Tranche 2 deadline: 1 July 2026—39 days remaining
AUSTRAC Tranche 2 · Complete Guide · Updated May 2026
AUSTRAC Tranche 2 Explained: Complete Guide for Australian Businesses 2026
AUSTRAC Tranche 2refers to the second phase of Australia’s Anti-Money Laundering and Counter-Terrorism Financing regime, which extends compliance obligations to approximately 100,000 new businesses from 1 July 2026. Under the AML/CTF Amendment Act 2024, lawyers, accountants, real estate agents, conveyancers, jewellers, precious metals dealers, and pawnbrokers must enrol with AUSTRAC, implement a written AML/CTF program, conduct customer due diligence, and report suspicious matters. The final enrolment deadline is 29 July 2026.
Key dates
Last updated: May 2026 · Source: austrac.gov.au ↗
Background
What is AUSTRAC Tranche 2 and why does it exist?
AUSTRAC Tranche 2 is the extension of Australia’s AML/CTF regime to professional services sectors that were previously unregulated — lawyers, accountants, real estate agents, and precious metals dealers. Australia was one of the last FATF member nations to regulate these sectors, despite them being identified as high-risk for money laundering globally. The reforms were legislated through the AML/CTF Amendment Act 2024, which received Royal Assent on 10 December 2024. Source: austrac.gov.au ↗.
What is FATF and why does it matter for Australian businesses?
The Financial Action Task Force (FATF) is the global standard-setter for anti-money laundering regulation, with 40 recommendations that member nations are expected to implement. Australia has been under sustained FATF pressure since its 2015 mutual evaluation identified the absence of AML obligations for professional services as a material gap — one that made Australia an outlier among comparable economies. Tranche 2 directly addresses that gap and will be assessed in Australia’s next FATF mutual evaluation. Source: fatf-gafi.org ↗.
What is the difference between Tranche 1 and Tranche 2?
Tranche 1 entities are businesses regulated under the original AML/CTF Act 2006 — banks, credit unions, casinos, gambling operators, digital currency exchanges, bullion dealers, and remittance providers. Tranche 2 entities are the newly regulated professional services sectors — lawyers, accountants, real estate agents, conveyancers, jewellers, and pawnbrokers — coming under the regime from 1 July 2026. If your business was not previously required to report to AUSTRAC, you are a Tranche 2 entity.
Who is in scope
Which businesses are captured by AUSTRAC Tranche 2?
The AML/CTF Amendment Act 2024 brings five sectors into scope from 1 July 2026. The trigger in every case is the specific designated service provided — not the profession, the size of the firm, or the payment method. Source: AUSTRAC — Tranche 2 reforms ↗.
Lawyers and conveyancers
When acting on real estate transactions, company or trust formation, managing client funds or bank/securities accounts, or organising contributions for companies or trusts. General legal advice not involving these activities does not trigger obligations. Source: AML/CTF Act 2006, Table 6, s.6(5B).
Accountants and tax agents
When managing client funds, forming companies or trusts, acting as nominee director or providing a registered office, or acting on property transactions. General tax return preparation under Table 1 of s.6(1) is NOT a designated service — only services in Table 6 of s.6(5B) are captured.
Real estate professionals
When brokering the sale, purchase, or transfer of real estate on behalf of buyers or sellers, auctioning property, or direct sales by developers. Property management, rent collection, and tenancy management are specifically NOT designated services.
Jewellers and precious metals dealers
When selling or purchasing precious metals, stones, or precious products where the customer pays $10,000 or more in cash or virtual assets in a single or linked transaction. Bullion dealers are regulated at any transaction value and through any payment method.
Pawnbrokers
All pawnbroking services are designated services regardless of loan value or payment method. Pawnbrokers must enrol, implement an AML/CTF program, and conduct CDD for all pawnbroking clients.
How do I know if my specific service is a designated service?
AUSTRAC provides an online eligibility checker at austrac.gov.au ↗ that allows businesses to confirm whether their specific services trigger obligations. The full list of designated services is in Schedule 3 of the AML/CTF Act 2006 as amended. If you are uncertain, AUSTRAC recommends using the checker or seeking independent legal advice.
What if I provide both regulated and unregulated services?
Your AML/CTF obligations apply only to your designated services. If your accounting firm provides both general tax returns (not regulated) and trust formation services (regulated), you must implement an AML/CTF program covering your trust formation work only. The program does not need to cover non-designated services. However, your risk assessment must address the interaction between service lines where relevant. Source: AUSTRAC reforms guidance.
Does legal professional privilege exempt lawyers from Tranche 2?
