When Treasurer Jim Chalmers handed down the 2026-27 Federal Budget on 12 May, the headline numbers dominated the news cycle. But for legal practitioners and conveyancers already preparing for the first day of Tranche 2 AML/CTF obligations, one line item deserved closer attention than it received: $654.3 million committed to expanding Australia’s Digital ID system. That investment, and what it signals about the direction of identity verification in this country, lands at a particularly consequential moment for the profession.
From July 1 as Tranche 2 comes into effect, the question of how practitioners verify a client’s identity has moved from a theoretical compliance concern to an operational daily reality. The budget announcement does not change that obligation. It does, however, materially change the infrastructure and policy environment in which that obligation will increasingly be met.
The $654.3 million investment targets the expansion of the Australian Government Digital ID System and the myID platform, with the stated goal of giving Australians a single, reusable verified identity to access more than 255 online government services. The government has framed this as a “tell-us-once” approach: verify once, apply that verification broadly, and avoid the repeated sharing of personal data that characterises the current patchwork of identity checks across different services and institutions.
Two elements of the announcement are particularly relevant for practitioners. First, the Australian Taxation Office receives $357.4 million of the total allocation, with a specific focus on integrating biometric liveness detection into the myID credential to counter sophisticated fraud. Second, and more directly significant for the profession, the investment explicitly prepares the ecosystem for broader integration by allowing accredited private sector identity providers to participate in the Digital ID system.
That second point is not a minor detail. It means the government is actively building the regulatory and technical infrastructure to bring the private sector, including legal and conveyancing practices, into a verified digital identity framework. The question for practitioners is not whether this is coming. It is how to position their verification workflows to meet the standard that framework will require.
The AML/CTF Rules 2025 require practitioners to apply customer due diligence procedures that are risk-based, documented, and capable of establishing not just the validity of identity documents, but the authenticity of the person presenting them. That is a meaningfully higher bar than collecting a copy of a driver’s licence and filing it with the matter.
Digital ID, as it stands today, provides a higher-assurance identity signal particularly suited to remote onboarding and digital-first client relationships. Where a client holds a verified digital identity, practitioners gain greater confidence in the underlying identity documents and the biometric match that supports them. What Digital ID does not do is replace the broader due diligence framework. Assessing source of funds, understanding the purpose of a transaction, identifying beneficial ownership, and conducting ongoing monitoring throughout a matter remain obligations that sit beyond what any identity verification tool can address on its own.
The important framing is that Digital ID is an addition to the practitioner’s compliance toolkit, one that is becoming substantially more capable and more relevant as government investment scales the system and opens it to private sector participation.
The ATO’s $357.4 million allocation specifically to integrate biometric liveness detection into myID is not incidental. It reflects a recognition at the highest levels of government that document presentation alone is no longer a sufficient identity standard in an environment where deepfake technology and document manipulation have become more sophisticated.
Biometric verification, which compares a live facial capture against the photograph on a presented identity document, closes the gap between confirming that a document is valid and confirming that the person holding it is genuinely the person it describes. This is precisely the authenticity question that Tranche 2 reform guidance has emphasised for higher-risk matters, particularly those involving complex trust or corporate structures, high-value property transactions, or clients with elevated risk profiles.
The budget’s investment signals that biometric liveness detection will become a baseline expectation of the national identity infrastructure, not a premium feature. Practitioners who build verification workflows around that standard now will be well positioned as that expectation flows through to private sector participation requirements.
The budget’s investment in Digital ID is not a distant policy signal, it is infrastructure being built now, at scale, with private sector integration explicitly in scope. Practitioners who treat biometric verification as a future consideration rather than a present standard will find themselves retrofitting workflows under pressure. The more productive question is not whether to build toward this standard, but how to do it in a way that strengthens the broader due diligence framework Tranche 2 demands.
