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AML/CTF Reforms in Australia

The 2024 Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) reforms mark the biggest overhaul of Australia’s financial crime laws in nearly two decades.

These changes extend AML/CTF obligations to professions including real estate agents, lawyers, accountants, trust and company service providers, and precious metals dealers.

With 90,000 new reporting entities impacted, businesses must enrol with AUSTRAC by 31 March 2026 and comply by 1 July 2026, knowing your obligations is crucial to your compliance strategy.

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What are the AML/CTF Reforms?

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What are the

AML/CTF Reforms in Australia?

On 29 November 2024, Parliament passed the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2024 (Cth) (the Bill), introducing the most significant reforms to the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (the Act) since its inception.

The amendments impact both existing and new reporting entities and pursue two key objectives:

Expansion of the AML/CTF Regime

The reforms extend anti-money laundering and counter-terrorism financing (AML/CTF) obligations to certain high-risk services. These include designated services provided by real estate professionals, professional service providers such as lawyers, accountants, trust and company service providers, and dealers in precious metals and stones (collectively referred to as Tranche 2 entities).

Modernisation and Simplification

The amendments aim to simplify and clarify AML/CTF obligations, making compliance more straightforward for businesses. The reforms are also intended to update the regime to align with evolving business structures, technological advancements, and emerging illicit financing threats.

The amendments are expected to result in approximately 90,000 new reporting entities, as well as, impact approximately, 17,500 existing Tranche 1 entities from the Financial Services, Gaming and Bullion Dealer Sectors.

New reporting entities providing designated services must enrol with the Australian Transaction Reports and Analysis Centre (AUSTRAC) by 31 March 2026 and start to comply with the Act by 1 July 2026.

The new designated services offered by Tranche 2 entities are commonly referred to as gatekeepers, since these professionals can facilitate access to the financial system, making them potential enablers (knowingly or unwittingly) of illicit activities and are considered high-risk for money laundering:

  • Real Estate Professionals
  • Legal Professionals
  • Accounting Professionals
  • Trust and Company Service Providers (TCSPs)
  • Dealers in Precious Metals and Stones (DPMS)
  • Virtual Asset Service Providers (VASPs)

The Bill has introduced reforms designed to strengthen Australia's ability to deter, detect, and disrupt money laundering and terrorism financing while aligning with international standards set by the Financial Action Task Force (FATF).

Expansion of

AML/CTF laws to new ‘gatekeeper’ sectors

The expansion of the AML/CTF laws to new gatekeeper sectors is a critical step in preventing money laundering and terrorism financing because these gatekeepers often hold key positions that allow them to influence, create, or manage financial and corporate structures, making them attractive targets for organised criminals seeking to launder the proceeds of their crimes, or finance terrorism.

Real Estate Professionals

Real estate agents can be exploited by organised criminals to launder illicit proceeds by using real estate transactions to integrate dirty money into the legitimate economy. Criminals may purchase high-value properties outright using illicit funds, either directly or through shell companies and trusts that obscure the true ownership. They can also manipulate property values, conduct rapid "flipping" of properties, or use cash deposits for deposits and settlements to further conceal the origin of funds.

In some cases, they may collude with real estate agents who fail to conduct proper due diligence or report suspicious activity, enabling the criminals to bypass anti-money laundering controls, disguise illicit funds, integrate them into legitimate markets, and exploit regulatory loopholes to avoid detection.

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Legal Professionals

Legal professionals can be exploited by organised criminals to launder illicit funds through services that help obscure the origin and ownership of money. Criminals may use lawyers to set up trusts, companies, or other legal structures that conceal their identity or beneficial ownership. Lawyers may also facilitate large financial transactions, such as managing client funds or real estate purchases, without conducting sufficient due diligence.

Additionally, criminals may exploit lawyer-client privilege to shield suspicious activities from scrutiny or use legal professionals to create complex contractual arrangements that make tracing illicit funds more difficult. In cases of negligence or willful collusion, legal professionals can unwittingly or knowingly enable money laundering schemes.

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Accounting Professionals

Accounting professionals can be exploited by organised criminals to launder illicit funds through services that help disguise the true source, movement, and ownership of money. Criminals may use accountants to create complex corporate structures, trusts, or offshore entities to obscure beneficial ownership and facilitate money laundering. Accountants can also be manipulated to provide false financial records, manipulate invoices, or facilitate fraudulent tax returns to legitimise illicit earnings.

