By Fiona Halsey
Lawyers who provide designated services will soon be brought within Australia’s anti-money laundering and counter-terrorism financing (AML CTF) regime. AUSTRAC has published regulatory expectations, a timetable, and is currently preparing supporting materials to assist the legal profession to prepare. Importantly, AUSTRAC is recommending that firms not purchase software yet.
AUSTRAC’s key expectations for Tranche 2 entities
On 3 July 2025, AUSTRAC released its regulatory expectations for new Tranche 2 reporting entities, which will include lawyers. It identified five key actions that must be in place by 1 July 2026:
1. Enroll with AUSTRAC once enrolment opens on 31 March 2026
2. Have an AML CTF program, either by adopting AUSTRAC’s “starter program” or developing your own
3. Appoint an AML CTF compliance officer
4. Provide staff training on the AML CTF program and obligations
5. Be ready to apply obligations to clients, including reporting suspicious matters.
AUSTRAC has emphasised that its regulatory approach will be risk-based and outcomes-focused, but it expects firms to make “meaningful effort” to comply by the commencement date.
An extension beyond 1 July 2026 is unlikely
AUSTRAC has indicated that the 1 July 2026 commencement date is firm. As a member of the Financial Action Task Force (FATF), Australia is expected to comply with international AML CTF standards. The FATF’s 2015 mutual evaluation was critical of Australia for not extending the AML CTF regime to “gatekeeper professions” such as lawyers. The next FATF mutual evaluation is scheduled for 2026. (Mutual evaluations are only rarely rescheduled, usually in situations where the country is, for example, at war.) Delays would undermine Australia’s preparedness for this review.
Lawyers should not expect an extension of time.
Starter programs and support materials
AUSTRAC is preparing sector-specific “starter program kits” for smaller and less complex businesses. These will include:
• A template AML CTF program (including policies) suitable for low-risk businesses, and
• Guidance to help entities conduct an initial risk assessment.
These kits will be available in December 2025. Although AUSTRAC has stated that they are intended to support compliance – not delay it – it’s hard to understand this. How can businesses start preparation without the starter programs?
Sector-specific guidance
AUSTRAC is working to produce sector-specific guidance documents. It seems as though these will be practical handbooks and, so far, this seems promising.
AUSTRAC’s advice on software
AUSTRAC has advised new reporting entities to not purchase software solutions yet, warning that premature investments may not align with the final rules and guidance. Instead, firms should await AUSTRAC’s sector guidance and starter programs before committing to technology solutions.
Many WA lawyers will know there are many software providers who are enthusiastically promoting their products, and some are even warning of the “fallacy” of waiting, as recommended by AUSTRAC. Despite industry pressure, AUSTRAC’s guidance reflects the evolving nature of the regime and aims to prevent misaligned investments. Time will tell which approach is most successful.
AUSTRAC’s timeline
AUSTRAC has published a timetable of reforms and supporting material availability:
| Milestone | Date |
| New AML CTF Rules finalised | August 2025 |
| Core guidance released | October 2025 |
| Starter programs and sector-specific guidance (this will be written specifically for different professional services sectors, with specific guidance for legal practitioners) | December 2025 |
| Enrolment opens | 31 March 2026 |
| Obligations commence | 1 July 2026 |
Conclusion
For Australian lawyers, Tranche 2 represents a significant regulatory change. AUSTRAC’s expectations are clear: enroll by March 2026, establish an AML CTF program, appoint a compliance officer, train staff, and be ready to conduct client due diligence and reporting from 1 July 2026.
Given Australia’s FATF obligations and the 2026 mutual evaluation, the commencement date is highly unlikely to change. Firms should take advantage of AUSTRAC’s starter programs and guidance, but should begin planning now to ensure readiness for compliance.
This article is part of a series on AML CTF. The next article will focus on being an AML Officer. Do you have a particular topic or question on AML CTF you would like Fiona to cover? Email us at brief@lawsocietywa.asn.au.
This is a broad summary of the law and has been condensed for readability. You must consider the law yourself before making decisions.
