AML/CTF Tranche 2 in Australia is the most significant expansion of the country’s financial crime framework in twenty years — extending full AML/CTF obligations to accountants, lawyers, real estate agents, and trust service providers for the first time.
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A structural shift, not a compliance update
AML/CTF Tranche 2 is the piece of Australia’s financial crime architecture that has been missing for twenty years. From 1 July 2026, the Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024 extends the full regulatory perimeter to professional services firms for the first time. What was once a framework that captured banks, fintechs, and casinos but not the lawyers, accountants, and real estate agents who facilitated the same transactions is now complete.
This is not a compliance update. The Tranche 2 reforms represent a structural shift in how Australia regulates professional services — and for the vast majority of affected businesses, the preparation required is far more substantial than they currently appreciate.
Who is captured: Accountants, lawyers, real estate agents, trust and company service providers, and dealers in precious metals become designated reporting entities. The test is not what type of firm you are — it is what services you actually provide.
Why Australia ran out of excuses
Australia did not arrive at AML/CTF Tranche 2 voluntarily. The Financial Action Task Force (FATF) — the Paris-based intergovernmental body that sets global AML/CTF standards — had been documenting Australia’s professional services blind spot for years.
In its 2015 mutual evaluation, FATF rated Australia non-compliant or partially compliant across multiple technical requirements — several directly related to the absence of obligations for lawyers, accountants, and real estate agents. Australia was placed on enhanced follow-up: a status that carries serious reputational consequences for a jurisdiction positioning itself as a regional financial hub.
In public statements and parliamentary submissions on the Tranche 2 reforms, AUSTRAC has consistently identified professional services as a persistent gap in Australia’s financial crime defences — citing particular exposure to money laundering through real property transactions and layered corporate structures as the primary justification for the expansion.
in estimated proceeds of crime flowing through the Australian economy annually — Attorney-General's Department, 2023 Tranche 2 Consultation
The AML/CTF Amendment Act 2024 passed in late 2024. AML/CTF Tranche 2 obligations commence 1 July 2026. The peer jurisdictions Australia has been out of step with — the UK, EU, Canada, and Singapore — have regulated their professional services sectors for years. That gap is closing.
Who the AML/CTF Tranche 2 reforms capture
The Tranche 2 reforms introduce a concept that will catch many firms off guard: the designated services test. A firm does not become a reporting entity because of its firm type — it becomes one because of its service activities. This distinction matters enormously: a firm that has never considered itself subject to financial regulation may find that several of its core service lines independently trigger full reporting entity obligations.
The following service categories trigger AML/CTF Tranche 2 obligations:
- Accounting and bookkeeping services — managing client funds, financial statements in connection with transactions, tax advice on asset structuring or disposal
- Legal practitioners — real property transactions, forming or administering companies or trusts, managing client trust accounts, business acquisitions and disposals
- Real estate agents and property developers — residential and commercial property transactions above $10,000, capturing the vast majority of Australian property transactions
- Trust and company service providers (TCSPs) — forming, administering, or providing registered office services for legal entities
- Dealers in precious metals, stones, and luxury goods — transactions above applicable thresholds
- Certain financial advisers and mortgage brokers — those not already covered under existing AFSL conditions
Many firms performing the Tranche 2 self-assessment are asking “what type of firm are we?” rather than “what services do we actually provide?” A firm that prepares financial statements, manages SMSF accounts, and provides registered office services may trigger three independent sets of reporting entity obligations simultaneously — one for each designated service category.
What AML/CTF Tranche 2 means for your firm
The Tranche 2 expansion has no modern precedent in Australian professional services regulation. AUSTRAC estimates approximately 10,000 new reporting entities will enter the regime — the largest single-cohort addition since the Act passed in 2006.
For each newly designated firm, the obligations are immediate and non-negotiable: register with AUSTRAC, implement a written risk-based AML/CTF program, conduct Know Your Customer (KYC) checks, maintain ongoing client due diligence, lodge Suspicious Matter Reports when required, and retain all records for seven years.
