Australia’s Tranche 2 AML Reforms: What You Need to Know

Australia is preparing for its most sweeping anti-financial crime reforms in nearly two decades. From 1 July 2026, thousands of professionals—including lawyers, accountants, real estate agents, and jewellers—will officially become “gatekeepers” of the financial system under the new Tranche 2 AML/CTF reforms.

For many, this will be more than extra paperwork. It’s a cultural shift: professions traditionally built on client trust and confidentiality will now carry a public responsibility to help detect and report financial crime. It means balancing client service with a duty to protect the wider community from illicit money flows.

Why These Reforms Matter

The push for reform comes from two fronts. Internationally, the Financial Action Task Force (FATF) has long criticised Australia for being one of the few developed countries not regulating “gatekeeper professions.” This gap has made the country a soft target for money launderers. Being labelled non-compliant risks Australia being put on the FATF “grey list”—a move that would raise red flags for global investors, increase transaction costs, and damage the country’s reputation.

Domestically, the costs of financial crime are staggering—up to $60 billion each year. Real estate has been a favourite vehicle: criminals buying property with dirty money, renovating it with illicit funds, and selling it on for clean capital gains. Lawyers and accountants, too, have unintentionally played a role by setting up companies or trusts used to obscure true ownership. The reforms aim to shut these doors.

Who Will Be Affected

The reforms don’t regulate professions in a blanket way; they target specific “designated services”. For example, a lawyer who only handles litigation may not be captured, but one who manages property transactions or sets up family trusts almost certainly will. The main groups brought in under Tranche 2 include:

• Lawyers and conveyancers
• Accountants
• Real estate agents and property developers
• Trust and company service providers
• Dealers in precious metals and stones

AUSTRAC, Australia’s financial intelligence agency, has developed tools to help businesses self-assess whether they fall under the regime.

What Compliance Will Look Like

For businesses caught by the reforms, the shift is significant. They’ll be considered reporting entities, bound by six core obligations:

• Enrol with AUSTRAC within 28 days of providing a designated service.
• Develop an AML/CTF program, tailored to their business risks (with AUSTRAC offering starter kits for small operators).
• Conduct customer due diligence (KYC)—checking ID documents, beneficial ownership, and monitoring client behaviour over time.
• Report suspicious matters to AUSTRAC if transactions look unusual or linked to crime. Importantly, it’s illegal to tip off clients about these reports.
• Maintain records of compliance activities for at least seven years.
• Appoint a compliance officer with authority and independence to oversee obligations.

While tasks can be outsourced, liability cannot. Small businesses in particular must choose RegTech or compliance partners carefully—if they fail, the business itself is still on the hook.

The Challenges Ahead

Each profession faces unique challenges. Lawyers worry about conflicts with client confidentiality and privilege, though the law preserves legal professional privilege. Real estate agents warn of duplication, since multiple professionals often check the same client in a single property deal. They’re pushing for a “reliance model,” where due diligence done by one party can be securely shared with others. Accountants, many of whom work in small firms, fear the costs of compliance will be overwhelming—training, systems, and paperwork can quickly add up.

New Zealand’s experience offers a glimpse: when similar reforms were introduced, many small firms underestimated the time and expense involved. To ease the transition, AUSTRAC is promising a “light-touch” approach for low-complexity businesses, supported by templates and guidance.

The Road to 2026

The rollout follows a clear timeline:

• August 2025: Final rules published.
• Late 2025: Guidance and sector-specific instructions releases
• March 2026: AUSTRAC enrolment opens.
• 1 July 2026: Reforms take effect.
• 29 July 2026: Enrolment deadline for most new reporting entities.

For businesses, the smartest move is to start early: assess whether you’re covered, appoint a compliance officer, budget for costs, and begin drafting an AML/CTF program. Those who delay risk scrambling under pressure—and facing penalties if they fall short.

More Than Compliance

It’s tempting to see these reforms as just another regulatory headache. But they also present an opportunity. By stepping into the role of gatekeepers, professionals are helping cut off the flow of money that fuels organised crime, terrorism, and corruption. It’s a collective effort—government, regulators, and now an expanded network of professionals working together to strengthen Australia’s financial system.

In the long run, success will be measured not just in compliance tick-boxes but in creating a more secure, trusted environment for doing business. And that benefits everyone.