Lawyers and conveyancers are entering a new era of compliance with the introduction of the Tranche 2 reforms under the Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Amendment Act 2024. These long-anticipated changes expand AML/CTF obligations to legal professionals, property professionals, accountants, and other key service providers, fundamentally altering how these industries operate.
This is one of the most significant regulatory shifts for Australian legal services since the adoption of the Legal Profession Uniform Law almost a decade ago. While the initial adjustments may be challenging, they also open opportunities for firms willing to modernise and adapt.
When introducing the Bill, the Federal Government stressed that these reforms are “critical to protecting Australia’s financial system from criminal abuse” and bringing Australia in line with global anti-money laundering standards. The new requirements take effect on 1 July 2026, but the short compliance timeline and the limited availability of AML/CTF specialists in Australia mean demand for expertise will intensify.
In other words, the time to prepare is now.
The Tranche 2 reforms extend many AML/CTF responsibilities, previously reserved for financial institutions, to legal service providers. Key obligations include:
Critically, firms must not only comply but be able to demonstrate compliance if audited by AUSTRAC, Australia’s proactive AML regulator. As AUSTRAC has emphasised, “Compliance is not just about ticking a box. It’s about developing a deep understanding of your money laundering and terrorism financing risks and mitigating them effectively.”
Legal professionals are trained in advocacy and legal analysis, not financial crime detection. Unsurprisingly, the imposition of AML/CTF obligations will challenge firms in several ways:
While initial anxiety is understandable, as the Law Council of Australia noted in its submission to Treasury: “With appropriate guidance and proportional implementation, these obligations can be integrated into legal practice in a way that protects both national security and fundamental legal principles such as client confidentiality and professional privilege.”
To navigate this transition, legal professionals must embrace a strategic, proactive approach.
A sound AML/CTF compliance program starts with a thorough risk assessment, tailored to your firm’s client base, services, and delivery channels. As Gary Hughes, barrister and AML expert, notes in his article for the Law Society Journal, “preparing this assessment will take more time, detail, discussion and documentation than you imagine at the outset.”
Key steps include:
The Australian Government’s 2023 Consultation Paper highlighted the importance of cultural change within newly regulated sectors, noting that success relies on “embedding a compliance mindset across all levels of an organisation, not just within compliance teams.”
A critical starting point is to map your firm’s services against the designated services captured under the Act. AML obligations are activity-based, not title-based. Litigation services, for example, are generally exempt, but managing client money, even during a dispute settlement, may be captured.
Understanding what is “in scope” is essential as it will not always be obvious whether certain scenarios are in or out of scope. Close analysis and clear internal guidance will be critical to avoid compliance missteps.
Technology will be a major ally. Legal tech solutions can assist with:
As Hughes puts it, “AML boils down to an information management problem within the firm.” Modern tools help firms gather, verify, monitor, and retrieve data efficiently, essential under the new regime.
Further supporting the technology imperative, the Financial Action Task Force (FATF) global evaluation report on Australia (2022) urged more use of “regtech and fintech solutions” to drive proactive compliance and reduce human error.
Firms must rethink client onboarding to integrate compliance without creating excessive friction. Options include:
Firms must nominate a Compliance Officer at the management level to oversee AML obligations. Developing an internal AML Champion, someone to master the jargon, regulations, and frameworks, will help integrate compliance into daily operations.
As AUSTRAC states in its “Designated Services” guide: “Effective leadership is essential for a strong culture of compliance.”
AUSTRAC will not be a passive overseer. Firms must expect annual reporting, triennial audits, and possible supervisory visits. Suspicious matter reporting will be among the most sensitive obligations. Deciding whether to report on a client may fundamentally challenge the training of many lawyers. Yet, it’s critical to the system’s integrity.
This sentiment is underscored by Treasury’s 2023 announcement: “Australia’s ability to detect, deter and disrupt serious crime, including money laundering, relies on the vigilance and cooperation of gatekeeper professions like lawyers and accountants.”
While the Tranche 2 reforms introduce significant operational challenges, they also present a rare opportunity to modernise, build resilience, and strengthen client trust.
As your legal tech provider, InfoTrack is working to ensure the solutions you rely on each day will support your compliance, with additional client checks and onboarding requirements. Our Client Relationship Managers are ready to discuss your specific needs.
To support your education and preparation, we’re tailoring training resources to help you transition confidently into this new regulatory environment.
Complete our first AML/CTF training module (for 0.5 CPD units).
