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Your Obligations Under Tranche 2

What Tranche 2 means for your business, designated services, and compliance deadlines

What is Tranche 2?

Tranche 2 of the AML/CTF Act extends Australia's anti-money laundering regime to 'designated non-financial businesses and professions' (DNFBPs). This includes real estate agents, lawyers, conveyancers, accountants, trust & company service providers (TCSPs), and dealers in precious metals and stones.

Why Now?

Australia has been criticised internationally for being one of the last countries in the FATF (Financial Action Task Force) to regulate these professions. The 2024 Amendment Act finally brings Australia in line with international standards, with a compliance date of 1 July 2026.

Designated Services Under Tranche 2

  • Real estate — buying, selling, or leasing property; managing real estate transactions
  • Legal — conveyancing, trust and company formation, managing client funds
  • Accounting — preparing financial statements, tax planning, managing client funds
  • Trust & Company Services — forming companies or trusts, acting as director/trustee, providing registered offices
  • Precious metals & stones — dealing in gold, silver, precious stones, or high-value goods over $10,000

Key Deadline: 1 July 2026

From 1 July 2026, all Tranche 2 businesses must be fully compliant. This means: enrolled with AUSTRAC, AML/CTF Program in place, staff trained, CDD procedures operational, and reporting systems ready. Start preparing now — don't wait until the deadline.

AML/CTF Program Requirement

Under the AML/CTF Act, you must have a written AML/CTF Program that identifies and manages the money laundering and terrorism financing risks you face. The program must be appropriate to the size, nature, and complexity of your business.

Your AML/CTF Program Must Include

  • A documented ML/TF risk assessment
  • Policies and procedures for CDD and ongoing monitoring
  • Policies for identifying and reporting suspicious matters
  • Employee training and awareness program
  • Independent review every two years
  • Appointment of a compliance officer

Risk-Based Approach

Not all customers and transactions carry the same level of ML/TF risk. A risk-based approach means applying more stringent measures (enhanced due diligence) to higher-risk situations, and simplified measures to lower-risk situations. The key is to understand your risks and respond proportionately.

Risk Categories

ML/TF risk comes from four main sources: customer risk (who they are), geographic risk (where they are from/operating), product/service risk (what you are providing), and delivery channel risk (how the service is delivered). Assess each category.

Record Keeping

You must keep records of all CDD, transaction monitoring, and reporting activities for at least 7 years. Records must be readily accessible and available for inspection by AUSTRAC. Electronic records are acceptable.

Independent Review

Your AML/CTF Program must be independently reviewed every two years. This can be done by an external auditor, a qualified consultant, or an appropriately qualified person within your organisation who is independent of the compliance function.

Steps to Get Ready

  • Enrol with AUSTRAC (registration opens before July 2026)
  • Appoint an AML/CTF Compliance Officer
  • Conduct your business ML/TF risk assessment
  • Develop your AML/CTF Program
  • Train all relevant staff
  • Implement CDD procedures (or use a service like InstantAML)
  • Set up suspicious matter reporting procedures
  • Establish record-keeping systems

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