On 1 July 2026, Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) regime expands significantly. For the first time, commercial lawyers, accountants, real estate professionals, and other professional service providers will be required to comply with the same type of know-your-client obligations that banks have long been subject to.
If you are a director, business owner, or shareholder about to engage a commercial lawyer for a significant transaction, restructuring, or dispute — this change affects you directly.
What are the Tranche 2 AML/CTF reforms?
Australia’s AML/CTF Act has historically applied to banks, financial institutions, and casinos. The Tranche 2 reforms — brought into effect by the Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024 — extend that regime to a broader category of professionals, including lawyers and accountants.
The rationale is straightforward: criminal organisations often use professional services to launder the proceeds of crime. The Financial Action Task Force (FATF), the global AML standards body, has consistently noted that Australia’s regime was incomplete without covering these “gatekeepers” to the financial system. The 1 July 2026 commencement date reflects years of legislative reform and consultation.
Which lawyers are covered?
The regime does not apply to every lawyer or every piece of legal work. It applies where a lawyer provides what the legislation calls a “designated service” with a geographical link to Australia.
Under Table 6 of the AML/CTF Act, designated services for lawyers include:
- Assisting you to buy, sell or transfer real estate
- Helping you buy, sell or transfer a business, company, or trust
- Receiving, holding, or managing money or property on your behalf as part of a transaction
- Assisting with equity or debt financing transactions
- Selling or transferring a shelf company to you
- Helping to create or restructure a company, trust, or other legal arrangement
- Acting as a director, company secretary, trustee, or nominee shareholder on your behalf
- Providing a registered office or business address for your entity
Pure litigation work — representing you in court or advising you on your legal rights in a dispute — is not itself a designated service. But the moment a lawyer moves into any of the activities above, the AML/CTF regime is engaged.
What does this mean when you engage a lawyer?
If your lawyer is providing a designated service, they are required to:
- Enrol with AUSTRAC as a reporting entity (enrolment opened from 31 March 2026)
- Verify your identity — Know Your Customer (KYC) checks, meaning you’ll be asked for identification documents
- Identify beneficial owners — if you’re engaging through a company or trust, the lawyer must identify who ultimately controls or benefits from that structure
- Implement an AML/CTF program — internal policies, risk assessment, staff training, and record-keeping procedures
- Report suspicious matters to AUSTRAC
- Submit threshold transaction reports for cash dealings above $10,000
In practice: if you’re engaging a commercial lawyer to help you restructure a company, acquire a business, or manage a significant financial transaction, expect to be asked for more identity and ownership documentation than previously. This is not the lawyer being overly cautious — it is a legal obligation.
Why does this matter for directors and business owners?
There are three key reasons this reform is directly relevant to you:
First, transactions will take longer to initiate. Enhanced due diligence takes time, particularly for complex structures involving trusts, multiple entities, or offshore interests. If you’re planning a transaction that requires legal assistance in the second half of 2026, allow extra lead time.
Second, non-compliance by your lawyer has consequences. If your lawyer fails to conduct proper due diligence and is subsequently penalised by AUSTRAC, any transactions processed in that period may face scrutiny. Engaging a lawyer who takes AML/CTF compliance seriously is protection for you — not just paperwork.
Third, if your business structure is complex, be prepared to explain it. Beneficial ownership identification is a cornerstone of the regime. If your company is owned through a trust, a holding company, or there are multiple ultimate beneficiaries, you will need to provide documentation tracing control to natural persons.
What about pure litigation matters?
If you engage Boss Lawyers for commercial litigation, an insolvency proceeding, or a director or shareholder dispute — and we are not receiving, holding, or managing your funds or facilitating a property or company transaction — the designated services provisions are not triggered in relation to that retainer.
However, many commercial matters involve overlapping activities. A debt recovery matter may involve enforcement through the sale of property. An insolvency proceeding may involve the distribution of company assets. A director dispute may involve a restructuring. Where those elements are present, AML/CTF obligations may arise even within what looks like a litigation retainer. The safest approach: disclose the full scope of what you need early in the engagement.
What should you do before 1 July 2026?
- If you have a significant transaction planned: start it before end of June, or factor in additional time for KYC processes from 1 July
- Gather your identity documents: passport or driver’s licence for individuals; ASIC company extract and trust deed for entities
- Identify your beneficial owners: know who ultimately controls or benefits from any structure you’re transacting through
- Engage a lawyer who understands the reform: not all firms will be ready on day one
The bigger picture
Australia’s Tranche 2 reforms bring us into line with comparable jurisdictions — the UK, Canada, and most of Europe have had similar regimes in place for years. For legitimate business owners and directors, the practical impact is a modest increase in documentation requirements when engaging certain professional services.
If you have questions about how the new AML/CTF obligations may affect an upcoming transaction or your engagement with Boss Lawyers, contact us on 1300 267 711 or via our contact form.
This is general information only and is not legal advice. You should obtain professional advice specific to your circumstances.
