Australia's Tranche 2 AML/CTF Reforms: What They Are and What They Mean for Our Clients
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From 1 July 2026, Australia's anti-money laundering and counter-terrorism financing (AML/CTF) laws will, for the first time, apply to professional services firms. These changes — known as the "Tranche 2" reforms — bring accountants, lawyers, real estate professionals, and trust and company service providers under the oversight of AUSTRAC, Australia's financial intelligence agency.
Because Causbrooks provides certain "designated services," we become a reporting entity enrolled with and regulated by AUSTRAC under the new regime. This article sets out what is changing, why, and what our clients can expect as a result.
Australia's Tranche 2 AML/CTF Reforms: What They Are and What They Mean for Our Clients
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From 1 July 2026, Australia's anti-money laundering and counter-terrorism financing (AML/CTF) laws will, for the first time, apply to professional services firms. These changes — known as the "Tranche 2" reforms — bring accountants, lawyers, real estate professionals, and trust and company service providers under the oversight of AUSTRAC, Australia's financial intelligence agency.
Because Causbrooks provides certain "designated services," we become a reporting entity enrolled with and regulated by AUSTRAC under the new regime. This article sets out what is changing, why, and what our clients can expect as a result.
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Why the law is changing
Banks, casinos and other financial businesses have been subject to Australia's AML/CTF regime since 2006. Professional "gatekeepers" — lawyers, accountants and corporate service providers whose services can be used to obscure asset ownership or move illicit funds — have not. Australia has been one of the few countries to leave this gap open.
The Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024 closes it, aligning Australia with international standards set by the Financial ActionTask Force (FATF). Tens of thousands of additional Australian businesses are expected to come under AUSTRAC's regulation as a result.
It's worth noting that the regime regulates specific services, not entire professions. A business is captured because of the designated services it provides, not because of its industry label.
The designated services we provide
Causbrooks provides several services that fall within the new regime's definition of designated services, including:
- Business structuring services
- Buying, selling or transferring a company or other legal entity
- Facilitating business equity and debt financing
- Nominee shareholder services
- Providing registered office or principal place of business address services
- Shelf company services
- Facilitating or performing roles in companies and other corporate or legal arrangements
Providing these services makes us a reporting entity under the AML/CTF Act from 1 July 2026.
What the reforms require of firms like ours
As a reporting entity, we must enrol with AUSTRAC, assess the money laundering and terrorism financing risks our services could expose us to, and maintain an AML/CTF program — a documented set of policies, procedures and controls to identify, mitigate and manage those risks. We're also required to appoint a management-level AML/CTF compliance officer, train our staff, keep records, and report certain matters to AUSTRAC, including suspicious matters and cash transactions of $10,000 or more.
Customer due diligence sits at the centre of the regime. Before we can provide a designated service, we must establish who our client is and, where the client is a company, trust or other structure, identify the individuals who ultimately own or control it. We're then required to keep that information current for as long as we continue providing designated services.
What this means for our clients
For most clients, the practical impact is simple: we'll be asking for more information than we have in the past, because the law requires us to obtain it before we can act.
You can expect to be asked to verify your identity with documents such as a passport or driver licence — this applies even to longstanding clients, since the law doesn't distinguish between new and existing relationships. If you hold a company, trust or other entity, expect questions about ownership and control, and in some cases we may need to ask about the purpose of a transaction or the source of funds involved. We'll also periodically ask clients to confirm that the information we hold is still current.
These requests aren't a judgement on any individual client — they're a legal requirement that applies to every firm providing these services in Australia. All information we collect is handled in line with our privacy policy and used only for the purposes the law requires.
Our commitment
We support what these reforms are trying to achieve. Strengthening Australia's defences against money laundering and terrorism financing protects the integrity of the businesses, structures and transactions our clients trust us with. We've been preparing for commencement and are committed to meeting our obligations while keeping the experience for our clients as smooth as possible.
This article is general information only and does not constitute legal or financial advice. Information is current as at July 2026. Further detail on the reforms is available from AUSTRAC at austrac.gov.au.
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For more information on how we can assist with your tax and accounting needs, visit our Sydney Tax Accountant page or schedule a consultation with our expert team today.
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Disclaimer
Any advice contained in this document is general advice only and does not take into consideration the reader’s personal circumstances. Any reference to the reader’s actual circumstances is coincidental. To avoid making a decision not appropriate to you, the content should not be relied upon or act as a substitute for receiving financial advice suitable to your circumstances.
FAQ's
What are the Tranche 2 AML/CTF reforms?
