Tranche 2 AML/CTF Reforms: Protecting Australia's Financial Integrity in a Complex Global Economy
Australia has long stood as a beacon of financial stability and regulatory robustness. However, the evolving sophistication of financial crime demands continual modernization of our frameworks to stay ahead of threats. The Tranche 2 amendments to the Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) regime, which come into effect from July 1, 2026, represent the most significant expansion of Australia's AML regime since 2006.
Scope and Rationale
Tranche 2 extends AML/CTF compliance obligations to high-risk professional service providers, including legal practitioners, accountants, real estate agents, conveyancers, property developers, and dealers in precious stones and metals. These "gatekeepers" have historically been exploited as loopholes by criminals seeking to move dirty money undetected, leveraging complex transactions, layered company structures, and opaque asset ownership to launder illicit proceeds.
By formally bringing these industries within the AML/CTF regime, Australia aligns with international best practices required by the Financial Action Task Force (FATF), affirming our commitment to counter financial crime—and meeting recommendations from both FATF mutual evaluations and domestic enforcement agencies.
Key Features of the Reform
- Outcomes-Based Customer Due Diligence: The reforms introduce a simplified, flexible framework focusing on real-world risk outcomes rather than prescriptive rules, enabling entities to tailor their compliance based on risk assessments.
- Clarification on Legal Professional Privilege: Balancing confidentiality with compliance, the reforms clarify how legal service providers can meet AML obligations without breaching privilege doctrines.
- Introduction of 'Keep Open Notices': This procedural reform streamlines law enforcement's ability to issue notices to reporting entities to delay customer due diligence when alerting suspects would jeopardize an investigation.
National and International Impacts
The reforms strengthen Australia's position in global financial networks, sending a clear signal to international partners that Australia is tightening its controls. Improved transparency and cooperation reduce the country's attractiveness as a laundering hub and bolster investor confidence.
These measures also mitigate risks to the Australian economy, which loses billions annually to organized and serious crime—estimated at nearly $69 billion in 2023–24 according to industry reports. Beyond combating crime, they protect the integrity of markets, reduce fraud, and enhance fairness for all participants.
Preparing for the Transition
AUSTRAC is actively supporting affected sectors with detailed guidance, training, and enrolment systems opening from March 31, 2026, allowing time for onboarding and compliance readiness. Businesses that proactively invest in risk-based compliance will reduce disruption and gain a competitive advantage by demonstrating robust governance.