Tranche Two signals a new era for AML/CTF in Australia

Risk Management

Australia is preparing for the most significant anti–money laundering and counter-terrorism financing (AML/CTF) reform since the framework was first introduced in 2006. Commonly referred to as Tranche Two, these reforms will expand AML/CTF obligations beyond banks, casinos and bullion dealers to a much broader group of “gatekeeper” professions.

The Australian Transaction Reports and Analysis Centre (AUSTRAC) has begun outlining its expectations and timelines for these newly regulated sectors, with commencement expected around mid-2026.

Who’s coming into scope

Under the Tranche Two reforms, AML/CTF obligations will extend to:

• Legal services – certain matters involving client funds, company or trust formation, and real property transactions
• Accounting and audit services
• Real estate and conveyancing businesses
• Trust and company service providers (TCSPs)
• Dealers in precious metals and stones

These industries have been targeted because criminals often exploit professional intermediaries to move or conceal illicit funds. Expanding the framework aligns Australia with global Financial Action Task Force (FATF) standards and strengthens the nation’s defences against financial crime.

What will change

While some details are still being finalised, AUSTRAC has already outlined the key compliance obligations for new reporting entities. Expect to:

1. Register with AUSTRAC
2. Develop a risk-based AML/CTF program
3. Conduct customer due diligence (CDD), including beneficial-ownership checks and ongoing monitoring
4. Screen for politically exposed persons (PEPs) and sanctions
5. Submit mandatory reports, including suspicious matter reports, threshold transaction reports, and international fund transfer instructions where applicable; and  
6. Maintain records and provide staff training

AUSTRAC’s phased implementation plan will help new and existing reporting entities transition successfully.

Why it matters beyond compliance

1. Strategic and reputational risk

If reforms stall or are poorly implemented, FATF grey-listing becomes a real possibility, with knock-on effects for correspondent banking, cross-border payments and investment flows. Even unregulated businesses will face higher expectations from banks and corporate clients as AML/CTF requirements cascade through supply chains.

2. Real estate and professional services under scrutiny

Australia’s property market and professional advisory sectors are particularly attractive for money laundering. Failing to detect or prevent suspicious activity can lead to legal exposure, regulatory penalties and lasting brand damage.

3. More than a policy rewrite

Tranche Two represents a shift in business operations and culture. Firms will need to build new capabilities in governance, data, technology and staff awareness. For many small and mid-sized practices, this will be their first structured AML/CTF program.

Bridging the AML/CTF knowledge gap

Even seasoned compliance teams are having to re-learn aspects of the framework as it evolves. For newly regulated sectors, the most critical learning areas include:

• Risk assessment – building a firm-wide ML/TF/PF risk framework that fits your services
• Beneficial ownership – identifying and verifying controllers through complex structures
• Service mapping – knowing which activities trigger AML/CTF obligations and avoiding mis-scoping
• CDD and monitoring – applying proportionate, risk-based standards
• Reporting – establishing reliable triggers and high-quality suspicious matter reports (SMRs)
• Training and culture – building awareness and early-escalation practices across teams

A practical roadmap for 2025–2026

1. Set governance and accountability early. Appoint a senior sponsor and an AML/CTF Compliance Officer and approve a delivery roadmap.
2. Map your services and clients. Identify where AML/CTF applies and which segments carry higher inherent risk.
3. Conduct or refresh your risk assessment. Use AUSTRAC’s sector insights to define control priorities.
4. Develop your AML/CTF program. Keep it risk-based and clearly documented so it can be tested.
5. Build reliable data processes. Capture identity, beneficial ownership and transaction data effectively.
6. Train your people. Deliver role-specific training and rehearse red-flag scenarios.
7. Test, learn and improve. Pilot your approach, simulate AUSTRAC engagement, close gaps and scale up.

What ‘good’ may look like to AUSTRAC

AUSTRAC’s approach will be supportive during the transition, but it will require visible progress against published milestones, evidence that programs are tailored (not copied), and that reporting entities are learning from issues.

Expect focus on:

• Strong beneficial-ownership verification
• Employee due diligence (EDD) triggers
• Information sharing
• High-quality SMRs backed by sound reasoning

Looking ahead

While some details are still being finalised, the intent of Tranche Two is clear. Organisations that take early, deliberate steps can manage change more effectively and build lasting AML/CTF capability.

By approaching AML/CTF as a strategic investment, not just a compliance task, organisations can position themselves to respond confidently to regulation, enhance efficiency, and reinforce trust across their networks.

From compliance to competence

To support organisations preparing for Tranche Two, we’ve developed a new AML/CTF eLearn tailored for the sectors coming into scope.

This course delivers practical, role-specific training across:

• Risk assessment and governance
• Customer due diligence and ongoing monitoring
• Suspicious matter reporting
• Culture and professional scepticism

By blending regulatory insights with real-world case studies, the program helps firms build genuine capability, embedding AML/CTF competence as part of everyday business practice.

Find out more about our Anti-money laundering eLearn 

References

1. AUSTRAC – Tranche Two consultation and guidance materials on AML/CTF obligations and implementation timelines.
2. Attorney-General’s Department – Consultation papers on reforms extending AML/CTF coverage.
3. Financial Action Task Force (FATF) – International standards for gatekeeper professions.
4. Norton Rose Fulbright – “Tranche Two AML/CTF reforms: What legal and professional firms need to know.”
5. Law Society of South Australia – Guidance on Tranche Two impacts for legal practices.
6. Moody’s – Commentary on Australia’s AML/CTF regime and potential economic implications.
7. The Australian and Courier Mail – Coverage of money-laundering risks in real estate and professional services sectors.