From 1 July 2026, Australia's AML/CTF laws extend to accounting and advisory practices, lawyers, real estate professionals, and trust and company service providers. Because Causbrooks provides a number of designated services under the new regime, including business structuring, nominee shareholder services and registered address services, we become a reporting entity regulated by AUSTRAC, Australia's financial intelligence agency, with new legal obligations to meet.
What is customer due diligence (CDD)?
Customer due diligence is the process the law requires us to complete before providing a designated service. In practice, that means establishing and verifying who you are, understanding who ultimately owns and controls any entities involved, and understanding the nature and purpose of the services you're asking us to provide. CDD isn't a one-off exercise; we're required to keep this information current for as long as we continue to act for you.
What will you ask me for?
For individuals, we'll ask you to verify your identity using reliable documents such as a passport or driver licence. For companies, trusts, partnerships and Self-Managed Superannuation Funds, we'll also need information about the structure itself, such as constitutions, trust deeds or partnership agreements,, and the identity of the individuals who ultimately own or control it. In some cases, we may also need to ask about the purpose of a transaction or where the relevant funds have come from.
What is a beneficial owner, and why do you need to identify them?
A beneficial owner is an individual who ultimately owns or controls an entity, generally someone who holds 25% or more of it, directly or indirectly, or who exercises effective control over it, for example through the power to appoint directors or make key decisions. The law requires us to look through companies and trusts to the real people behind them, since complex structures are one ofthe main tools criminals use to disguise the ownership of illicit funds. This applies to every client with an entity, no matter how straightforward the structure appears.
I've been a client for years, why do I need to provide identification now?
The law doesn't distinguish between new and longstanding clients. Every firm providing designated services in Australia must hold verified identity information for the clients it acts for, even where the relationship goes back decades. As registered tax agents, we've always verified client identity under the Tax Practitioners Board's proof-of-identity requirements, so this process will be familiar to many clients, but the AML/CTF regime is a separate, broader obligation, so we may need to ask for information even if you've verified your identity with us before. Being asked isn't a reflection of any concern about you; it's simply a legal requirement that applies to everyone.
What is enhanced due diligence (EDD)?
Enhanceddue diligence is a deeper level of checking required by law in higher-risk situations. Where it applies, we must go beyond standard CDD, which can mean obtaining more detailed identification information, asking about your source of funds (where the money for a particular transaction came from) or source of wealth (how your overall wealth was accumulated), seeking senior management approval before proceeding, and monitoring our services to you more closely.
When does enhanced due diligence apply?
Common triggers include situations we assess as higher risk, clients or beneficial owners who are foreign politically exposed persons, transactions connected to countries identified as high-risk by the Financial Action Task Force, and transactions that are unusually large, complex, or lacking an apparent economic or lawful purpose. If EDD applies to you, it doesn't mean we suspect wrong doing; many triggers, such as holding foreign public office or transacting with certain countries, are entirely circumstantial.
What is a Politically Exposed Person (PEP)?
A PEP is someone who holds, or has held, a prominent public position, such as a head ofstate, government minister, senior politician, judge, senior military officer, or senior executive of a state-owned enterprise, along with their immediate family members and close associates. The law treats PEPs as warranting closer attention because public office can be misused for corruption. We're required to determine whether our clients and their beneficial owners are PEPs, and enhanced due diligence is mandatory for foreign PEPs.
Can you act for me before the checks are complete?
Generally, no. The law requires initial CDD to be completed before we provide a designated service. In limited circumstances, verification can be finalised shortly afterwards, but as a rule we can't begin, or in some cases continue, designated services until the required information has been provided. Responding promptly to our requests is the best way to avoid delays to your work.
What happens if I don't provide the information?
If we can't complete the required due diligence, we're legally unable to provide the designated service, and in some cases may need to stop acting for you. We may also have other obligations under the Act in those circumstances. We'll always work with you to keep the process as straightforward as possible, but we can't waive these requirements for any client.
Will I need to provide my information more than once?
Possibly. Ongoing CDD means we're required to keep your information current, so we'll periodically ask you to confirm your details, and we may need updated information when your circumstances change, for example, a change in the ownership or control of your entities, or when you ask us to provide a new designated service. Where we already hold current, verified information, we'll rely on it rather than asking again unnecessarily.
Is my information kept private?
Yes. The information we collect is handled in accordance with our privacy policy and the Privacy Act, stored securely, and used only for the purposes required by law. We're required to retain CDD records for seven years. AML/CTF obligations sit alongside, not instead of, our existing confidentiality obligations to you.
Does this change the cost or speed of your services?
The reforms apply to every firm in our profession, and some additional steps at the start of an engagement are unavoidable. We've designed our processes to keep any impact — including on fees — to a minimum, and providing requested documents promptly will help us complete the checks quickly.
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