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Tranche 2 Compilance: What you need to know

Tranche 2 Compliance:
What you need to know

Australia’s Tranche 2 Reforms will soon expand AML/CTF regulations to law firms, real estate agencies, accountants, and other Designated Non-Financial Businesses and Professions (DNFBPs).
By preparing today, you can safeguard your business, enhance your credibility, and stay ahead of regulatory changes.
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What Is Tranche 2?

Tranche 2 is the next phase of Australia’s AML/CTF regulations, designed to strengthen financial crime prevention by expanding compliance requirements to non-financial sectors that handle high-value transactions.
Who will be affected?
Lawyers
Accountants
Real Estate Agents
Precious Metals and Stone Dealers
Trust and Company Service Providers (TCSPs)
What are the new obligations?
  • Enrol with AUSTRAC
  • Develop an AML/CTF program
  • Conduct Customer Due Diligence (CDD)
  • Perform ongoing CDD
  • Report suspicious activity
  • Maintain record-keeping
Is Your Business Ready for Tranche 2?
Take our quick quiz to find out where your business stands and what you need to do next.
Step 1: Answer a few simple questions about your business.
Step 2: Instantly see your readiness score.
Step 3: Speak with an AML expert about your readiness.
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Enhancing and Strengthening Australia's AML/CTF Regime

Australia is committed to safeguarding the integrity of its financial system and countering the threats posed by money laundering and terrorism financing. To ensure a robust and responsive Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) regime, the Australian Government has initiated a public consultation on the proposed reforms.

These reforms aim to simplify and modernise the regime's operations. They extend coverage to high-risk professions, including lawyers, accountants, trust and company service providers, real estate agents, and dealers in precious metals and stones - collectively referred to as Tranche 2 entities.

Key upcoming milestones
October 2025
Finalisation of Core Guidance 
October to November 2025
Targeted consultation on Tranche 2 sector-specific guidance in working groups with industry associations and peak bodies
December 2025
Finalisation of Tranche 2 sector-specific guidance
August to December 2026
Ongoing enhancements to the sector-specific guidance for current reporting entities in partnership with industry 
1 July 2026
AML/CTF obligations commence for Tranche 2 entities  
31 March 2026
FinalisatiChanges to obligations for current reporting entities and virtual assets service providers on of Core Guidance 
Free Consulatation

What Happens If You Do Not Comply?

Significant fines & legal consequences:
Non-compliance can result in heavy penalties.
Increased regulatory scrutiny:
High-risk industries will be closely monitored.
Loss of reputation and customers:
Non-compliant businesses may lose trust and customers.
Staying compliant not only protects your business but also strengthens your reputation and trust with clients.

How MemberCheck Can Help

We offer automated Risk Management compliance solutions to help businesses effortlessly meet Tranche 2 obligations.
PEP & Sanctions Screening
Instantly check customers against global watchlists
Adverse Media Checks
Detect reputational risks before onboarding clients
Ongoing Monitoring
Stay compliant with real-time risk alerts
Automated Verification
Save time and reduce false positives
Book a free consultation with our experts to discuss your Tranche 2 compliance strategy.
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Proven Compilance Results

75%

Reduction in false positives

24 hrs

Watchlists updated daily

40%

Average reduction in onboarding time

< 1 sec

Average response time

1000+

PEP & Sanctions Watchlists
*Statistics based on average user experience across several industries

Tranche 2 Resources

Transaction Monitoring

Tranche 2 AML Compliance: Impact on Trust and Company Service Providers (TCSPs)

BLOG

Australia is increasing its defences against financial crime by making major changes to its Anti-Money Laundering and Counter-Terrorism...

Read More
Transaction Monitoring

Tranche 2 AML Compliance: Impact on Precious Metals and Stone Dealers

BLOG

As part of a broader effort to align with international standards set by the Financial Action Task Force (FATF), the AML/CTF regime will now...

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Transaction Monitoring

Tranche 2 AML Compliance: Impact on the Accounting Profession

BLOG

The Tranche 2 Reforms aim to strengthen Australia’s ability to combat financial crime. A crucial part of these reforms is the...

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Transaction Monitoring

Tranche 2 AML Compliance: Impact on Real Estate Professionals

BLOG

The Tranche 2 Reforms aim to strengthen Australia’s ability to combat financial crime. A crucial part of these reforms is the introdu...

Read More
Transaction Monitoring

Tranche 2 AML Compliance: Impact on Lawyers

BLOG

Australia is increasing its defences against financial crime by making major changes to its Anti-Money Laundering and Counter-Terrorism Financi...

