Anti-Money Laundering and Counter-Terrorism Financing reforms soon to affect lawyers, accountants and real estate professionals

Australia is tightening its anti-money laundering and counter-terrorism financing laws to strengthen the country’s financial system, align with international standards and address evolving threats posed by financial crime. These changes will significantly impact professionals in legal, accounting and real estate sectors. This article outlines what is changing, when, and how to prepare.

The Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) plays a key part in how the Australian Government regulates the functions of Australian Transaction Reports and Analysis Centre (AUSTRAC), which is responsible for preventing, detecting and responding to criminal abuse of the financial system to protect the Australian community from serious and organised crime.

On 29 November 2024, the AML/CTF Act was amended to include several changes that will have significant regulatory impacts across many sectors.

Australia’s stable political system and open and free economy, coupled with outdated anti-money laundering regulations has made it an attractive destination for criminals to store and legitimise proceeds of crime. The changes to the AML/CTF Act are in response to growing concern over Australia’s exposure risk to financial crimes.

How does the AML/CTF regime operate?

A “designated service” refers to specific financial, legal or professional services that may be vulnerable to misuse for money laundering or terrorism financing. Entities providing these services are classified as “reporting entities” and must comply with AUSTRAC regulations.

The key obligations for businesses regulated by AUSTRAC are to:

• enrol and register with AUSTRAC
• develop and maintain an AML/CTF program tailored to the business
• conduct initial and ongoing customer due diligence
• report certain transactions and suspicious activities
• make and keep records.

Reporting entities are required to develop, implement and maintain their own AML/CTF program (a set of policies and procedures the business must adhere to for the purpose of identifying, mitigating and managing risk whilst also complying with mandatory obligations set out in the AML/CTF Act). Reporting entities’ responsibilities are to be managed by a “compliance officer” who is responsible for overseeing the AML/CTF program, ensuring internal procedures meet legal obligations and reporting to AUSTRAC.

As part of an AML/CTF program, certain types of transactions and matters that a reporting entity deems suspicious must be reported to AUSTRAC. Significant ongoing reporting obligations include submitting threshold transaction reports (for transactions of AU$10,000 or more, international funds transfer instruction reports and suspicious matter reports).

Further obligations include conducting business risk assessments, collecting and verifying client details before providing services (customer due diligence), maintaining secure records of all compliance activities undertaken, and paying an industry levy if the business meets certain threshold requirements.

What's changing?

The key objectives of the amendments to the AML/CTF Act are to:

1. expand the AML/CTF regime to reach additional high-risk services, provided by “tranche two entities”
2. simplify and clarify the AML/CTF regime to increase flexibility, reduce regulatory impacts and support businesses to better prevent and detect financial crime.

Early stages of the new regime came into effect in January 2025 with the repeal of the Financial Transaction Reports Act 1988 (making the AML/CTF Act now the sole source of anti-money laundering guidance) and further changes will continue to roll out until July 2026.

Rather than listing specific business types, the amended AML/CTF Act now defines its scope by reference to newly introduced “designated services”. Any entity that provides these services and has a geographical connection to Australia will be subject to the AML/CTF regime.

This change significantly broadens the reach of the legislation by capturing a range of high-risk services that were previously unregulated. These include services offered by the following “tranche two entities”:

1. real estate professionals
2. dealers in precious metals and precious stones
3. professional service providers – such as lawyers, conveyancers, accountants, and trust and company service providers.

To help businesses determine whether they fall within the scope of the new regime, AUSTRAC has developed an online tool, available here.

Further updates include changes to the existing requirement to develop and refine an AML/CTF program, whereby reporting entities will be required to undertake more clearly defined measures focused on identifying, assessing and mitigating money laundering, terrorism financing and proliferation financing risk. This replaces the current ‘check-box’ approach of simply needing to have an AML/CTF program.

The AUSTRAC website contains a comprehensive list of all changes to the Act and ongoing obligations for reporting entities, which can be found here.

When do the changes commence?

The following timeline outlines key dates for the roll-out of AML/CTF reforms affecting tranche two entities.

What should I do?

AUSTRAC has acknowledged that the above timeframes are tight, but maintain that they are necessary as Australia will be subject to a mutual evaluation by the global AML body, The Financial Action Taskforce, from 2026.

With the upcoming changes to Australia’s AML/CTF regime, legal, financial and professional service providers (that provide the newly regulated “designated services”) must begin preparing now. To ensure AML/CTF compliance and reduce regulatory risk, consider the following essential questions:

• Does my business offer any of the new AML/CTF “designated services”?
• Do we plan to continue offering these services under the updated AML/CTF framework?
• Are any of our services considered high-risk under AML/CTF guidelines and should they be modified, discontinued or outsourced?
• What customer identification and verification data do we currently collect and how is it stored, reviewed and updated?
• How well do we understand our clients’ backgrounds and sources of wealth?
• What AML/CTF screening tools and software solutions are available to support compliance?
• Do we have systems in place to detect and report suspicious transactions or activity?
• Who within our organisation is responsible for leading AML/CTF compliance efforts and ensuring ongoing regulatory alignment?