Obligations are in effect·Enrolment deadline: 29 July 2026—10 days remaining
Sector Guide · Lawyers & Law Firms
Privilege protects advice. It doesn’t protect the transaction.
- $36.4M
- Max civil penalty
- 29 Jul
- Enrolment deadline
- 3 yrs
- Independent evaluation
- $299/mo
- Klyvon for law firms
I. The Line That Matters
The obligation attaches to the service, not the firm
litigation-only firm that never touches a property settlement is not a reporting entity. A mixed-practice firm that does one property settlement a year is — for that service, from the day it happens. Under the AML/CTF Act 2006 as amended by the 2024 reforms, six categories of legal work are designated services, and everything else generally isn’t.
This matters because the obligation doesn’t care what your letterhead says your firm specialises in. A commercial litigator who occasionally helps a client form a holding company is, for that engagement, providing a designated service. Work through your actual service lines — not your marketing copy — to know where you stand.
Designated legal services
Real property deals
Acting in the purchase or sale of real property for a client.
Client money & assets
Managing or controlling client funds, securities, or other assets.
Company & trust formation
Forming companies or trusts on a client's behalf.
Nominee arrangements
Acting as, or arranging, nominee directors or shareholders.
Registered office services
Providing registered office or company secretarial services.
Business sale & purchase
Acting in the purchase or sale of a business entity.
Generally not designated
Litigation
Court representation and dispute resolution, on their own.
General advice
Legal advice that doesn't involve managing client funds.
Criminal law
Criminal defence and prosecution work.
Family law
Where no asset or fund management is involved.
Employment law
Workplace disputes and employment advice.
IP advice
Intellectual property registration and advice.
II. Two Different Rules
Privilege and tipping-off get confused. They protect different things.
Legal professional privilege decides what you have to report. The tipping-off prohibition decides what you're allowed to say once you've reported it. Mixing them up is where firms get into trouble.
If every ground for your suspicion is privileged — genuinely covered by legal advice privilege for the retainer — no SMR is required at all. But most suspicious matters aren’t that clean. The underlying transaction facts — the movement of client funds, the mechanics of a settlement — are generally not protected by privilege on their own, even when the advice around them is. Where a matter splits like that, you still have to report the part that isn’t privileged.
A suspicious matter can split — privilege doesn’t cancel the whole report
If every ground for suspicion is privileged, no SMR is required at all. Most matters aren’t that clean — the transaction facts usually survive the privilege claim and still need reporting.
“You must not disclose to any person — including the client — that an SMR has been filed or that AUSTRAC is investigating.”
— s.123, AML/CTF Act 2006
That tipping-off rule applies regardless of the privilege outcome. Even where you’ve correctly withheld privileged content and filed an LPP form instead of an SMR, you still cannot tell the client that you assessed the matter, that you considered reporting, or that AUSTRAC is involved in any way. Treat it as an absolute rule with no client-facing exceptions.
III. Building the Program
Six steps from a blank page to an enrolled, working program
This is the order that actually works — mapping your exposure before you write a word, and enrolling before you need to act on anything the program surfaces.
Map which services you actually provide
Start by being honest about your practice mix, not your firm's marketing. A firm that does ninety-five percent litigation and one property settlement a year is still a reporting entity for that one settlement. Go through every service line and mark which ones touch client money, property, or entity formation.
Appoint a compliance officer
Someone at the firm needs to own this — reviewing suspicious matters, signing off on the risk assessment, and answering for the program if AUSTRAC ever asks. In a sole practice, that's you. In a partnership, it's usually a senior partner or the practice manager, formally named in the program document.
Write the risk assessment and CDD procedures
Your program needs a documented view of where your firm's money-laundering and terrorism-financing risk actually sits — property work, trust formation, high-value clients — plus the identity verification steps staff follow before a designated service starts, including for corporate clients and trusts where you need to look through to beneficial owners.
Train the people who touch client files
Anyone handling client money, property settlements, or entity formation needs to recognise the red flags and know the firm's escalation path. AUSTRAC expects this to be role-specific and refreshed — not a single induction session three years ago that nobody remembers.
Enrol with AUSTRAC before the deadline
DeadlineEnrolment opened 31 March 2026 and closes 29 July 2026 for Tranche 2 entities. Lodgement of any report — including an SMR — is only possible from an active, enrolled account, so this has to happen before you can act on anything your program surfaces.
AUSTRAC Tranche 2 enrolment window
Book the independent evaluation
At least once every three years, someone outside your day-to-day compliance function needs to test whether the program actually works — not just whether it exists on paper. Findings go to the firm's governing body or a responsible senior manager in a written report.
IV. What Actually Goes In It
Five things your program needs that a generic template won't have
A program built for a real estate agency or an accounting practice won't cover trust formation or nominee arrangements properly. These are specific to how law firms actually handle client relationships.
Property transaction CDD
Identity verification of all parties, including beneficial owners of corporate buyers or sellers, plus source-of-funds checks on large transactions.
Trust & company formation
Identity verification of settlors, trustees, and beneficial owners of any trust or company you form on a client's behalf.
Client funds handling
Procedures for receiving, holding, and disbursing trust account funds, including transaction monitoring triggers.
Nominee director checks
Enhanced due diligence on the true principals behind any client who wants to remain undisclosed through a nominee arrangement.
PEP screening
An enhanced due diligence procedure for clients who are current or former senior government officials, or their immediate family.
V. How Klyvon Helps
Generate your law firm’s AML/CTF program in one session
Built for legal practice
Prompted with AUSTRAC's published Legal Profession Starter Kit and sector guidance — covers property CDD, trust formation, and nominee checks.
Reviewed by your CO
The generated program is a starting point for review and adoption by your firm's compliance officer. All decisions remain with your firm.
Risk framework and CDD
One session covers both halves — your compliance officer, monitoring, and training framework, plus client identification procedures.
Answers instead of pointing you at a PDF
No other Tranche 2 platform in Australia does this.
Free to start · cancel anytime
Related resources
Lawyers Guide
Full sector guide incl. LPP and SMR interaction
AUSTRAC Tranche 2 — Complete Guide
Obligations, deadlines, penalties
SMR Guide
How to submit a Suspicious Matter Report
AUSTRAC Penalty Register
Track published enforcement actions
Am I Regulated?
Check whether your firm is in scope
AML Compliance Cost
What programs cost, and why
Pricing
Klyvon plans for law firms
All resources
Every guide, sector explainer and tool
General guidance only · Not legal advice