Additionally, they may unknowingly assist in layering transactions by structuring deposits, transferring funds between accounts, or advising on financial strategies that inadvertently help criminals integrate illicit funds into the legal economy. Through negligence or deliberate collusion, accountants play a crucial role in either preventing or enabling financial crime, making robust compliance measures, continuous training, and carrying out due diligence.

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Trust and Company Service Providers

Trust and company service providers (TCSPs) can be exploited by organised criminals to launder illicit funds by creating and managing corporate structures, trusts, and other legal entities that obscure the true ownership of assets. Criminals may use TCSPs to establish shell companies, nominee arrangements, or offshore entities that allow them to move and store illicit funds while maintaining anonymity. These structures can be used to layer transactions, making it difficult for authorities to trace the origins of the money.

Additionally, TCSPs may be misused to facilitate false invoicing, complex financial arrangements, or fraudulent investment schemes that integrate illicit proceeds into the legitimate financial system. Without proper due diligence and regulatory oversight, TCSPs can become key enablers of money laundering and financial crime.

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Dealers in Precious Metals and Stones

Dealers in precious metals and stones can be exploited by organised criminals to launder illicit funds due to the high value and portability of these assets. Criminals might purchase gold, diamonds, or other precious items with illicit cash and then resell them to create a legitimate-looking source of income. They can also use these assets to transfer value across borders without detection, avoiding the scrutiny of traditional financial channels.

Furthermore, the ease of anonymising transactions in this market, especially with cash deals or private sales, makes it a favored method for concealing and moving illicit wealth. Without stringent checks, dealers can unwittingly become conduits for money laundering schemes.

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Virtual Asset Service Providers

Virtual Asset Service Providers (VASPs), including cryptocurrency exchanges and digital wallet providers, can be exploited by organised criminals to launder illicit funds due to the pseudonymous, decentralised, and borderless nature of virtual assets. Criminals may use VASPs to convert illicit funds into cryptocurrencies, layer transactions across multiple wallets or exchanges to obscure the source of funds, and cash out into fiat currency in jurisdictions with weak AML regulations.

Peer-to-peer (P2P) transactions, privacy coins, and mixing services further enhance anonymity, making it difficult for authorities to trace transactions. Without stringent AML/CTF controls, VASPs can serve as conduits for money laundering, terrorist financing, and other financial crimes.

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Modernisation and simplification of the

AML/CTF regime in Australia

The AML/CTF reforms aim to modernise and simplify Australia’s AML/CTF regulatory framework, enhancing compliance, improving international cooperation, and reducing administrative burdens on businesses. Key changes to the AML/CTF Act include:

Oversight and Governance

Boards and senior management must take reasonable steps to ensure their business effectively identifies, assesses, manages, and mitigates risks related to money laundering, proliferation financing, and terrorism financing. Essentially, the Designated Business Group (DBG) model has been replaced with a reporting group structure, allowing related entities to collectively implement AML/CTF programs. This streamlines compliance for businesses operating across multiple sectors or within complex corporate structures. It also expands the liability for the lead entity of a reporting group.

ML/TF/PF Risk Assessment

The existing implied enterprise-wide ML/TF risk assessment (EWRA) requirement has been explicitly mandated so now reporting entities must conduct and regularly update their assessments of money laundering, terrorism financing and proliferation financing risk assessments, including documenting the methodology, the inherent risks, the design and operational effectiveness of mitigating controls and document and action plans to reduce any ineffective controls identified in the process. The ML/TF risk assessment and AML/CTF policies must be independently reviewed at least every 3-years.

Customer Due Diligence (CDD)

The obligations for verifying customer identities are being extensively revised, with stricter requirements for initial due diligence before providing designated services, as well as ongoing monitoring throughout business relationships.

Refined Information Sharing and Tipping-Off Rules

Amendments to the tipping off offence now allow for better information sharing to combat financial crime risks, except where disclosure could reasonably be expected to prejudice a law enforcement investigation.

Streamlining and Repealing Redundant Legislation

The reforms eliminate outdated provisions by repealing the Financial Transactions Reports Act 1988 (FTR Act), reducing legal redundancy and simplifying compliance obligations.

