Obligations commence: 1 July 2026·Enrolment deadline: 29 July 2026—27 days remaining
AML/CTF Compliance · Australian Lawyers
AML compliance for lawyers in Australia — AUSTRAC Tranche 2 guide
From 1 July 2026, Australian law firms providing designated legal services become AUSTRAC reporting entities under the AML/CTF Amendment Act 2024. This guide covers exactly which legal services trigger obligations, what your AML/CTF program must contain, and how to comply before the deadline. For the full industry guide see /lawyers.
Written by the Klyvon Compliance Team · Melbourne, Australia · General guidance only, not legal advice
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Which legal services trigger AUSTRAC obligations?
The key principle: the obligation attaches to the service, not the firm type. A litigation-only firm that never handles property transactions is not a reporting entity. A mixed-practice firm that does even one property settlement per year is.
Designated (regulated) legal services
✓ Acting in real property purchase or sale transactions
✓ Managing or controlling client money, securities, or assets
✓ Forming companies or trusts for clients
✓ Acting as or arranging nominee directors or shareholders
✓ Providing registered office or company secretarial services
✓ Acting in the purchase or sale of a business entity
NOT designated (not regulated)
✗ Litigation and court representation
✗ General legal advice (without fund management)
✗ Criminal law practice
✗ Family law (without asset management)
✗ Employment law
✗ Intellectual property advice
Source: AML/CTF Act 2006, s.6(5B) Table 6, as inserted by the AML/CTF Amendment Act 2024 (Cth).
Legal professional privilege and the tipping-off prohibition
The AML/CTF Act 2006 contains specific provisions for legal professional privilege at s.247. Lawyers are not required to disclose privileged communications when filing a Suspicious Matter Report. However, underlying transaction facts — such as the movement of client funds or the mechanics of a property settlement — are generally not protected by privilege.
The tipping-off prohibition under s.123 is separate and applies once an SMR has been filed: you must not disclose to any person — including the client — that an SMR has been filed or that AUSTRAC is investigating. Breach is a criminal offence (maximum 2 years imprisonment).
What your law firm's AML program must cover
Your program must address both Part A (risk framework) and Part B (CDD), tailored to your practice areas. For law firms, key specifics include:
Property transaction CDD
Identity verification of all parties, including beneficial owners of corporate buyers or sellers. Source of funds checks for large transactions.
Trust and company formation procedures
Identity verification of settlors, trustees, and beneficial owners of any trust or company formed on behalf of clients.
Client funds handling
Procedures for receiving, holding, and disbursing funds from trust accounts — including transaction monitoring triggers.
Nominee director/shareholder checks
Enhanced due diligence on principals who wish to remain undisclosed through nominee arrangements.
Politically exposed persons (PEPs)
Enhanced due diligence procedure for clients who are current or former senior government officials or their immediate family members.
Frequently asked questions
Do lawyers need to register with AUSTRAC?
Yes, if your law firm provides any designated legal services under Table 6 of s.6(5B) of the AML/CTF Act 2006 as amended by the AML/CTF Amendment Act 2024. Designated legal services include: acting in real property transactions, managing client money or assets, forming companies or trusts for clients, acting as or arranging nominee directors or shareholders, providing registered office or company secretarial services, and acting in the purchase or sale of a business entity. Litigation-only firms and pure advisory practices that provide none of these services are generally not reporting entities. Source: AML/CTF Act 2006, s.6(5B).
What AML program does a law firm need?
Law firms must implement an AML/CTF program with two mandatory parts. Part A covers the firm's risk management framework: a documented ML/TF risk assessment, compliance officer appointment, transaction monitoring procedures, staff training, and audit arrangements. Part B covers customer due diligence procedures: how the firm identifies and verifies client identity before providing a designated service, including for corporate clients and trusts. The program must be tailored to the firm's specific practice areas and risk profile. Source: AML/CTF Act 2006, ss.81–85.
How much does AUSTRAC compliance cost for law firms?
The Australian Government's Regulatory Impact Statement estimated $23,250 average one-time preparation cost for small businesses using external consultants. Boutique AML consultants charge $5,000–$15,000 for law firm programs. Large firm programs from specialist AML law firms or Big 4 cost $20,000–$50,000+. Klyvon is purpose-built for Australian law firms — it generates a firm-specific AML/CTF program in 60 seconds from $79/month, with a 7-day free trial.
What happens if a law firm doesn't comply by July 2026?
Operating as a reporting entity without an AML/CTF program, CDD procedures, and staff training from 1 July 2026 is a contravention of the AML/CTF Act 2006. Civil penalties for bodies corporate (law firms operating as companies or partnerships) can reach $33,000,000 per contravention. Non-enrolment after 29 July 2026 attracts daily penalties of up to $18,780. AUSTRAC publishes all enforcement actions publicly. Law firms also face potential consequences under state Law Society professional conduct frameworks.
Can law firms use AI to generate their AML program?
Yes. Klyvon is purpose-built for Australian law firms — it generates a firm-specific AML/CTF program in 60 seconds from $79/month. The AI is trained on AUSTRAC's published Legal Profession Starter Kit and sector guidance. The generated program covers Part A (risk framework, compliance officer, monitoring, training) and Part B (CDD procedures for individuals, companies, and trusts). The program must be reviewed and adopted by the firm's compliance officer. Klyvon is not a law firm and its output is not legal advice.
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Klyvon generates your complete AML/CTF program (Part A + Part B) for law firms in 60 seconds. From $79/month — 7-day free trial.
General guidance only · Not legal advice · Source: AML/CTF Act 2006, s.6(5B) · austrac.gov.au