AML/CTF Tranche 2 Reforms: what Lawyers, Accountants, Real Estate Professionals and other Businesses need to know by 2026

Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) regime is undergoing its most significant reform since the original Act came into force in 2006. With the passing of the AML/CTF Amendment Act 2024 and the finalisation of the AML/CTF Rules 2025, the long-debated “Tranche 2” reforms are now law.

From 31 March 2026 and 1 July 2026, thousands of businesses and professionals will, for the first time, come under direct regulation by AUSTRAC. These changes are not optional — they carry civil and criminal penalties for non-compliance, and affected industries have less than two years to prepare.

This article explains:

• Who is caught by the new rules.
• The timelines and key compliance dates.
• The obligations every new reporting entity will need to meet.
• The most important changes introduced by the 2025 Rules.
• Practical steps businesses should take now to prepare.

From 1 July 2026, AML/CTF obligations will apply to services typically provided by:

• Real estate professionals – including real estate agents, buyers’ agents, and property developers.
• Dealers in precious metals and precious stones.
• Lawyers and conveyancers providing transactional or trust services.
• Accountants.
• Trust and company service providers.

In addition, from 31 March 2026, Virtual Asset Service Providers (VASPs), will face expanded regulation, covering services such as crypto exchanges, custody, and other virtual asset services.

These professions join existing reporting entities such as banks, payment providers, superannuation funds, and remittance businesses, bringing Australia into line with global standards set by the Financial Action Task Force (FATF).

Once covered, businesses must comply with five core obligations:

1. Enrol and register with AUSTRAC

• Provide details of your business structure, services, key personnel, and keep records up to date.
• VASPs/DCEs must apply for registration in addition to enrolment.

2. Develop and maintain an AML/CTF program

• Conduct a money laundering, terrorism financing and proliferation financing risk assessment.
• Adopt written policies, procedures, systems, and controls proportionate to your size and risk profile.
• Have the program approved by a senior manager or board.
• Arrange for an independent evaluation at least once every three years

3. Conduct customer due diligence (CDD)

• Initial CDD before providing designated services.
• Ongoing monitoring, including updates to customer profiles, enhanced CDD for high-risk clients (PEPs, sanctions exposure), and simplified CDD for low-risk scenarios.
• New requirements for beneficial ownership checks and source of wealth/funds in enhanced due diligence

4. Report certain transactions and suspicious matters

• Suspicious matter reports (SMRs).
• Threshold transaction reports (TTRs) for cash ≥ $10,000.
• International Funds Transfer Instruction (IFTI) reports — in the 2025 Rules these are sometimes described more broadly as “international value transfers,” to reflect both fiat and virtual assets, but AUSTRAC’s reporting system continues to use the IFTI terminology.
• Annual compliance reports.

5. Maintain records for at least 7 years

Covering CDD, AML/CTF program documents, transactions, staff training, and audit outcomes

While these obligations are familiar to existing reporting entities, the AML/CTF Rules 2025 introduce several new requirements and clarifications.

1. Beneficial ownership and customer due diligence (UBO and CDD)

• New sections specifically address identifying and verifying beneficial owners (sections 6-7, 6-8)
• Businesses must also establish the nature and purpose of the relationship (section 6-9).
• Enhanced CDD now explicitly requires establishing source of wealth and source of funds in certain scenarios (section 6-21).

2. Real Estate–specific CDD

• New targeted rules for real estate transactions (sections 5-20, 6-32, 6-33)
• These address delayed verification in property settlements and identity requirements for buyers/sellers.

3. Virtual Asset services /DCEs

• Section 6-22 imposes enhanced CDD for certain VASP services
• Registration requirements (Part 4) prohibit operating without AUSTRAC confirmation. Criminal penalties apply for breaches.

4. Governance and Compliance Officers

• Section 5-14 sets a fit and proper test for AML/CTF compliance officers
• Officers must be senior, suitably qualified, and free from conflicts or disqualifying factors.
• Programs must be overseen by the board or governing body, with regular reporting (sections 5-6, 5-7).

5. Independent Evaluations

• AML/CTF programs must be independently reviewed at least every three years (section 5-10)
• Evaluations must cover risk assessment, policies, and effectiveness.

6. Transfers of Value – “Travel Rule”

• New obligations (Part 8) for payment transparency.
• Ordering institutions must collect and transmit payer and payee information; beneficiary institutions must monitor and ensure receipt
• Aligns with FATF’s “travel rule” for crypto and cross-border payments.

Australia has long been criticised for lagging on FATF recommendations, particularly for leaving lawyers, accountants, and real estate outside AML/CTF regulation.

The Explanatory Statement highlights that:

• The reforms are necessary to maintain Australia’s reputation and avoid potential “grey listing.”
• They respond to extensive consultation: 229 industry submissions and input from nine working groups.
• The aim is to strike a balance between reducing regulatory complexity and enhancing risk-based compliance

1. Assess whether you are caught

• Review your services against AUSTRAC’s list of “designated services.”
• For law firms and accountants, note that not every service is covered — obligations apply to specific transactional, trust, or structuring activities.

2. Start building your AML/CTF Program

• Conduct a risk assessment tailored to your business.
• Draft core policies (CDD, record-keeping, suspicious matter escalation).
• Identify governance arrangements and appoint a compliance officer.

3. Plan for Customer Due Diligence (CDD)

• Prepare systems to verify identity, beneficial ownership, and source of funds.
• Train staff in recognising politically exposed persons and suspicious indicators.
• Consider outsourcing or technology solutions for electronic verification.

4. Budget for Compliance

Costs will vary by business size, but should include:

• Staff training.
• Independent program reviews every three years.
• Record-keeping and reporting systems.
• Legal and compliance advice.

5. Monitor AUSTRAC Guidance

• AUSTRAC will publish sector-specific guidance during 2025.
• Early movers will be best placed to manage compliance smoothly when the rules commence.

The AML/CTF Tranche 2 reforms will transform the compliance landscape for lawyers, accountants, real estate professionals, trust and company service providers, and precious metals/stones dealers. Together with expanded obligations for virtual asset services, the reforms represent a decisive step in aligning Australia with international standards.

The timeline is short, the obligations are detailed, and penalties for non-compliance are serious. Businesses should act now to assess their exposure, design compliance frameworks, and engage specialist advisers where necessary.

At Ming Dao Law, we assist businesses with:

• AML/CTF program design and implementation.
• Customer due diligence frameworks and technology solutions.
• Training and governance support for compliance officers and boards.
• Preparing enrolment and registration applications with AUSTRAC.