The Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024 (the Act) passed Parliament on 29 November last year. The amendments rewrite and amend (‘modernise and simplify’) the current Act and, as is now well known, extend its operation to lawyers, accountants and real estate agents (‘Tranche 2 entities’) among other businesses.
These changes to the Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) regime are the biggest change to the AML/CTF laws since Tranche 1 was introduced in 2006.
The changes bringing Tranche 2 entities into the regime come into force on 1 July 2026. Other provisions of the Act have already come into force, with the balance of the modernisation and simplification measures affecting current reporting entities coming into force on 31 March 2025.
In the meantime, work continues to finalise the regulatory Rules and AUSTRAC guidance necessary to implement the amendments. The Rules are expected to be finalised in July 2025 after a second round of consultation, and AUSTRAC expects to finalise its tranche 2 guidance in January 2026, leaving a scant 6 months for the Reporting Entities affected to implement it.
The benefits of an effective AML/CTF regime to the economy are substantial. Recent estimates put the cost of serious and organised crime to the Australian economy to be almost $69 Billion in 2023-2024. In business terms this means that if you are an accountant, lawyer or real estate agent, the likelihood that your firm is dealing with money launderers is higher than you might think. In the coming year as AML/CTF checks and reporting become a routine part of the operating environment for the new entrants to the regime, maintaining AML/CTF measures will become a hallmark of a professional and well-run business.
What are the requirements?
Businesses that provide what are known as designated services under the AML/CTF Act (‘Reporting Entities”) must:
- Enroll with AUSTRAC;
- Develop and implement an AML/CTF Program (known as an AML/CTF Policy after 31 March 2026) that complies with the requirements of the Act;
- Ensure that they comply with the requirements of the Program;
- Make certain reports to AUSTRAC most notably including an annual compliance report and suspicious matter reports.
The AML Program must provide for appointment of an AML/CTF compliance officer, board (or other governing body) approved and must include:
- A risk assessment for the Reporting Entity (on which the rest of the Program is based);
- Customer due diligence (also known as KYC) measures to collect and verify identification information for clients;
- Employee due diligence for background checks of staff in roles with potential to facilitate money laundering;
- Training to raise awareness of Money Laundering risks;
- Reporting measures;
- Record keeping measures.
Where do I start?
Tranche 2 business are fundamentally different from other Reporting Entities in terms of culture, cash flow and their client/customer relationships. An example of the challenges these differences raise is the debate around the tension between the lawyers’ obligation to protect client legal privilege and the obligation to report suspicious matters to AUSTRAC. The lessons learned and experience gained over the past 18 years by current reporting entities though highly relevant is not directly transferable in all cases to tranche 2 entities. On the other hand, Australian business does benefit from being late to the game by being able to learn from the experience of UK and New Zealand tranche 2 entities gained from implementing the corresponding obligations in those markets.
Typically, a business faced with new compliance obligations would start by drafting a compliance policy and designing controls to ensure the obligations are met. However, implementation of AML/CTF compliance obligations is not a tick box exercise, and a risk assessment that meets the requirements of the legislation must be completed before procedures can be designed and the AML/CTF Policy written. In our experience this is the task that clients find to be the most difficult part of implementing an AML/CTF Program. Further, the fundamental shift in culture and attitudes required suggests that the training element is ongoing and should be about more than simply procedure.
There are five things that professional services providers and real estate professionals should start doing now, to be ready for implementation by July 2026.
- Get written advice confirming which of the services provided by your business are designated services within the scope of the AML/CTF regime. It is easy to summarise the designated services that apply to professional and real estate services providers but there is devil in the details. Businesses also need to understand when in the client life cycle designated services may be triggered and generally how the obligations of the Act apply to their business. It will be critical risk management to understand and communicate clearly not just what relationships are within the scope of the AML/CTF regime, but what are not;
- Designate your AML/CTF Compliance Champion and consider whether and how to use technology to meet your obligations given the size nature and complexity of the business – the mix of human and IT resources required to optimise efficient delivery the AML/CTF Program. Assemble the required resources;
- Map your current client onboarding and engagement procedures and consider how to integrate the necessary additional requirements into these existing processes. Look for opportunities to leverage existing processes (such as electronic conveyancing verification of identity requirements);
- Start collecting the information and data you need about your customers to form the basis of a customer risk assessment. It is much easier to collect information as you go, looking forwards, than to have to look backwards at incomplete and unreliable information not collected for the purpose;
- Identify your training needs. Professional services client relationships are built around obligations of trust and confidentiality. For the first time, legal and accounting professionals may need to turn their minds to how to meet regulatory obligations that require them to proactively act in a way to protect those client rights while also meeting their legal obligations.
Then and only then, develop a risk-based AML/CTF Policy and procedure that reflects the evolving regulatory and money laundering and terrorism financing risk environment as well as the needs of the business.
How we can help
At Danaher Moulton our Banking and Financial Services team have market leading expertise developing and reviewing AML/CTF programs, and unique insight into the needs of professional services businesses.
Our AML/CTF Solutions Package is designed with the unique needs of lawyers, conveyancers, accountants and real-estate agents in mind.
- Delivered flexibly as a managed service or on a fee-for-service basis;
- Training designed with you and your business in mind;
- Risk Libraries for your industry;
- AML/CTF Policy documents tailored in consultation with you in a workshop setting;
- Access to industry leading technology partners;
- Ongoing flexible support and expert advice to develop your Program and keep it up to date in a changing environment.
