AML/CTF Tranche 2
AML/CTF Tranche 2 Reforms
The Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024 was passed by Parliament on 29 November last year. The legislation updates and simplifies the existing AML/CTF framework and, significantly, expands its scope to include lawyers, accountants, and real estate agents—commonly referred to as ‘Tranche 2 entities’—alongside other business types.
This reform represents the most significant change to Australia’s AML/CTF laws since the introduction of Tranche 1 in 2006.
The inclusion of Tranche 2 entities will take effect from 1 July 2026. Several other provisions of the Act are already in force, with the remaining modernisation measures for existing reporting entities commencing on 31 March 2026.
In the meantime, work is underway to finalise the supporting regulatory Rules and AUSTRAC guidance. A second round of consultation will take place, with the Rules expected to be finalised by July 2025. AUSTRAC plans to release its guidance for Tranche 2 entities by January 2026, leaving affected businesses just six months to implement the required changes.
An effective AML/CTF regime brings significant benefits to the economy. In 2023–2024, the cost of serious and organised crime to the Australian economy was estimated at nearly $69 billion. For accountants, lawyers, and real estate agents, this means that exposure to money laundering activity may be more common than expected. As AML/CTF obligations become part of day-to-day business for these newly regulated sectors, strong compliance will become a mark of professionalism and operational maturity.
The Requirements
Businesses that provide designated services under the Anti-Money Laundering and Counter-Terrorism Financing Act (AML/CTF Act)—referred to as Reporting Entities—are required to:
Register with AUSTRAC;
Establish and maintain an AML/CTF Program (to be called an AML/CTF Policy from 31 March 2026) that meets the requirements of the Act;
Comply with their AML/CTF Program in day-to-day operations;
Submit specific reports to AUSTRAC, including suspicious matter reports and an annual compliance report.
The AML/CTF Program must be:
Approved by the business’s board or governing body;
Include the appointment of an AML/CTF Compliance Officer; and
Contain the following core elements:
A comprehensive risk assessment of the business’s exposure to money laundering and terrorism financing;
Customer due diligence (or Know Your Customer – KYC) procedures to collect and verify client identification;
Employee due diligence, including background checks for staff in high-risk roles;
Ongoing training to ensure staff understand money laundering risks;
Reporting procedures for suspicious activity and other obligations;
Robust record-keeping to support compliance and regulatory audits.
Customer Onboarding
With the introduction of Tranche 2 AML/CTF reforms, customer onboarding processes for accountants, lawyers, and real estate agents will undergo a significant transformation. These businesses, now classified as Reporting Entities under the AML/CTF Act, must adopt formal procedures to assess the money laundering and terrorism financing risks posed by their clients. This includes implementing robust customer due diligence (CDD) measures during onboarding—such as collecting, verifying, and documenting client identity information and screening for politically exposed persons (PEPs) or suspicious activity.
How Verify Assist can Help
Verify Assist is purpose-built to simplify and streamline this new onboarding burden. Through automated KYC workflows, identity document verification, AML checks, and PEP/sanctions screening, Verify Assist allows businesses to meet their compliance obligations without sacrificing client experience or staff productivity. Instead of navigating complex regulatory requirements manually, accountants, legal professionals, and real estate agencies can rely on Verify Assist to perform secure and auditable checks in minutes, helping ensure they meet AUSTRAC’s expectations while maintaining a smooth and professional onboarding process.
