Australia’s fight against money laundering and terrorism financing is built on a regulatory framework that makes one thing clear: money must be visible, traceable and accountable.
The rules around AML/CTF reporting are changing from July 2026 with penalties for non-compliance. But with so many rules, acronyms and “tranches”, it can be hard to understand what actually applies to you.
This article breaks it down simply for you (and uses some fun lessons from Jerry Maguire to help make it stick!)
The Foundation: Tranche 1 (Anti-Money Laundering and Counter-Terrorism Financing Act 2006)
The Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) was introduced to modernise Australia’s defences against financial crime. It was designed to:
- Deter and detect money laundering and terrorism financing;
- Protect the integrity of Australia’s financial system; and
- Replace older reporting obligations with a more comprehensive, risk-based regime.
Under Tranche 1, “reporting entities” include traditional financial-sector businesses such as:
- Banks;
- Non-bank lenders and finance companies;
- Remittance and payment service providers;
- Bullion dealers;
- Casinos; and
- Certain insurance and superannuation services.
If you provide a designated service, typically involving loans, credit, accounts, remittance, stored-value facilities, or financial transactions, you must:
- Enrol with the Australian Transaction Reports and Analysis Centre (AUSTRAC);
- Verify customer identities through Know Your Customer (KYC) / Customer Due Diligence (CDD);
- Monitor transactions;
- Submit Suspicious Matter Reports (SMRs);
- Submit Threshold Transaction Reports (TTRs);
- Maintain an AML/CTF Program; and
- Keep appropriate records.
What about trade credit providers?
Simply offering trade credit, for example issuing invoices with 30/60/90-day terms, is not considered a financial service under Tranche 1.
This is because trade credit providers:
- Sell their own goods or services;
- Issue invoices (accounts receivable);
- Are paid directly as creditors;
- Do not handle client funds; and
- Do not offer loans as a financial product.
- The result is that standard trade credit businesses are not regulated under Tranche 1.
The Expansion: Tranche 2 (Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024)
As criminals shifted to using non-financial sectors such as real estate, law, accounting and corporate structuring, the Australian Government expanded the AML/CTF regime through the Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024.
These reforms, collectively known as Tranche 2, begin from 1 July 2026.
Tranche 2 is NOT a catch-all.
You are only captured if you provide certain high-risk “gatekeeper” services.
These professions are referred to as Designated Non-Financial Businesses and Professions (DNFBPs).
Who Tranche 2 covers
- Real Estate Professionals
Captured when acting for others in:
- Selling or buying property;
- Introducing buyers and sellers;
- Holding deposits; or
- Acting as an agent or intermediary
Not captured: selling your own property or development stock.
- Lawyers and Conveyancers
Captured when:
- Transferring property;
- Managing client funds or trust accounts;
- Establishing companies, trusts, partnerships;
- Acting as a director, nominee or secretary for clients; or
- Buying or selling businesses on behalf of clients.
Not captured: general advice, litigation-only practices.
- Accountants and Professional Advisers
Captured when:
- Forming companies or trusts;
- Providing registered office services;
- Managing client money;
- Acting as company secretary; or
- Administering corporate structures.
Not captured: bookkeeping, payroll, tax return preparation.
- Trust and Company Service Providers (TCSPs)
Captured when:
- Acting as trustee;
- Acting as director or partner for clients;
- Providing nominee services;
- Supplying registered office addresses;
- Forming legal entities; or
- Administering corporate or trust structures.
- High-Value Goods Dealers
Captured when dealing in:
- Precious metals;
- Precious stones; or
- High-value assets above defined transaction thresholds.
- Virtual Asset Service Providers (VASPs)
Captured when they:
- Operate cryptocurrency exchanges;
- Provide digital-asset wallets or custody;
- Facilitate token transfers; or
- Act as intermediaries in crypto transactions.
A Quick self-test: Am I captured?
Step 1: Do you provide a designated financial service such as lending, finance, remittance, or handling client money?
YES = Tranche 1
NO → Step 2
Step 2: Do you provide gatekeeper services such as real estate brokerage, conveyancing, trust/company formation, managing client funds, or crypto exchange services?
YES = Tranche 2
NO = Not regulated under AML/CTF
Most trade credit providers will answer NO to both, but always seek advice if you are unsure.
AML/CTF Lessons… from Jerry Maguire
Some of the movie’s famous lines line up neatly with AML/CTF principles so we’ve created a checklist of lessons to help you remember your obligations.
- Show me the money!
Always verify the source of funds (KYC/CDD). - Help me help you.
Compliance requires cooperation with AUSTRAC and clients. - A little piece of integrity goes a long way.
Good ethics are the first line of defence. - I’m about showing you the money!
Base decisions on verified facts, not assumptions. - You complete me.
A strong AML/CTF program fills organisational risk gaps. - Every dollar has a story.
Funds must be traceable. - Transparency isn’t optional.
Reporting obligations are mandatory. - Trust, but verify.
Due diligence is essential. - Where the money flows, so does accountability.
Document every movement of funds. - Follow the paper trail.
Investigating suspicious activity means following the money.
In summary
- Tranche 1 covers financial-sector services (loans, finance, remittance, money handling).
- Tranche 2 covers non-financial “gatekeeper professions” (real estate, law, accounting, TCSPs, high-value dealers, virtual-asset services).
- Standard trade credit businesses are not in Tranche 1 or Tranche 2.
- The AML/CTF system is scope-based, not “everyone who handles money”.
- Understanding what counts as a designated service is the key.
- Be prepared for 1 July 2026.
- Ultimately:
If you can’t clearly show the money, where it came from and where it’s going, then AUSTRAC will ask why.
Get ready
If Tranche 2 applies to you, you need to be ready by 1 July 2026. Stay tuned for our next article which will detail the steps you can take and the tools you can implement in your business to assist with your AML/CTF compliance.
For more information, I can be contacted on at natalie.ledlin@fcwlawyers.com.au.
Disclaimer
This article is designed and intended to provide general information in summary form. The contents of this article do not constitute legal advice, are not intended to be a substitute for legal advice and should not be relied upon as legal advice. Please seek legal advice about your specific circumstances.
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Principal Lawyer
Natalie is Principal Lawyer at FCW Lawyers. With a double degree in law and psychology, she understands the science behind human behaviour. She knows that soft skills can often be the real way to achieve great results for clients. Whether you call it emotional intelligence, empathy or just plain gut feel, Natalie has it in spades – which is invaluable when she’s negotiating outcomes for clients and conducting commercial litigation.
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