).
Receiving, holding, controlling, or managing a client's funds or property.
Acting as a director, partner, trustee, or under a power of attorney for a client.
Acting as a nominee shareholder or providing a registered office address.
Certain transactional work like equity or debt financing.
When do these new obligations actually start for solicitors?
The main obligations for solicitors, lawyers and conveyancers providing "designated services" will start on July 1, 2026.
However, you can enrol with AUSTRAC from March 31, 2026. It's strongly recommended to start preparing now because there's a lot to do.
What are the key things my firm will need to do to comply?
If you provide designated services, you'll generally need to:
Enrol with AUSTRAC (see above): Get your practice registered with the AML & CFT regulator and financial intelligence agency.
Develop an AML/CTF Program: Create a plan outlining how you'll identify, assess, and manage money laundering and terrorism financing risks within your practice. This is tailored to your business.
Conduct Customer Due Diligence (CDD): "Know your client" thoroughly. This means verifying their identity, understanding their background, and assessing the risks associated with their transactions. You'll need to do initial CDD before providing services, and ongoing CDD for existing clients.
Report certain activities: This includes:
Suspicious Matter Reports (SMRs): If you suspect a client or transaction is linked to criminal activity (even if you're not sure), you must report it.
Threshold Transaction Reports (TTRs): For cash transactions of A$10,000 or more.
International Funds Transfer Instruction Reports (IFTIs) Other reports like cross-border movements of currency or international value transfers might also apply depending on the service.
Keep records: Maintain detailed records of all your due diligence, transactions, and compliance activities for at least seven years.
Appoint an AML Compliance Officer (AMLCO): This person will oversee your firm's day-to-day compliance.
How will this impact Legal Professional Privilege (LPP)?
AUSTRAC has stated that the common law doctrine of legal professional privilege will remain unchanged. The new laws are designed to preserve LPP. If privileged information is requested, there will be a specific process, including a dedicated form, to assert privilege instead of providing the information.
Do I need to provide specific training to my staff?
Yes, absolutely!
AUSTRAC expects ongoing, tailored training for all staff, not just a one-off session. Everyone needs to understand their responsibilities under the AML/CTF regime, what constitutes "suspicion," and internal reporting procedures.
What are the potential penalties for not complying?
In short, yes. AUSTRAC has various enforcement actions, including:
Civil Penalty Orders: Large court-ordered fines, which can be significant (e.g., up to 20,000 penalty units for individuals, 100,000 for body corporates, with a penalty unit currently at $313).
Enforceable Undertakings: Written commitments to comply.
Infringement Notices: Fines for specific breaches.
Remedial Directions: Orders to fix compliance issues.
AUSTRAC can also require external audits or risk assessments. Non-compliance can have serious reputational and financial consequences.
Are there any exemptions for smaller firms or specific types of services?
At the time of writing, AUSTRAC is developing guidance and class exemptions. Some initial exemptions are being considered, for instance, allowing delays in initial customer due diligence for real estate agents and conveyancers in certain circumstances.
It's best to stay updated with AUSTRAC's official guidance and any specific rules for your profession as they are finalised.
Where can I go for reliable information and help?
AML Sorted Free Webinars: Book your free place HERE.
AUSTRAC's official website: This is the primary source for all information, updates, and guidance.
Your relevant Law Society: They are actively working with AUSTRAC and providing resources (e.g., the Law Society of NSW and Queensland Law Society have dedicated AML/CTF hubs and courses).
Legal professional associations: They often provide seminars, webinars, and practical tools.
The key message for solicitors, lawyers and conveyancers is to start preparing now, even though the full obligations commence in July 2026. Understanding what "designated services" apply to your practice, developing a risk assessment, and preparing for customer due diligence and reporting will be crucial for a smooth transition and peace of mind.
AML Sorted is here to hold your hand through all the processes that AUSTRAC requires from you.
Why not book a call in with Amy Bell, our CEO and solicitor who has been a leading AML and Regulatory expert in the UK for over 20 years.
Team AML Sorted
