AML for Australia’s Legal Industry I MemberCheck

Q: What are the Tranche 2 Reforms?

The Tranche 2 Reforms aim to broaden Australia's Anti-Money Laundering and Counter-Terrorism Financing laws to include more high-risk businesses and professions.

Q: Which industries will be affected by the Tranche 2 Reforms?

Industries impacted include real estate agents, precious metal dealers, lawyers, trust and company service providers, and accountants.

Q: Why are the Tranche 2 Reforms necessary?

The reforms help Australia align with global FATF standards and enhance the country's ability to detect, prevent, and disrupt money laundering and terrorism financing.

Q: What steps should regulated entities take to comply with the Tranche 2 Reforms?

Entities must perform risk assessments, implement AML/CTF programs, provide staff training, report suspicious activities, and maintain compliant record-keeping systems.

Q: What is the AML Amendment Act 2024?

The AML/CTF Amendment Bill 2024 expands Australia's AML/CTF regime to include high-risk professions such as lawyers, accountants, real estate agents, and dealers in precious metals and stones.

AML Compliance for Australia’s Accounting Sector

Introduction The AML/CTF Amendment Act 2024 and Tranche 2 Reforms Designated Services Provided in Australia's Legal Industry Compliance Obligations for Australia’s Legal Industry Navigate the New Compliance Landscape with Confidence by Partnering with MemberCheck FAQs

Subscribe to our newsletter

Introduction

Australia's legal industry is undergoing a huge regulatory upheaval. Under the AML/CTF Amendment Act 2024, legal practitioners will soon be forced to comply with severe anti-money laundering regulations. Professionals in this area must understand their new responsibilities and create a comprehensive, risk-based AML program.

The AML/CTF Amendment Act 2024 and Tranche 2 Reforms

According to AUSTRAC's most recent National Risk Assessment, the legal profession has a ‘high and stable’ vulnerability to money laundering, with many lawyers playing roles in structuring onshore and offshore organisations to conceal transactions and beneficial ownership.

Tranche 2 reforms seek to resolve long-standing regulatory weaknesses in gatekeeper professions and other Tranche 2 sectors recognised by the FATF as prone to money laundering. The government has given significant funds to AUSTRAC and agencies to promote implementation and enforcement, including public sector consultations and sector-specific guidelines. Australia's legal industry will be subject to Australia's strengthened AML/CTF framework starting mid-2026.

Designated Services Provided in Australia's Legal Industry

Law firms must conform when delivering specific services such as:

purchasing, selling, or transferring real estate (excluding transactions made according to court or tribunal orders)
purchasing, selling, or transferring legal entities, such as corporations, trusts, or other legal structures
managing client funds, accounts, securities, or property, including receiving, retaining, or controlling another person's money, assets, or virtual assets (although usually excludes funds held in trust for professional fees and disbursements)
creating, operating, or managing legal entities or arrangements, including the reworking of corporate or legal structures
acting or arranging for someone else to function as a corporation director, secretary, partner, trustee, nominee shareholder, or providing registered office/principal place of business services
some transactional/corporate finance activities, including stock and debt financing
selling or transferring shelf firms

Compliance Obligations for Australia’s Legal Industry

Once designated, legal professionals must implement:

ML/TF risk assessments
Customer Due Diligence (CDD) and increased procedures as required
Transaction monitoring and suspicious matter reports (SMRs) to AUSTRAC
AML/CTF program documents and policies
Independent evaluations every 3 years, with record retention up to 7 years

Navigate the New Compliance Landscape with Confidence by Partnering with MemberCheck

MemberCheck supports large enterprises in navigating the complexities of Tranche 2 compliance. Our advanced screening and verification solutions are designed to adapt to the unique requirements of each organisation, enabling them to effectively identify risks, meet AML/CTF obligations, and stay ahead of regulatory demands. By providing secure, reliable, and easy-to-integrate tools, MemberCheck empowers businesses to strengthen their compliance frameworks and focus on growth while ensuring they remain protected in an evolving regulatory landscape.

‍

FAQs

What are the Tranche 2 Reforms?

The Tranche 2 Reforms are a set of proposed legislative reforms aiming at broadening the scope of Australia's Anti-Money Laundering and Counter-Terrorism Financing laws to include more businesses and professions.

Which industries will be affected by the Tranche 2 Reforms?

The Tranche 2 Reforms will affect real estate agents, precious metals dealers, lawyers, trust and company service providers, and accountants.

Why are the Tranche 2 Reforms necessary?

The Tranche 2 Reforms are required to align with global standards established by the Financial Action Task Force (FATF), which recommends that countries regulate DNFBPs within their AML/CTF frameworks and to strengthen Australia's ability to detect, prevent, and combat money laundering and terrorism financing activities.

What steps should regulated entities take to comply with the Tranche 2 Reforms?

Regulated entities must conduct detailed risk assessments, develop and implement strong AML/CTF programs, ensure that employees receive adequate training on AML/CTF obligations and the entity's compliance program, establish systems for reporting suspicious activities and keeping records in accordance with regulatory requirements.

What is the AML Amendment Act 2024?

The Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Amendment Bill 2024, passed by the Australian Parliament on 29 November 2024, marks a major milestone in Australia’s efforts to combat financial crime.

This legislative reform strengthens the AML/CTF Act 2006 by:

expanding the AML/CTF regime to include certain high-risk professions such as lawyers, accountants, real estate agents, trust and company service providers, and dealers in precious metals and stones. These sectors, often referred to as ‘Tranche 2’ entities, were previously outside the scope of AML/CTF obligations.
simplifying compliance to make it easier for businesses to understand and meet their AML/CTF responsibilities
modernising the regulatory framework to reflect evolving business practices, digital technologies, and sophisticated illicit finance tactics