Gear Up for 2026 AML Reforms Now!

Tranche 2 Deadline Looms

Australia has operated one of the narrower anti-money laundering and counter-terrorism financing (AML/CTF) regimes among developed economies. Until now, the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 primarily covered banks, remittance services, casinos and similar financial players, leaving designated non-financial businesses and professions (DNFBPs) such as lawyers, accountants, real estate agents, conveyancers and dealers in precious metals and stones largely unregulated for money laundering risks.

That changes decisively in 2026. Following years of pressure from the Financial Action Task Force (FATF), which repeatedly criticised Australia's incomplete coverage, Parliament passed the AML/CTF Amendment Act in November 2024. AUSTRAC, the regulator and financial intelligence unit, tabled the supporting Anti-Money Laundering and Counter-Terrorism Financing Rules 2025 in August 2025 after public consultations. These reforms introduce 'Tranche 2' obligations, extending the regime to those previously exempt professions that provide designated services such as trust and company formation, real property transactions, client account management and advice on tax or wealth structuring.

The stakes are immediate and material. From 1 July 2026, affected entities must enrol with AUSTRAC (enrolment opens 31 March 2026), implement a risk-based AML/CTF programme, conduct customer due diligence, monitor transactions, report suspicious matters and maintain records. Failure to comply exposes firms to civil penalties that can reach millions of dollars, potential criminal liability for senior management and reputational harm that erodes client trust. Estimates suggest 80,000 to 90,000 new reporting entities will enter the regime, many of them small or mid-sized professional practices that have never before faced such structured compliance demands.

Costs will vary widely but are far from trivial: technology for customer verification and monitoring, staff training, appointment of dedicated compliance officers and external audits can run into tens of thousands of dollars annually for smaller firms, with larger ones spending more to overhaul systems. Transitional relief exists—such as a three-year window for initial customer due diligence and deferred independent evaluations until at least 2029 for new entities—but core obligations like ongoing due diligence and suspicious matter reporting begin immediately on 1 July 2026.

Less discussed is the trade-off between enhanced detection of illicit finance—real estate and legal services have long been flagged as laundering channels—and the potential chilling effect on legitimate business. Critics argue the rules impose a one-size-fits-all burden on professions where actual money laundering is rare relative to volume, raising privacy concerns over client data and increasing barriers to entry for smaller operators. Supporters counter that Australia's gap encouraged criminals to exploit these sectors, undermining the integrity of the financial system and exposing the country to FATF grey-listing risks that could raise borrowing costs and damage investment inflows.

With deadlines now locked and transitional rules finalised in early 2026, the window for preparation is closing fast.