Read More
Transaction Monitoring

Guide to Tranche 2 Reforms

REPORT

Australia's new AML/CTF laws are expected to result in major regulatory changes. These amendments aim to close current gaps by...

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Stay Ahead of Tranche 2 – Get Started Today!

Don’t wait for enforcement to begin - ensure compliance now. Book a consultation or explore our AML/CTF solutions to safeguard your business.

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Dates to Remember

The reforms will go into effect on March 31, 2026, including the replacement of Part 7 of the AML/CTF Act with a more outcomes-oriented approach to risk alleviation and management for reporting entities.

New Customer Due Diligence (CDD) criteria will be implemented, as well as increased coverage of the AML/CTF regime for high-risk service providers such as real estate agents and virtual asset service providers. Key revisions include new legislation on tipping-off violations and electronic financial transfer reporting, which modernise the framework to meet global standards.

Finally, by July 1, 2026, more clarifications will be provided respecting legal professional privilege in reporting obligations and the treatment of bearer negotiable instruments. A transitional time is allowed for new reporting entities, allowing them to prepare for compliance with the enhanced AML/CTF regulations before the deadlines.

Proposed Reforms

Part 1 - Simplifying and Modernising the AML/CTF Regime

The first part of the proposed reforms focuses on simplifying and modernising the operation of the AML/CTF regime. The need for streamlining obligations has long been recognised by the industry and was recommended by the 2016 Statutory Review of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (the Act). The review highlighted that the current regime is overly complex, making it difficult for regulated entities, especially small businesses, to understand and comply with their obligations.

One of the major concerns identified in the review was the complexity of the Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No. 1) (the Rules). The scale, structure, and density of the Rules have rendered them hard to follow and largely inaccessible for many businesses. Consequently, there is a pressing need to simplify both the Act and the Rules, streamlining AML/CTF obligations to ensure clarity and ease of compliance

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Part 2 - Extending the AML/CTF Regime to Tranche 2 Entities

The second part of the proposed reforms aims to address the regulatory gap by extending the AML/CTF regime to Tranche 2 entities. Currently, Australia is one of only five jurisdictions in the FATF Global Network, alongside China, Haiti, Madagascar, and the United States, that do not regulate these high-risk professions. This regulatory gap creates vulnerabilities that can be exploited by criminals for money laundering and terrorism financing purposes.

By including lawyers, accountants, trust and company service providers, real estate agents, and dealers in precious metals and stones within the scope of the AML/CTF regime, Australia aims to enhance the effectiveness of its Anti-Money Laundering and Counter-Terrorism Financing efforts. These professions often handle significant financial transactions and have the potential to be unwittingly involved in facilitating illicit activities. Extending the regime to Tranche 2 entities will ensure a comprehensive approach to combating money laundering and terrorism financing across various sectors.

Effects of Tranche 2 Reforms on Regulated Entities

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Benefits and Challenges for Tranche 2 Entities

The inclusion of Tranche 2 entities within the AML/CTF regime presents both benefits and challenges for these professions. While adhering to AML/CTF regulations will boost the legitimacy and integrity of these industries, inspiring trust in customers and investors. It will indicate a commitment to combating financial crime and increasing trust in the financial system as a whole

However, compliance with AML/CTF obligations may impose certain burdens on Tranche 2 entities. These obligations may require additional resources, including employee training, technological upgrades, and the implementation of robust internal controls. However, the long-term benefits of a strengthened AML/CTF regime, such as mitigating reputational risks and minimising exposure to illicit activities, outweigh the short-term challenges

Benefits and Challenges for Tranche 2 Entities

The inclusion of Tranche 2 entities within the AML/CTF regime presents both benefits and challenges for these professions. While adhering to AML/CTF regulations will boost the legitimacy and integrity of these industries, inspiring trust in customers and investors. It will indicate a commitment to combating financial crime and increasing trust in the financial system as a whole

However, compliance with AML/CTF obligations may impose certain burdens on Tranche 2 entities. These obligations may require additional resources, including employee training, technological upgrades, and the implementation of robust internal controls. However, the long-term benefits of a strengthened AML/CTF regime, such as mitigating reputational risks and minimising exposure to illicit activities, outweigh the short-term challenges

1

Conclusion

The proposed reforms to Australia's AML/CTF regime aim to simplify and modernise its operation while extending its coverage to Tranche 2 entities. By streamlining obligations and including high-risk professions, the Australian Government seeks to strengthen its efforts in combating money laundering and terrorism financing. The consultation process provides an opportunity for industry stakeholders to contribute their expertise and shape the development of a robust AML/CTF framework that aligns with international standards and best practices. Together, government and industry can work towards a safer and more resilient financial system that protects the integrity of Australia's economy and communities.