What is AUSTRAC Tranche 2? AML/CTF obligations for Australian businesses — plain English guide

Tranche 2 refers to the AML/CTF Amendment Act 2024 (Cth), which extends Australia's Anti-Money Laundering and Counter-Terrorism Financing regime to professional service providers for the first time. It affects accountants, real estate agents, lawyers, conveyancers, trust and company service providers, and others providing designated services from 1 July 2026. The first tranche — which covered banks, financial institutions, casinos, and digital currency exchanges — has been in place since 2006.

A reporting entity is any business or individual that provides one or more designated services listed in Table 1 or Table 2 of s 6 of the AML/CTF Act 2006 (Cth). Being a reporting entity means you must: enrol with AUSTRAC, build an AML/CTF program under s 81, conduct Customer Due Diligence on your clients, submit Suspicious Matter Reports (SMRs) when you suspect money laundering or terrorism financing, submit Threshold Transaction Reports (TTRs) for applicable cash transactions, and keep records for seven years.

An AML/CTF program is the documented compliance framework required under s 81 of the AML/CTF Act 2006 (Cth). It has two parts: Part A covers your internal risk-management systems (compliance officer, training program, employee due diligence, independent review, board oversight), and Part B covers customer-facing procedures (Customer Due Diligence, enhanced due diligence for high-risk customers, ongoing monitoring). The program must be adopted by the board or principals and kept current as your business changes.

After commencement, day-to-day obligations include: verifying client identities before providing a designated service (CDD); screening new and existing clients against PEP and sanctions lists; monitoring ongoing transactions for suspicious activity; lodging SMRs within statutory timeframes when suspicion arises; lodging TTRs for applicable cash transactions; maintaining 7-year records; delivering staff training and refreshers; and reviewing and updating your AML/CTF program when your business changes.

With a compliance consultant, initial program development typically takes 6–12 weeks and $5,000–$25,000 in fees. With AutoAML, a draft of all 13 required documents tailored to your business is generated in under 10 minutes from the onboarding questionnaire. You should then allow time for the principals to review, adopt, and sign off on the program — and organise staff training before 1 July 2026.

Ignorance of the law is not a defence under the AML/CTF Act. AUSTRAC can take enforcement action regardless of intent — contraventions are strict-liability in many cases. Civil penalties under Part 15A can reach $22.2 million per contravention for body corporates. AUSTRAC has stated it will take a proportionate approach to early Tranche 2 enforcement, but 'I didn't know' is not a mitigating factor that eliminates liability.