No. Legal professional privilege does not exempt lawyers from enrolment, CDD, or AML/CTF program obligations. It applies only to specific privileged communications and does not override reporting obligations under the Act. The AML/CTF Amendment Act 2024 includes specific provisions preserving LPP while maintaining compliance obligations. Source: s.41(5) AML/CTF Act; AUSTRAC legal practitioners guidance.
Core obligations
What are the 6 core obligations for every Tranche 2 entity?
Every entity that provides a designated service from 1 July 2026 must satisfy all six of the following obligations. Non-compliance with any one of them is a separate contravention of the Act.
What does enrolling with AUSTRAC involve?
Every Tranche 2 entity must register on the AUSTRAC Reporting Entity Roll via AUSTRAC Online at online.austrac.gov.au. Enrolment opened 31 March 2026 and must be completed by 29 July 2026 for entities already providing designated services on 1 July 2026. You will need your ABN, details of your designated services, and the name of your AML/CTF Compliance Officer.
s.76 AML/CTF Act 2006
What is an AML/CTF program and what must it cover?
A written AML/CTF program is mandatory for every reporting entity. It has two parts: Part A covers your ML/TF risk assessment, governance, staff training, transaction monitoring, and program review schedule. Part B covers your customer identification and verification procedures. The program must be approved by a senior manager before you start providing designated services. AUSTRAC has released Program Starter Kits for small businesses as a starting point.
s.84 AML/CTF Act 2006
What is an AML/CTF Compliance Officer and who can fill the role?
Every reporting entity must appoint an AML/CTF Compliance Officer in writing. The Compliance Officer must be a senior person within the business with authority to access all records and implement compliance measures. For sole traders and small businesses, the owner or principal can serve as Compliance Officer — a separate person is not required. AUSTRAC's guidance confirms the person must meet a fit and proper standard.
s.36 AML/CTF Act 2006
What is customer due diligence and when must it happen?
Customer due diligence (CDD) requires you to identify and verify your customers before providing a designated service. For individuals this means collecting and verifying full name, date of birth, and address using government-issued photo ID. For companies and trusts, you must identify beneficial owners — natural persons who ultimately own or control 25% or more. Enhanced CDD is required for high-risk customers including politically exposed persons.
ss.28–36 AML/CTF Act 2006
When must a Tranche 2 entity submit a Suspicious Matter Report?
You must submit an SMR to AUSTRAC when you have reasonable grounds to suspect that a matter relates to money laundering, terrorism financing, or proceeds of crime. Terrorism financing suspicions must be reported within 24 hours. All other SMRs within 3 business days. The tipping-off prohibition under s.123 means you cannot disclose to the customer or any third party that an SMR has been or may be filed.
s.41 AML/CTF Act 2006
When must a Tranche 2 entity submit a Threshold Transaction Report?
A Threshold Transaction Report must be submitted for any cash transaction of $10,000 or more, including physical currency and virtual assets. The TTR must be submitted within 10 business days of the transaction. Deliberately structuring transactions below $10,000 to avoid this requirement is a criminal offence.
ss.43, 142 AML/CTF Act 2006
Common mistakes
What are the most common mistakes businesses make with Tranche 2 compliance?
These are the compliance traps that appear repeatedly across all Tranche 2 sectors. Each one is a genuine risk — not a theoretical concern.
Do low-volume businesses still need to comply if they don't handle much cash?
Many businesses assume Tranche 2 only affects firms handling large amounts of cash. This is wrong. An accountant who forms one trust per year for a client, or a lawyer who acts on a single property settlement, is a reporting entity regardless of transaction volume or payment method. The trigger is the service provided, not how it is paid for or how often it occurs.
Is the AUSTRAC Program Starter Kit enough on its own?
AUSTRAC has released Program Starter Kits for small businesses. These are a useful starting point but are generic. AUSTRAC's own guidance makes clear that your program must be tailored to your specific business, client base, and risk profile. A starter kit adopted without customisation may not satisfy AUSTRAC's expectation of a risk-based program specific to your practice.
Does enrolling with AUSTRAC mean I am fully compliant?
Enrolling with AUSTRAC is the first step — not the finish line. Many businesses complete enrolment and assume they are compliant. AUSTRAC's expectation is that by 1 July 2026, enrolling entities have an AML/CTF program in place, a Compliance Officer appointed, staff trained, and CDD procedures operational. Enrolment alone does not satisfy any of these obligations.
What is the beneficial ownership requirement and why do businesses miss it?
The beneficial ownership obligation requires identifying all natural persons who ultimately own or control 25% or more of a company or trust client. This is not the same as identifying the person who signs the engagement letter. For complex structures — holding companies, discretionary trusts, SMSFs — tracing to the ultimate natural person is a distinct obligation that many businesses overlook in their CDD procedures.
