Money laundering involves disguising the origin of illicit funds so they appear to come from legitimate sources. Research from the Australian Institute of Criminology estimates that serious and organised crime cost the Australian community up to $60.1 billion in 2020-21, with illicit financing central to many of these offences.
Australia’s response to these risks is set out in the Anti-Money Laundering and Counter-Terrorism Financing Act 2006, commonly known as the AML/CTF regime, which requires certain businesses to identify clients, monitor transactions and report suspicious activity to AUSTRAC.
Recent reforms expand the regime beyond banks and financial institutions to additional industries, including legal, accounting and real estate services. These changes, often referred to as “Tranche 2” reforms, bring professional service providers within the regulatory framework when they are involved in certain high-risk transactions.
For lawyers, this means new compliance obligations when providing designated services, including verifying client identities, assessing money laundering risks and reporting suspicious matters.
Closing gaps in the financial system
The reforms aim to address gaps that can allow organised crime groups to exploit legitimate industries, particularly where professional services may be used to move, conceal or legitimise illicit funds.
Money laundering does not occur in isolation; it often sits alongside other forms of criminal activity and can distort legitimate markets and financial systems. Research conducted by the Australian Institute of Criminology in collaboration with AUSTRAC has found that criminal groups involved in money laundering generate more than twice the level of crime-related harm compared to those that do not engage in laundering activities.
The reforms are intended to strengthen Australia’s ability to detect, deter and disrupt illicit financial activity by expanding regulatory oversight into sectors that may be vulnerable to misuse.
Expansion to new industries
A key feature of the reforms is the extension of AML/CTF obligations to a broader range of industries through the inclusion of Tranche 2 entities.
These reforms apply to businesses that may facilitate complex financial, corporate or property transactions. The regime will apply to certain designated services provided by the following industries:
- Lawyers
- Conveyancers
- Accountants
- Real estate professionals
- Trust and company service providers
- Dealers in precious metals and stones.
Businesses providing these services will become regulated under the AML/CTF framework from 1 July 2026.
These changes represent a significant expansion of Australia’s financial crime framework and will require affected businesses to prepare for new compliance obligations.
What the reforms mean for lawyers
While the exact requirements will depend on the nature of the services being provided, the changes mean that many law firms will need to introduce formal compliance processes and ensure staff are appropriately trained to recognise and manage money laundering and terrorism financing risks.
This may involve:
- Conducting client due diligence before providing certain services
- Verifying the identity of clients
- Monitoring transactions and client activity for suspicious conduct
- Reporting suspicious matters to AUSTRAC where required.
Implementation timeline
The reforms will be introduced progressively, with several key dates already confirmed.
31 March 2026: enrolment opens for newly regulated businesses and obligations commence for additional virtual asset service providers.
1 July 2026: AML/CTF obligations commence for newly regulated professional service providers, including lawyers.
For many legal practices, this means the period leading up to July 2026 will be an important time to review internal processes and ensure the firm is ready for the new regulatory framework.
Restrictions on “tipping off”
The reforms also reinforce restrictions around what is commonly referred to as “tipping off”.
Where a business reports suspicious activity to AUSTRAC, they must not disclose to the client or any other person that a report has been made.
On 31 March 2025, it became a criminal offence to disclose information where the disclosure could reasonably be expected to prejudice an investigation.
This may occur if a person alerts a client that suspicious activity has been reported or indicates that their conduct has raised concerns.
For example, this could include:
- Telling a client that a suspicious matter report has been submitted
- Informing a client that their activities may involve criminal conduct
- Sharing information that could alert the person being investigated.
These restrictions are designed to prevent individuals involved in unlawful activity from altering their behaviour once they become aware that authorities may be investigating them.
Preparing for the new obligations
Although the reforms will not fully apply until 1 July 2026, businesses are encouraged to begin preparing in advance.
Early preparation may involve reviewing current risk management practices, considering how AML/CTF requirements may apply to the services offered and identifying what changes may be required to internal procedures.
Looking ahead
Australia’s anti-money laundering reforms aim to strengthen the country’s ability to detect and disrupt criminal financial activity. By extending regulation into additional industries, the reforms seek to address areas that have historically been vulnerable to exploitation.
For lawyers and other professional service providers, the focus will be on understanding how the expanded regime applies to their work and preparing for the new compliance obligations.
Aubrey Brown Lawyers advises businesses and professionals on regulatory compliance and risk management.
If you would like assistance understanding how the AML/CTF reforms may affect your practice or business, contact our team on (02) 4350 3333 or visit aubreybrown.com.au.
