AML/CTF Reforms 2026: A Complete Guide for Australian Businesses

Australia is preparing for one of the most significant regulatory updates to its financial system. The upcoming AML/CTF Reforms will introduce stricter compliance requirements and expand regulatory oversight across several industries.

For financial professionals and advisory firms, understanding these changes is essential. Businesses operating in regulated sectors should strengthen their AML compliance processes and ensure they meet evolving regulatory expectations. 

This guide explains the tranche 2 AML reforms. It covers their impact on financial services businesses. It also explains what organisations should do now. This will help them stay compliant in Australia.

Understanding the AML/CTF Reforms in Australia

The Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Reforms aim to strengthen Australia’s financial system. They also reduce the risk of criminals misusing financial services.

These reforms are led by AUSTRAC, Australia’s financial intelligence and regulatory agency. AUSTRAC plays a key role in detecting, monitoring, and preventing financial crime.

The reforms aim to modernise Australia’s regulatory framework and align it more closely with international compliance standards. One of the biggest changes is the expansion of the AML regime to include industries once outside direct regulation.

For financial firms, this means they should review internal policies. They should improve risk management practices. They should also ensure AML compliance systems are up to date.

What Are Tranche 2 AML Reforms?

The Tranche 2 AML reforms represent the second phase of Australia’s anti-money laundering regulatory expansion.

Previously, AML obligations applied mainly to banks, lenders, and large financial institutions. However, from 1 July 2026, the AML framework will extend to additional industries.

The sectors expected to be regulated under Tranche 2 include:

• Lawyers and legal service providers
• Accountants and tax practitioners
• Real estate professionals and property agents
• Trust and company service providers
• Dealers in precious metals and stones

These industries are seen as higher risk for financial crime. They must now follow stricter AML rules for financial services.

Key AML Compliance Requirements for Businesses

Businesses affected by the AML/CTF Reforms will need to establish structured compliance programs that meet regulatory standards.

Core AML compliance obligations generally include:

1. Customer Due Diligence (CDD)

Businesses must verify client identities and assess potential financial crime risks. This includes identifying beneficial ownership and monitoring ongoing client activity.

Strong customer verification is a key component of effective AML compliance.

2. AML/CTF Risk Assessment

Organisations must regularly conduct risk assessments to identify potential money laundering or terrorism financing risks linked to their services.

This is particularly important for firms operating a financial advisor business or supporting complex financial structures.

3. Transaction Monitoring and Reporting

Businesses will be required to monitor financial transactions and report suspicious activities to regulators when necessary.

Accurate reporting helps organisations meet their financial services AML requirements and supports the integrity of Australia’s financial system.

4. Staff Training and Internal Controls

Compliance programs must include staff training so employees understand AML risks and reporting responsibilities.

For businesses that handle sensitive financial information, such as financial advisory firms, accounting firms, and legal practices, this step is especially important. Advisers often handle sensitive financial information for many clients.  

Industry-Specific Risk Considerations

Financial crime risks vary across industries. While the AML/CTF framework applies broadly, different sectors face unique risks depending on the services they provide.

Accounting and Legal Services

Professionals in these fields often support corporate structuring, trusts, and high-value financial arrangements. This increases the importance of strong customer due diligence and beneficial ownership checks.

Real Estate and Conveyancing

Property transactions are commonly associated with money laundering risks. Real estate professionals may face stricter requirements for identity verification and transaction monitoring.

Trust and Company Service Providers

These businesses frequently manage complex ownership structures and cross-border arrangements, which increases regulatory focus on transparency and ongoing monitoring.

Dealers in Precious Metals and Stones

High-value purchases and cash payments in this sector can raise financial crime risks. This requires stronger monitoring and reporting procedures.

Understanding how AML/CTF reforms apply to your services helps organisations build more effective AML compliance strategies.

What Businesses Should Do Now

With the 2026 AML/CTF reforms approaching, businesses should begin preparing well before the new requirements are fully enforced.

Early planning allows organisations to implement compliance systems in a structured way rather than reacting under regulatory pressure.

Some important early actions include:

• Confirming whether your services fall within the designated AML/CTF reporting entity categories
• Conducting an initial risk assessment to identify potential exposure to financial crime risks
• Appointing a qualified AML/CTF Compliance Officer responsible for oversight and reporting
• Reviewing governance frameworks and internal reporting structures
• Assessing current client onboarding and identity verification procedures
• Planning staff training programs and updating internal AML policies

Taking these steps early helps businesses strengthen their AML compliance programs and reduce risks as reforms take effect.

The Evolving Structure of AML/CTF Programs

Recent regulatory updates show that the old “Part A and Part B” AML/CTF program structure is no longer required.

However, this structural change does not reduce compliance responsibilities.

Instead, the reforms aim to give organisations more flexibility. They can use this flexibility when designing compliance programs. At the same time, they must still have strong, risk-based controls.

Businesses will still need to maintain documented compliance frameworks that address key areas such as:

• Governance and internal accountability
• Risk assessment processes
• Customer due diligence procedures
• Ongoing transaction monitoring
• Regulatory reporting obligations
• Compliance management and oversight

How Grace Advisory Supports Financial Compliance

At Grace Advisory, we work with financial professionals and advisory firms across Australia to navigate complex regulatory requirements.

Our team provides specialised AFSL compliance services designed to help businesses maintain strong governance, risk management, and regulatory alignment.

We work with a wide range of Phase 1 and Phase 2 reporting entities, including businesses in accounting, financial services, legal services, real estate, and virtual asset sectors.

As experts in Australian Financial Services Licence (AFSL) compliance, we support businesses with:

• AFSL regulatory guidance
• Compliance program development
• Risk management and governance frameworks
• Ongoing compliance support for regulated businesses

If your organisation is preparing for upcoming AML/CTF reforms, our specialists can help. We will help you stay compliant and keep growing your business.

Frequently Asked Questions (FAQs)

What are AML/CTF reforms in Australia?

The AML/CTF Reforms are regulatory changes. They aim to strengthen Australia’s financial crime prevention system. They also improve oversight of financial transactions.

When will the AML/CTF reforms start?

New obligations for existing reporting entities begin on 31 March 2026. Tranche 2 entities must comply from 1 July 2026. (AUSTRAC)

Which industries do the Tranche 2 AML reforms affect?

Industries such as real estate will follow AML rules. Legal services will follow AML rules.

Accounting will follow AML rules. Trust and company services will follow AML rules. Dealers in precious metals and stones will follow AML rules.

How can small financial advisory firms prepare for AML reforms?

Small advisory firms can get ready by using clear AML programs. They should train staff, watch transactions, and get compliance help when needed.