What happens if I assess a matter as not suspicious but don't document that decision?
Many businesses focus on when to file an SMR and overlook that AUSTRAC expects documented decisions when a matter is assessed and determined not to meet the reporting threshold. An undocumented assessment that a matter was not suspicious provides no audit trail if AUSTRAC later reviews that decision. Your program should include a formal assessment and record-keeping procedure for every potential suspicious matter.
Does Tranche 2 apply to property managers and rent collectors?
Property managers who collect rent, manage tenancy agreements, and handle bonds are not providing designated services under Tranche 2. The real estate obligations apply only to brokering the sale, purchase, or transfer of real estate. Property management is specifically excluded. Confusion on this point has led some property managers to begin unnecessary compliance preparations — and others in scope for sales to underestimate their obligations.
Enforcement
How does AUSTRAC enforce Tranche 2 compliance?
What are the penalties for non-compliance with AUSTRAC?
Civil penalties under Part 15 of the AML/CTF Act reach up to $33,000,000 for body corporates and $6,600,000 for individuals per contravention. Criminal penalties apply for operating without enrolment and for serious or wilful non-compliance. AUSTRAC publishes enforcement actions publicly — a finding against a law firm or accounting practice carries professional consequences with the Law Society, CPA Australia, or CA ANZ in addition to AUSTRAC penalties.
Source: AML/CTF Act 2006 (Cth), Part 15. Figures are indicative — refer to current legislation for precise amounts.
What does AUSTRAC actually check during a compliance review?
Based on AUSTRAC’s published regulatory expectations, the regulator focuses on whether your program is genuinely risk-based and operational — not just written. AUSTRAC looks for evidence that staff are trained, CDD is being conducted consistently, SMR decisions are documented, and records are maintained for the required 7 years. A well-written program that is not being followed provides no protection. Source: AUSTRAC Regulatory Expectations and Priorities 2025–26 ↗.
Will AUSTRAC prosecute small businesses in the first year?
AUSTRAC CEO Brendan Thomas has publicly stated that the regulator’s focus for newly regulated Tranche 2 entities will be on building “strong foundational capabilities — staff training, risk awareness, and robust AML/CTF programs — rather than perfection on day one.” However, this does not mean enforcement will not occur. AUSTRAC has demonstrated willingness to use enforcement powers — Westpac paid $1.3 billion in 2020, Crown $450 million in 2023. Businesses that make no effort to comply will not receive leniency.
Step-by-step
How do you enrol with AUSTRAC step by step?
Enrolment is completed through AUSTRAC Online at online.austrac.gov.au ↗. The process takes approximately 20–30 minutes for a straightforward small business.
Confirm you are in scope
Use AUSTRAC's eligibility checker at austrac.gov.au to confirm whether your specific services are designated services under Schedule 3 of the AML/CTF Act 2006. The trigger is always the service provided, not the payment method or transaction volume.
Appoint your AML/CTF Compliance Officer before starting
Designate a named senior person as Compliance Officer before you start enrolment — you must declare their details during the process. The owner or principal can fill this role for sole traders and small businesses.
Identify every designated service your business provides
List every designated service your entity provides by reference to Schedule 3 of the Act as amended. This list determines the scope of your AML/CTF program and must be accurate — understating your services is itself a compliance risk.
Create an account on AUSTRAC Online using your ABN
Go to online.austrac.gov.au and create an account. Enrolment opened 31 March 2026 and must be completed by 29 July 2026 for entities already providing designated services on 1 July 2026. Source: s.76 AML/CTF Act.
Complete the Business Profile Form
Enter your entity details, list all designated services, provide your Compliance Officer's name and role, and describe your business structure. All fields are mandatory before the form can be submitted.
Submit and receive your AUSTRAC reporting entity number
On submission, you will receive a AUSTRAC reporting entity number confirming enrolment. Keep this number — it is required for all future reporting, correspondence with AUSTRAC, and compliance audits.
Set up reporting access for SMR and TTR submissions
Within AUSTRAC Online, configure reporting access so that you and any nominated staff can submit Suspicious Matter Reports and Threshold Transaction Reports when required.
Notify AUSTRAC of any changes within 14 days
After enrolment, any change to your designated services, Compliance Officer, or business structure must be notified to AUSTRAC within 14 days via AUSTRAC Online.
Program guidance
What is the difference between an AUSTRAC starter kit and a custom AML/CTF program?
AUSTRAC has released sector-specific Program Starter Kits designed for small, low-complexity businesses. These cover the basic structure of a compliant program and are available free of charge at austrac.gov.au ↗. However, the Starter Kit is generic — it does not reflect your specific client base, risk profile, designated services mix, or compliance officer details.
