By Sharan Gill, General Counsel, Law Mutual (WA), and Ashley Macknay, Litigation Counsel, Williams & Hughes.
Gearing up for Tranche 2 AML CTF reforms
Preparing for the introduction of Tranche 2 of AML CTF reforms will probably involve the biggest changes in the last 25 years for many in the legal profession.
Practices providing designated services such as acting in the sale and purchase of properties, holding trust monies and trust or company structuring will now be subject to the regulations.
Hopefully, you will now have attended one or more of the seminars the Law Society of Western Australia has conducted and have an understanding of whether your practice provides designated services and, if so, the changes you will need to implement to ensure that you are compliant.
If you have not done so yet, time is short. By 1 July 2026, you need to:
- have enrolled with AUSTRAC (29 July 2026 at the latest);
- have appointed an AML CTF compliance officer who satisfies the fit and proper test;
- have developed and implemented (including staff training) an AML CTF program for the practice which includes risk assessment and an AML CTF policy which covers client due diligence, reporting and record keeping;
- have developed and implemented a privacy policy to comply with the Privacy Act 1988 (Cth)- refer to the OAIC’s website for Guidance for AML CTF reporting entities; and
- be ready to ask clients questions and report suspicious activity.
The time and effort involved in achieving compliance with your obligations should not be underestimated and, notwithstanding the pressing day-to-day demands of clients, should not be left until the last minute.
A good starting point to gather information about compliance is the AML CTF Hub on the Law Society’s website. The Hub brings together an extensive array of helpful material to enable you to get underway.
AUSTRAC has published guidance for the Tranche 2 reporting entities, including AML CTF program starter kits to assist the legal profession. You should subscribe to AUSTRAC communications to ensure you are kept up to date with any changes to the reforms before and after 1 July 2026.
Planning
In order to achieve compliance by 1 July 2026, organisation and planning will be key. Helpfully, the AML CTF Hub has a list of 10 practical steps for compliance.
The first date mentioned on that list is February 2026, so there is some catching up to do, but if you get underway now there is still time to get everything done – however, it is important to start now if you haven’t already done so.
Satisfying client demands
For all sorts of reasons, including discharging professional responsibilities and maintaining financial viability, client work still has to be done in a timely way.
We all differ in how we organise our work for clients. However, even if you do not usually plan each day and each week in advance, this is probably one of those times when you should consider doing so. Otherwise, the risk is that AML CTF compliance will be prioritised at the cost of dissatisfied clients with the risk of professional indemnity claims and complaints to the Legal Practice Board, or the steps for compliance will be put to one side until the pressing client work is done, with the potential for non-compliance on 1 July 2026 and the regulatory consequences that may follow.
Your day-to-day practice management tasks such as diarising critical dates, regular file reviews, supervision, keeping proper records and implementing cybersecurity measures continue. As does meeting your professional obligation to provide accurate and timely advice and maintain client confidentiality. Therefore, plan your working day, week and month to fit in both your client work and the steps necessary for AML CTF compliance. If those steps are carried out incrementally between now and 30 June 2026, you can achieve compliance without disrupting the timely servicing of your clients.
Trying to be helpful
The legal profession is not alone in having to achieve AML CTF compliance. Real estate agents, jewellers, conveyancers, accountants and trust and company service providers are in a similar position.
People in those fields would naturally think that the lawyer they regularly deal with would be a good starting point for advice on AML CTF compliance. However, the fact that you may be able to achieve compliance for your practice does not mean that you will have the expertise to give professional advice to others.
Unless your firm has developed a specialisation in AML CTF with a view to providing advice to clients, you should avoid giving even informal advice on AML CTF reform. This area is highly complex, it is still evolving and giving advice is best left to the experts. Operating out of your areas of expertise is a high-risk activity which exposes those who do so to an increased prospect of professional indemnity claims. In the case of AML CTF, negligent advice could be particularly serious for the client as they may be exposed to the legal consequences of non-compliance.
AML CTF is a complex field; don’t be tempted to dabble.
The takeaway for practices
- Start the process of achieving AML CTF compliance now, if you haven’t already done so.
- Access the Law Society’s AML CTF Hub for a wealth of relevant information and links, including the list of 10 practical steps for compliance.
- Plan your time so that you work towards AML CTF compliance incrementally, while still attending to your clients’ demands in a timely manner.
- Subscribe to AUSTRAC to keep informed of any changes to the regulatory requirements.
- Don’t fall into the trap of giving advice to clients and others concerning their compliance unless you have genuine expertise in AML CTF. Your ability to comply with the regulations does not qualify you as an expert who is able to provide advice on them.