Alignment with international AML/CTF laws and standards

The reforms address challenges faced by businesses operating internationally by clarifying how AML/CTF obligations apply to services provided within Australia versus those services provided overseas helping international reporting entities to navigate regulatory differences while maintaining compliance with Australian requirements.

AUSTRAC’s role as the

AML/CTF Supervisor and FIU in Australia

AUSTRAC serves as Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) supervisor and financial intelligence unit (FIU), responsible for regulating reporting entities, ensuring compliance with AML/CTF laws, and analysing financial data to detect, prevent, and disrupt money laundering, terrorism financing, and other financial crimes.

Part of AUSTRAC’s role is to issue and enforce compliance with AML/CTF Rules, which are currently under review as part of an ongoing consultation process, where feedback is being sought on the Exposure Draft AML/CTF Rules before they are finalised later in 2025.

The Exposure Drafts will include requirements applying to both existing and new reporting entities and are intended to provide greater clarity to existing reporting entities on the impacts the reforms will have on their AML/CTF compliance. They will assist existing reporting entities to identify what components of their AML/CTF Programs may need to be amended in order for it to transition to the new requirements applying to AML/CTF Policies under the new laws. 

In December 2024, AUSTRAC announced two rounds of consultation, the first round is based on Exposure Draft 1 of the AML/CTF Rules and is open for submissions prior to 14 February 2025.  

This covers the following topics; Reporting groups, AML/CTF programs, Customer due diligence, AML/CTF compliance officers, Keep open notices, Transfer of value (including the ‘travel rule’), Correspondent banking, Cross-border movement reports, Disclosure of AUSTRAC information to foreign counterparts and Compliance reporting.

Read our submission - click here.

The second round of consultation (Exposure Draft 2) dates have not yet been announced but will cover the following topics; Exposure 1 draft, with amendments (as required), Enrolment details, Registration details, Reportable details for threshold transaction reports and suspicious matter reports, any additional measures (as required) and current rules-based exemptions subject to consequential amendments.

AML/CTF Reforms

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In focus

Blogs

Tranche 2 in Practice: Key Challenges and Compliance Tips for Professionals

February 13, 2025

Ethical Dilemmas for Gatekeepers: Balancing Confidentiality with Legal Obligations

February 9, 2025

Compliance Culture in Tranche 2 Professions: Building Awareness and Accountability

January 30, 2025

Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) regulations for Tranche 2 Professions: A Global Overview

January 27, 2025

The role of gatekeepers in combating money laundering and terrorism financing

January 26, 2025

In focus

Whitepapers

Preparing for Tranche 2 Insights from jurisdictions already implementing these rules

Preparing for Tranche 2: Insights from Jurisdictions Already Implementing These Rules

Essential insights and key lessons from early adopters as Tranche 2 implementation continues expanding on a global scale.

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Training and awareness for gatekeeper professions Building a culture of compliance

Training and awareness for gatekeeper professions: building a culture of compliance

Enhancing compliance culture through targeted training and awareness for gatekeeper professions to strengthen regulatory adherence and risk management.

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Risk-based approach to AMLCTF compliance in Tranche 2 industries such as Lawyers, Accountants, Real Estate Agents and Trust and Company Service Providers (TCSPs)

Risk-based approach to AML/CTF compliance in Tranche 2 industries such as Lawyers, Accountants, Real Estate Agents and Trust and Company Service Providers

AML/CTF compliance strategies for Tranche 2 professionals and industries.

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Understanding Tranche 2 An overview of financial crime obligations for gatekeepers

Understanding Tranche 2: An Overview of Financial Crime Obligations for Gatekeepers

Overview of financial crime obligations and responsibilities for gatekeepers under Tranche 2 compliance regulations, ensuring regulatory alignment across affected industries.

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How

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Arctic Intelligence was founded by financial crime compliance experts who have been responsible for implementing AML/CTF programs and our business was founded to help regulated businesses regardless of their size, industry sector or location to manage their ML/TF risks and build compliant AML/CTF policies.

Our technology is designed to be simple and easy to use by regulated entities and we provide one-on-one training for all of our clients. We also work with a diverse range of industry practitioners who can work with you to guide you through the ML/TF risk assessment using our platforms to ensure ML/TF risks are understood and controls are appropriately documented, as well as, ensuring your AML/CTF Program and related AML/CTF policies are appropriately documented and tailored to your business.

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