AML/CTF Tranche 2: What real estate, legal and accounting service providers and their clients need to know

Key points

• Businesses providing certain real estate, legal and accounting services will be required to comply with AML/CTF Tranche 2 requirements from 1 July 2026 where these services are deemed to be ‘designated services’ under the Act.
• The reforms will also impact clients of these firms, who may be required to provide additional information before receiving designated services.
• Impacted businesses must assess whether they are providing designated services, and if so, take action to enrol with AUSTRAC and implement an AML/CTF program.
• AUSTRAC has published many helpful resources that service providers should read to ensure they understand their obligations and take the necessary steps to comply.

The Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) was passed in 2006 and commenced in 2008, regulating financial services, gambling and bullion services. These reforms are commonly known as Tranche 1. While the expansion of regulation to other industries was originally intended to follow the implementation of Tranche 1, the amendment Act was not passed until late 2024.

Significant reforms to Australia’s Anti‑Money Laundering and Counter‑Terrorism Financing (AML/CTF) regime will take effect from 1 July 2026. The reforms (commonly referred to as AML/CTF Tranche 2) will expand AML/CTF regulation into new industries which are recognised as high-risk for criminal exploitation, known as gatekeeper professionals who act as intermediaries in financial transactions, such as real estate agents, lawyers, accountants and trust/company service providers.

The reforms will also impact clients of these industries, who may be required to provide additional personal and entity related information before certain services can commence.

Existing regulated entities caught under Tranche 1 must comply with the reformed obligations by 31 March 2026 (with some transitional rules applying).

What services may be captured?

A full list of the new designated services is contained in the AML/CTF Act and AUSTRAC has released some helpful guidance which explains in detail the new services that will come under regulation. If you are in one of these gatekeeper industries, you must consider whether you are providing any of these services as you may be required to comply with the new obligations. A key factor to consider in determining whether the services you provide are captured, depends on the nature of the service, not just the profession of the provider. If you are providing a designated service, AML/CTF obligations will apply, regardless of whether you are a sole practitioner or a large firm.

Some examples of new designated services commonly provided by the real estate, legal and accounting industries include:

• assisting in the planning or execution of transactions to sell, buy or transfer real estate, a body corporate or legal arrangement;
• assisting in the planning or execution of the creation of, or restructuring, a body corporate or legal arrangement;
• providing a registered office address or principal place of business address of a body corporate or legal arrangement;
• acting, or arranging for someone to act on behalf of a person in particular positions in a body corporate or legal arrangement (such as a director or nominee shareholder);
• brokering the sale, purchase or transfer of real estate; and
• selling or transferring real estate where the sale of transfer is not brokered by an independent real estate agent.

For the full list of designated services refer to the AML/CTF Act or the AUSTRAC website.

What do service providers need to do?

YOU NEED TO ACT NOW.

The key upfront obligations imposed by the AML/CTF Act include:

• enrolling with AUSTRAC from 31 March 2026 up to 30 June 2026 (completed by no later than 29 July 2026);
• developing and maintaining an AML/CTF Program by 1 July 2026; and
• identifying your key AML/CTF roles and responsibilities by 1 July 2026.

Your ongoing obligations from 1 July 2026 include:

• conducting initial customer due diligence (CDD);
• conducting ongoing due diligence;
• ensure an independent evaluation is conducted at least once every three years;
• reporting transactions and suspicious matters;
• annual reporting to AUSTRAC; and
• record keeping.

The reforms are complex and their application may vary depending on the services provided and client circumstances. Practitioners may wish to seek legal advice to understand how the reforms apply to them and their obligations. If you are caught under Tranche 2, you will be required to comply by 1 July 2026.  This date is legislated so understanding your obligations is essential to being adequately prepared.

AUSTRAC has published AML/CTF reforms guidance to assist businesses in understanding the Tranche 2 reforms and regularly hosts educational webinars to support new and existing regulated entities. AUSTRAC guidance should be reviewed alongside professional advice if required to ensure obligations are fully understood.

Penalties

If you don’t meet your obligations under AML/CTF law, AUSTRAC can take steps to enforce compliance and apply significant penalties up to $6,600,000 for individuals and $33,000,000 for a body corporate.

How will the reforms affect clients?

To enable real estate agents, lawyers and accountants to comply with the new AML/CTF Tranche 2 obligations from 1 July 2026, you may be required to provide additional information to verify your identity, satisfy the provider of the underlying ownership and control of your structures, and even to provide evidence of your source of funds or source of wealth.  All of this will need to occur before any services are provided to you.

You may be required to provide this information even if you have an existing relationship with a firm, such as in circumstances where the services involve a new entity, or a new designated service is being provided.

You need to be aware that the provision of services may be delayed or withdrawn if you do not provide the information requested or respond in a timely manner.  You should also be wary of providers who disregard their AML/CTF obligations.

Where to next?

Service providers should take steps now to assess whether they provide designated services, understand their obligations under the reformed AML/CTF regime, and take action to ensure compliance ahead of the commencement date.

We also recommend that you begin to develop your internal processes for onboarding new clients and undertaking new engagements, including establishing your risk assessment criteria and subsequent activities to manage your AML/CTF risks.

Staying informed and preparing early will help both existing and newly regulated entities be ready to comply when the reforms take effect. Consult AUSTRAC’s guidance and consider whether you may need professional advice.