AML/CTF Tranche 2 Explained: What Australian Businesses Need to Know

Australia's anti-money laundering regime is undergoing its most significant expansion since the original AML/CTF Act was introduced in 2006. Known as Tranche 2, these reforms extend AUSTRAC's oversight to a range of professions that have historically operated outside the AML/CTF regulatory perimeter. If you are a real estate agent, accountant, lawyer, or conveyancer, this article explains exactly what is changing and what you need to do.

What is Tranche 2?

When Australia enacted the AML/CTF Act in 2006, it was always intended to be rolled out in stages. Tranche 1 covered financial services, gambling, bullion dealing, and remittance providers. Tranche 2 was designed to extend coverage to designated non-financial businesses and professions (DNFBPs), bringing Australia into line with the Financial Action Task Force (FATF) recommendations.

After years of delay, the Australian Government passed the AML/CTF Amendment Act, which brings Tranche 2 into effect with a compliance deadline of 1 July 2026.

Which Businesses Are Affected?

Tranche 2 covers businesses and professionals providing designated services, including:

Real Estate Agents

Real estate agents involved in buying or selling real property are now reporting entities. This includes agents acting for buyers or sellers in residential and commercial property transactions. The real estate sector has been identified as a high-risk area for money laundering, particularly through property purchases using unexplained wealth.

Accountants

Accounting professionals providing certain services are covered, including those involved in managing client funds, creating companies or trusts, and providing financial advisory services that could be exploited for money laundering purposes.

Lawyers

Legal practitioners providing transactional services — such as conveyancing, company formation, trust establishment, and managing client money through trust accounts — fall within scope. Importantly, legal professional privilege considerations apply, and AUSTRAC has issued guidance on how this intersects with reporting obligations.

Conveyancers

Licensed conveyancers handling property transfers are included as reporting entities, given the inherent money laundering risks associated with property transactions.

What Are the New Obligations?

If your business is caught by Tranche 2, you must:

1. Enrol with AUSTRAC — Register as a reporting entity before the compliance date
2. Develop an AML/CTF Program — A written compliance program covering Part A (general compliance) and Part B (customer identification)
3. Conduct a Risk Assessment — Identify, assess, and document your ML/TF risks based on customers, services, delivery channels, and geography
4. Implement Customer Due Diligence — Verify the identity of your customers before providing designated services
5. Monitor and Report — Lodge suspicious matter reports (SMRs) with AUSTRAC when you form a suspicion. Tipping off a client about a report is a criminal offence
6. Keep Records — Maintain records of CDD, transactions, and reports for a minimum of seven years
7. Train Staff — Ensure all relevant employees receive AML/CTF training within their first 30 days and on an ongoing basis

Key Dates and Deadlines

| Milestone | Date | |-----------|------| | AML/CTF Amendment Act passed | 2025 | | AUSTRAC enrolment opens for Tranche 2 entities | Early 2026 | | Compliance deadline | 1 July 2026 | | First independent review of AML/CTF program due | Within 12 months of commencement |

What Are the Penalties?

AUSTRAC's penalty regime is substantial. Corporations face civil penalties of up to $18.78 million per contravention, and individuals can face criminal prosecution. AUSTRAC has demonstrated a willingness to pursue enforcement — the $1.3 billion penalty against Westpac in 2020 remains the largest in Australian corporate history.

For smaller businesses, even modest penalties can be devastating, and the reputational impact of an AUSTRAC enforcement action can permanently damage client trust.

How to Prepare

With the July 2026 deadline approaching, businesses should be acting now. Here is a practical roadmap:

1. Assess your exposure — Determine which of your services are designated services under the Act
2. Register with AUSTRAC — Complete your enrolment as a reporting entity
3. Build your compliance program — Document your Part A and Part B program
4. Conduct your ML/TF risk assessment — Use a structured framework to identify and rate your risks
5. Set up CDD procedures — Implement customer identification and verification processes
6. Train your team — Deliver initial training and schedule ongoing refreshers
7. Establish reporting workflows — Ensure you have a clear process for escalating and lodging suspicious matter reports

Don't Go It Alone

Building an AML/CTF compliance program from scratch is a significant undertaking, and generic legal templates can cost upwards of $8,000. ComplyReady provides an affordable, guided approach that walks you through every step, tailored to your specific industry.

Start building your AML/CTF program with ComplyReady — and be ready well before the deadline.