What none of these obligations forgives is a lack of preparation. AUSTRAC has been building supervisory capacity specifically for Tranche 2 entities ahead of commencement. Its published guidance is explicit: operationalised programs are expected from day one — not programs in development, and not programs that exist only as documents.
Tranche 2 is not just a compliance obligation — it is a professional responsibility question. Every designated firm must be able to answer: do we genuinely know who our clients are, what their business activities are, and what our services are being used for? The KYC obligation is the mechanism by which that question gets answered formally, with documentation, on a schedule.
The window to prepare is closing
AML/CTF Tranche 2 Australia is not a future event. The legislation passed. The commencement date is set. For thousands of accounting firms, law practices, and real estate agencies, the compliance clock has already started.
The first question is simple: do the services your firm provides make it a designated reporting entity? For the vast majority of professional services firms, the answer is yes. The second question is the one that matters: will your program be built, tested, and embedded before AUSTRAC starts examining it?
How DBA Advisory supports
DBA Advisory works with professional services firms, financial businesses, and private enterprises across Australia to build AML/CTF programs that are genuinely defensible — tailored to your firm’s specific risk profile, embedded in your operating procedures, and built to withstand AUSTRAC scrutiny. All engagements are delivered on a fixed-fee basis — so the cost of compliance is certain before the work begins.
Frequently Asked Questions (FAQs)
Terrorism Financing Act 2006 — as amended by the AML/CTF Amendment Act 2024 — to include professional services firms as designated reporting entities for the first time. The Tranche 2 obligations take effect from 1 July 2026. From that date, accountants, lawyers, real estate agents, trust and company service providers, and dealers in precious metals are subject to the full suite of AML/CTF obligations: AUSTRAC registration, an AML/CTF program, KYC and customer due diligence, suspicious matter reporting, and seven-year record retention.
The Tranche 2 designated services test is activity-based, not entity-based. Accounting firms providing tax advice connected to transactions, managing client funds, or preparing financial statements for business transactions are captured. Legal practitioners handling real property transactions, company or trust formations, trust account management, or business acquisitions are captured. Real estate agents handling property transactions above $10,000, TCSPs, certain financial advisers and mortgage brokers, and dealers in precious metals are also in scope. A firm providing multiple designated services may trigger multiple independent sets of obligations simultaneously.
The obligations are structurally the same for accountants and lawyers — both must register with AUSTRAC, maintain an AML/CTF program, conduct KYC and customer due diligence, and lodge Suspicious Matter Reports. However, lawyers face a unique complication: the tipping-off prohibition (which makes it a criminal offence to inform a client that an SMR has been lodged) intersects with their existing duties of client confidentiality and legal professional privilege. The Law Council of Australia has been engaged with the Attorney-General’s Department on this tension. Both professions need specific internal protocols to manage their obligations.
Australia faced sustained pressure from the Financial Action Task Force (FATF), which rated Australia non-compliant or partially compliant across multiple AML/CTF requirements in its 2015 mutual evaluation — specifically because lawyers, accountants, and real estate agents were outside the regulatory perimeter. The Attorney-General’s Department estimated $50 billion in proceeds of crime flows through the Australian economy annually, much of it facilitated through professional services. The Tranche 2 reforms bring Australia into line with peer jurisdictions including the UK, EU, Canada, and Singapore, all of which have regulated their professional services sectors for years.
A designated reporting entity under AML/CTF Tranche 2 is a business that provides one or more of the designated services listed in the amended AML/CTF Act and is therefore subject to the full suite of compliance obligations. Professional services firms providing designated services join banks, fintechs, and other existing reporting entities in this category. Obligations include: registering with AUSTRAC before providing designated services; maintaining a written risk-based AML/CTF program; conducting KYC and ongoing customer due diligence; lodging Suspicious Matter Reports; and retaining all records for seven years.
Disclaimer
© DBA Advisory 2026. This article is intended as general information only and does not constitute legal or compliance advice. Businesses should seek qualified advice specific to their circumstances before acting on any information contained in this article.
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