Australia’s anti-money laundering and counter-terrorism financing laws are changing. From 1 July 2026, additional businesses and professional services — often described as “Tranche 2” entities — are expected to come within the AML/CTF regime.

 

For many businesses, the important question is not simply: “Are we covered?” It is: “Can we prove that we have identified our risks, allocated responsibility, and built a practical compliance workflow before the deadline?”

 

The reforms matter because AML/CTF compliance is not just a document exercise. It usually requires a working system for identifying customers, understanding the nature of transactions, assessing risk, keeping records, escalating concerns and making sure staff follow the process.

 

What is changing?

AUSTRAC explains that the AML/CTF regime is being expanded to cover new services and entities from 1 July 2026. The Attorney-General’s Department has also described the reforms as extending obligations to services recognised as higher risk for money laundering exploitation, including certain professional services.

 

That means affected businesses should start reviewing whether their services fall within the new regime and, if so, what practical changes will be needed.

 

The detail matters. Different service lines may carry different risks. A business may have some activities that are regulated and others that are not. A professional-services firm may need to distinguish between ordinary advisory work and services involving company formation, trust arrangements, transactions, asset movements or other designated activities.

 

Why early mapping reduces cost

Leaving AML/CTF preparation until close to commencement can make the work more expensive. By then, businesses may be trying to solve several problems at once: legal interpretation, risk assessment, client onboarding, records, technology, training and internal approvals.

 

A more efficient approach is to separate the work into stages.

 

First, identify the services the business provides and compare them against the new regulated-service categories. Secondly, map the client journey: who collects information, who verifies it, where records are stored, and who approves higher-risk work. Thirdly, identify gaps between the current process and the likely AML/CTF obligations.

 

This is where AI-assisted, lawyer-led work can be useful. AI can help organise service descriptions, extract process steps from documents, compare policy drafts and build issue lists. But the legal conclusions — whether a service is regulated, what risk controls are required, and how obligations should be implemented — need lawyer judgment.

 

Practical readiness checklist

Businesses potentially affected by the reforms should consider:

• Which services may fall within the expanded AML/CTF regime?

• Which clients, transactions or jurisdictions create higher risk?

• What information is collected at onboarding?

• Are identity checks documented and repeatable?

• Who decides whether a matter is high risk?

• Where are AML/CTF records stored?

• Are staff trained on escalation points?

• Can the business explain its risk assessment if questioned by a regulator?

 

The goal is not to create unnecessary bureaucracy. It is to build a defensible workflow that is proportionate to the business, clear enough for staff to follow, and capable of being reviewed.

 

The Law Flow Lens

AML/CTF readiness is a good example of where legal cost control depends on process design. A business that waits until the last minute may need urgent advice, rushed policy drafting and expensive remediation. A business that starts early can stage the work, avoid duplication and use legal advice where it adds the most value.

 

Efficient legal work does not mean cutting corners. It means using the right tools for lower-value organisation and comparison tasks, while reserving lawyer judgment for interpretation, risk and final recommendations.

 

This article is general information, not legal advice. For advice about your circumstances, contact Law Flow.

 

Short source list

• AUSTRAC — AML/CTF Reform: https://www.austrac.gov.au/amlctf-reform

• AUSTRAC — AML/CTF transitional rules 2026: https://www.austrac.gov.au/about-us/legislation/updates-legislation/amlctf-transitional-rules-2026

• Attorney-General’s Department — Overview of the AML/CTF Amendment Act: https://www.ag.gov.au/crime/anti-money-laundering-and-counter-terrorism-financing/anti-money-laundering-and-counter-terrorism-financing-amendment-act/overview-amlctf-amendment-act

• Attorney-General’s Department — Regulating additional high-risk services: https://www.ag.gov.au/crime/anti-money-laundering-and-counter-terrorism-financing/anti-money-laundering-and-counter-terrorism-financing-amendment-act/regulating-additional-high-risk-services