AUSTRAC Tranche 2: What Australian Businesses Need to Know

The Anti-Money Laundering and Counter-Terrorism Financing Act 2006 is expanding. Known as "Tranche 2", this extension brings a wide range of professional services under AUSTRAC's regulatory umbrella for the first time.

Who Is Affected?

Starting July 1, 2026, the following professions will be classified as reporting entities under the AML/CTF Act:

• Accountants — including tax agents, BAS agents, and firms providing financial advice
• Lawyers — particularly those involved in conveyancing, trust administration, and company formation
• Real estate agents — covering buying, selling, and leasing of property
• Conveyancers — handling property transfers and settlements
• Trust and company service providers — forming companies, acting as directors, or providing registered office services

What Are the Obligations?

Each reporting entity must establish and maintain an AML/CTF program that includes:

1. Part A — your AML/CTF program describing how your business will identify, mitigate, and manage ML/TF risks
2. Part B — customer identification procedures for verifying the identity of customers before providing designated services
3. Risk assessments documenting the ML/TF risks specific to your business, customers, and services
4. Ongoing customer due diligence to monitor transactions and update risk profiles
5. Reporting obligations including Suspicious Matter Reports (SMRs), Threshold Transaction Reports (TTRs), and International Funds Transfer Instructions (IFTIs)
6. Record-keeping for a minimum of 7 years
7. Employee training to ensure staff can identify suspicious activity
8. Compliance officer appointment with appropriate seniority and authority

What Happens If You Don't Comply?

AUSTRAC has significant enforcement powers. Non-compliance can result in:

• Civil penalties of up to $22.2 million per contravention for corporations
• Enforceable undertakings requiring specific remedial action
• Infringement notices for less serious breaches
• Remedial directions from AUSTRAC

The regulator has already demonstrated willingness to take action, with high-profile cases against Westpac ($1.3 billion) and Crown Resorts ($450 million).

How to Prepare

The best approach is to start early. Key steps include:

1. Determine whether your business provides designated services
2. Conduct an initial ML/TF risk assessment
3. Develop your AML/CTF program (Parts A and B)
4. Implement customer identification and verification procedures
5. Train your staff on their obligations
6. Appoint a compliance officer
7. Set up reporting procedures for SMRs and TTRs

Tools like AutoAML can generate your entire compliance program in minutes using AI, tailored to your specific business and industry.