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FAQs - Tranche 2 AML Compliance in Australia 

This page answers the most common questions Australian businesses are asking about Tranche 2 AML/CTF reforms, including who is affected, what obligations apply, when compliance is required, and how to prepare. It is written in plain English and aligned with AUSTRAC’s AML/CTF reform framework.

Key Dates

Enrolment opens            31 March 2026

Obligations commence 1 July 2026

What is Tranche 2 AML/CTF compliance?

Tranche 2 refers to the expansion of Australia’s Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) regime to cover designated non-financial businesses and professions (DNFBPs).

Under the AML/CTF Amendment Act 2024, these businesses will become reporting entities for the first time and must comply with AUSTRAC’s AML/CTF obligations.

When do Tranche 2 AML/CTF obligations start?

The key dates under the Tranche 2 reforms are:
 

  • 31 March 2026 – Deadline to enrol with AUSTRAC

 

  • 1 July 2026 – AML/CTF obligations formally commence


From 1 July 2026, Tranche 2 entities must have a compliant AML/CTF program in place and be actively meeting their obligations.

Who is affected by Tranche 2 AML/CTF laws?

Tranche 2 obligations apply to businesses that provide certain designated services, including:
 

  • Real estate agents and agencies

  • Law firms (when performing specified transactional services)

  • Accounting firms

  • Trust and company service providers

  • Dealers in precious metals and stones

  • Other professional service providers captured under the reforms


If your business handles client funds, facilitates property transactions, sets up legal structures, or manages assets on behalf of clients, you are likely affected.

What is a “designated service” under Tranche 2?

A designated service is a specific activity defined in the AML/CTF Act that triggers compliance obligations.

Common examples include:
 

  • Buying or selling real estate on behalf of a client

  • Managing trust accounts or client monies

  • Creating, administering, or managing companies or trusts

  • Acting as a nominee director or shareholder

  • Buying or selling precious metals, stones, or high-value items


Providing even one designated service means your business must comply with AML/CTF requirements.

Do sole practitioners need to comply with Tranche 2?

Yes. Sole practitioners and small firms are not exempt.

If you provide a designated service, you must:
 

  1. Enrol with AUSTRAC

  2. Implement an AML/CTF program

  3. Conduct customer due diligence (KYC)

  4. Monitor customer activity and report suspicious matters


Business size does not remove AML/CTF obligations.

What are the main AML/CTF obligations under Tranche 2?

Tranche 2 reporting entities must:
 

  1. Enrol with AUSTRAC

  2. Develop and maintain an AML/CTF Program

  3. Conduct customer due diligence (CDD / KYC)

  4. Identify and verify beneficial owners

  5. Assess and manage money laundering and terrorism financing risk

  6. Submit Suspicious Matter Reports (SMRs)

  7. Maintain AML/CTF records

  8. Provide AML/CTF training to staff

  9. Undertake independent AML/CTF reviews

What is an AML/CTF Program?

An AML/CTF Program is a documented framework that explains how your business:
 

  • Identifies and assesses ML/TF risk

  • Applies customer due diligence

  • Monitors customer activity and transactions

  • Escalates and reports suspicious behaviour

  • Manages AML/CTF governance and oversight


The program must be risk-based and tailored to your specific business model.

What does customer due diligence (CDD / KYC) involve?

Customer due diligence typically includes:
 

  • Identifying the customer

  • Verifying identity using reliable, independent sources

  • Identifying beneficial owners and controllers

  • Understanding the purpose and nature of the business relationship

  • Ongoing monitoring of customer activity

  • Higher-risk customers require enhanced customer due diligence (ECDD).

How long does it take to become AML/CTF compliant?

Timeframes vary depending on business complexity, but many Tranche 2 entities underestimate the effort required.

Typical preparation timelines include:
 

  • AML/CTF risk assessment: 2–4 weeks

  • AML/CTF program development: 3–6 weeks

  • Systems, training, and implementation: ongoing


Starting early reduces compliance risk and operational disruption.

Can AML/CTF compliance be outsourced?

Yes. Many Tranche 2 businesses choose to outsource AML/CTF operations, including:

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  • Customer onboarding and KYC

  • Ongoing due diligence and screening

  • Risk assessments and monitoring

  • Regulatory reporting support

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Outsourcing does not remove legal responsibility, but it can significantly reduce internal workload and compliance risk.

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If you'd like to discuss AML compliance with the experts, click here

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