From 1 July 2026, Australian businesses will face new or expanded anti-money laundering and counter-terrorism financing (AML/CTF) obligations. For many, this will be the first time AML compliance applies directly to their business.
Known as Tranche 2 AML/CTF reforms, these changes are more than a regulatory update. They represent a structural shift in how onboarding, client due diligence, and record-keeping must be handled across a wide range of professions.
The good news? With the right understanding and preparation, Tranche 2 does not have to be complex or disruptive. But getting there starts with knowing what’s changing — and what recommended steps and processes look like.
What are the Tranche 2 AML/CTF reforms?
Australia’s AML/CTF regime has traditionally focused on banks and financial institutions. Tranche 2 reforms extend these obligations to additional professional services sectors that have previously operated outside the formal AML framework.
Tranche 2 is designed to close regulatory gaps, align Australia with international standards, and reduce the risk of financial crime. For affected professions, AML/CTF obligations will shift from being indirect or occasional to formal, enforceable, and ongoing.
The reforms are overseen by AUSTRAC (the Australian Transaction Reports and Analysis Centre), which is responsible for supervising compliance and enforcing the Anti-Money Laundering and Counter-Terrorism Financing Act 2006.
Registrations with AUSTRAC for newly regulated entities will open from 31 March 2026, with new legislation effective from July onwards.
Who will be affected?
Tranche 2 applies to a broad range of regulated and newly regulated professionals, including:
- Real estate professionals
- Accountants
- Lawyers
- Conveyancers
- Dealers in precious metals, stones, and products
- Trust and company service providers
What new obligations will apply?
Tranche 2 introduces a set of core compliance responsibilities designed to help protect the financial system and prevent illicit funds from being channelled through professional services.
Customer Due Diligence (CDD) Reporting entities must verify client identities before providing designated services and understand the purpose and intended nature of the relationship. Ongoing monitoring — not just one-time checks — will also be required.
Beneficial Ownership Verification Entities must identify and verify individuals who ultimately own or control clients or related entities. This helps prevent opaque arrangements from obscuring illicit funds.
Record-Keeping and Auditability Detailed, structured records of due diligence, decision-making and compliance activity must be maintained in a way that is readily accessible and able to withstand regulatory review.
Governance and Training You will need an AML/CTF program and a designated compliance officer, as well as tailored staff training on AML/CTF requirements and risk management.
Why traditional compliance approaches will struggle
Many affected professions currently rely on manual, ad-hoc or document-centric compliance practices. While these may have worked historically, the breadth and depth of Tranche 2 obligations demand consistent, documented and repeatable processes.
Common challenges include:
- Manually collecting and storing identity documents
- Duplicate verification requests across teams
- Scattered records and inconsistent audit trails
- Heavy administrative overhead for staff and partners
These approaches make it difficult to demonstrate compliance under scrutiny and to maintain consistency over time.
What ‘good’ compliance looks like under Tranche 2
Effective AML/CTF compliance isn’t about ticking boxes — it’s about building a framework that is:
- Tailored to your business and regulatory context
- Capable of handling customer verifications and ongoing monitoring efficiently
- Secure, with clear accountability and oversight
- Prepared for audit and regulatory engagement
This means moving beyond paper-based processes toward structured, transparent systems that support real-time compliance and evidence-based decision-making.
Preparing now: practical first steps
Getting ready ahead of the deadline makes the transition smoother and reduces risk:
- Confirm your regulatory status: Use guidance resources to determine if your services qualify as designated under Tranche 2.
- Map your onboarding processes: Understand where your current client intake and verification processes sit today.
- Identify gaps: Look for manual handoffs, duplicated checks, or hard-to-find records.
- Invest in capability: Assess whether external compliance specialists or purpose-built technology providers can help you design, implement, and manage AML/CTF obligations in a structured and scalable way.
- Train your team: Embed awareness and understanding of AML/CTF requirements across staff roles.
Compliance without complexity
The Tranche 2 reforms are a meaningful step toward a more resilient Australian AML/CTF framework. While they bring new rules and expectations, they also encourage more structured, transparent and defensible practices.
Preparing for Tranche 2? Contact the Ratified team to understand how modern AML/CTF compliance can simplify onboarding, reduce duplication, and help you prepare for Tranche 2 with confidence.