Money laundering, fraud and the financing of terrorism aren’t just international problems, they directly harm Australians. Criminal abuse of the financial system undermines our economy, weakens national security, and causes real damage to individuals and small businesses.

To combat this, Australia is strengthening its anti-money laundering and counter-terrorism financing (AML/CTF) laws. These changes expand the scope of the regime and aim to make compliance clearer and more effective.

What’s changing?

The reforms will apply AML/CTF obligations to a broader range of businesses, particularly those known as tranche two entities – lawyers, accountants, trust and company service providers, real estate agents, and dealers in high-value goods. Virtual asset service providers (such as cryptocurrency exchanges) will also come under the net.

These changes are designed to help close regulatory gaps that criminals have historically exploited. Importantly, the government has also committed to simplifying and streamlining the existing regime to reduce duplication and improve compliance outcomes.

Key obligations for reporting entities

If your business becomes a reporting entity under the reforms, there are a number of core obligations to understand:

1. AML/CTF Program Requirements

Businesses will be required to develop and maintain a program that sets out how they identify, assess and manage risks relating to money laundering, terrorism financing, and proliferation financing.

2. Customer Due Diligence (CDD)

You will need to:

• Identify your customers and verify their identity
• Carry out due diligence on individuals associated with your customers (e.g. beneficial owners)
• Apply simplified CDD in a narrower range of situations
• Note that the threshold for CDD exemptions will be lowered for gambling service providers

3. Reporting Requirements

You will need to report to AUSTRAC:

• Threshold transaction reports
• Cross-border movement reports
• Suspicious matter reports
• International funds transfer instructions (IFTIs)

You must also keep complete and accurate records that can assist authorities investigating financial crime. That said, these laws do not override legal professional privilege – you are not required to disclose privileged documents or communications.

When do these obligations commence?

New reporting entities can enrol with AUSTRAC starting from 31 March 2026 and must be fully compliant by 1 July 2026.

Reforms for current reporting entities commence on 31 March 2026.

What does this mean for your business?

If your business falls within the expanded scope of the AML/CTF regime, it’s essential to:

• Understand your obligations early
• Put systems in place to comply
• Seek professional advice if you’re unsure

Criminals are sophisticated and opportunistic. These reforms are about reducing their ability to exploit businesses as unknowing facilitators of financial crime.

Please contact Chris Andonas for tailored advice.

This information is general in nature and does not constitute legal advice.