For the first time in Australian regulatory history, lawyers are inside AUSTRAC’s supervisory net. The Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2024 brings legal practitioners into Tranche 2 from 1 July 2026, with all the customer due diligence, reporting and program obligations Tranche 1 entities have carried since 2006.
The reform is targeted, not blanket. Only “designated service” work — broadly, transactional work that touches money movement, real property, company structures or trust arrangements — triggers the obligations. Pure litigation work is largely carved out.
Who is caught
- Property and conveyancing lawyers (every transfer, mortgage, lease)
- Commercial lawyers handling business sales, share transfers, restructures
- Trust and estate lawyers setting up or administering structures
- Lawyers running client trust accounts that move funds for clients
- Migration lawyers handling investment-pathway visas
What an AML/CTF program means for a firm
- A board-approved Part A program — risk assessment, governance, training, oversight
- A Part B program — customer due diligence on every client and beneficial owner
- Risk-rate every matter at file-opening
- Suspicious matter reports lodged with AUSTRAC within 24 hours (with statutory protection from breach-of-confidence claims)
- Threshold transaction reports for $10,000+ cash movements
- Seven-year record retention
- Annual compliance reporting and an appointed AML/CTF compliance officer
What is new vs Tranche 1
Tranche 1 (banks, money remitters, casinos) has run this regime for nearly two decades. Tranche 2 closes the FATF “gatekeeper” gap. The legal-professional privilege carve-outs are narrow — the obligation to lodge an SMR generally survives privilege, with carefully drafted statutory protection for the lawyer.
What contracts and documents need updating
- Client engagement letters — AML/CTF disclosure, ID and beneficial-ownership consent, source-of-funds enquiry, refusal/delay rights, retainer-termination triggers
- Trust account terms and authority forms
- Privacy collection notices — sensitive ID and source-of-funds data
- Subcontractor / agent / barrister briefing templates — flow-down of AML obligations
- Retainer-variation letters when a matter’s scope crosses into a designated service mid-engagement
The deadlines and penalties
Commencement 1 July 2026, AUSTRAC enrolment first, full obligations from commencement with limited transitional relief. Civil penalties to $22 million per contravention for incorporated practices; partner-level personal liability for systemic failures.
How an updated Service Agreement helps
Claim Done’s Service Agreement wizard produces a Tranche 2-ready engagement letter — AML/CTF disclosures, ID and beneficial-ownership consent, source-of-funds language, refusal/delay rights, and the file-note structure AUSTRAC will look for at audit. Flat $79, DOCX and PDF, ready to deploy across the firm.
Next step
Appoint a compliance officer, enrol with AUSTRAC, draft Part A, and re-paper every engagement letter before 1 July 2026.