AUSTRAC’s own guidance states that the program must be tailored to your business. For a sole-practitioner conveyancer with 50 clients per year, a Starter Kit with minimal customisation may be sufficient. For an accounting firm with a mix of corporate advisory, trust formation, and client fund management, a custom program that addresses each service line and client type separately is more defensible under review.
The practical difference matters most when AUSTRAC conducts a compliance assessment — the regulator looks for evidence that the program reflects how your business actually operates, not just that a document exists. A generic program that references services your firm doesn’t provide, or omits client types your firm regularly deals with, is a compliance risk in itself.
Common questions
Frequently asked questions about AUSTRAC Tranche 2
Does Tranche 2 apply to sole traders?
Yes. The AML/CTF Act applies to all reporting entities regardless of business structure — sole traders, partnerships, companies, and trusts. A sole-practitioner lawyer who acts on property settlements must enrol with AUSTRAC, appoint themselves as Compliance Officer, implement an AML/CTF program, and conduct CDD for applicable clients. The size of your business affects the complexity of your program, not whether you need one.
What if I miss the 29 July 2026 enrolment deadline?
Operating as a reporting entity without enrolment is a contravention of the AML/CTF Act 2006 and may attract civil or criminal penalties. AUSTRAC has indicated it will take a risk-based approach to enforcement for new Tranche 2 entities, but businesses that fail to enrol without good reason face significant legal exposure. Enrolment opens at online.austrac.gov.au from 31 March 2026.
Do I need a separate AML/CTF program for each service I provide?
No. Your AML/CTF program covers your entire entity and all the designated services you provide. However, the program must address each designated service separately with a tailored risk assessment and CDD procedures. A law firm providing both conveyancing and trust formation services must address both service lines in its program.
Can I use the same Compliance Officer across multiple entities?
AUSTRAC's guidance is that each reporting entity must have its own Compliance Officer appointed in writing. Where a single individual is named across multiple related entities — for example, multiple companies in a group — the appointment must be documented separately for each entity and the individual must have genuine authority to act for each one.
What is a politically exposed person (PEP) and why does it matter?
A Politically Exposed Person (PEP) is an individual who holds or has held a prominent public position — including government ministers, senior military officers, senior judiciary, and their close family and associates. Engaging a PEP as a client requires enhanced CDD, including source of funds verification and senior management approval. PEP status does not prevent you from taking on the client — it requires additional scrutiny.
Do I need to re-verify existing clients I have worked with for years?
AUSTRAC's guidance requires that all customers be identified and verified before designated services are provided. For existing clients whose identity has previously been verified under a formal process, you may not need to re-collect documents — but your AML/CTF program must specify your approach to existing client verification and must ensure records are adequate. Source: AUSTRAC CDD guidance.
How long must I keep AML/CTF records?
All AML/CTF records — including customer identification documents, transaction records, TTRs, SMRs, risk assessments, and training records — must be retained for a minimum of 7 years from the date the record was made or the transaction completed, whichever is later. Records must be stored securely and retrievable for AUSTRAC examination. Source: AML/CTF Act 2006, s.112.
What is the tipping-off offence?
Tipping off is a criminal offence under s.123 of the AML/CTF Act. Once an SMR has been filed — or a decision is being made about whether to file one — you cannot tell the customer, or any third party, that an SMR is being considered or has been lodged. This prohibition exists to prevent suspects from being alerted and destroying evidence. A breach of the tipping-off prohibition can attract criminal penalties.
Can I rely on another Tranche 2 entity's CDD (reliance arrangements)?
Yes. The AML/CTF Act allows reliance arrangements where one reporting entity relies on CDD conducted by another. Under a reliance arrangement, the relying entity must have a written agreement in place, must be satisfied that the other entity's CDD meets the required standard, and retains legal responsibility for the adequacy of the CDD. Source: ss.38–40 AML/CTF Act 2006.
What is an annual AML/CTF compliance report?
Reporting entities must submit an Annual Compliance Report to AUSTRAC by 31 March each year covering the previous calendar year. The report covers your compliance activities, staff training, program reviews, and whether your program was followed during the year. Failure to lodge is a separate contravention. Source: s.47 AML/CTF Act 2006.
Does Tranche 2 apply to businesses outside Australia that service Australian clients?
The AML/CTF Act applies to persons who provide designated services in Australia or to Australian residents. An offshore firm providing services remotely to Australian clients in relation to Australian real estate or Australian company formations may be captured. AUSTRAC's guidance recommends that cross-border arrangements be reviewed against the specific designated services definition. Source: AML/CTF Act 2006, s.5.
Where can I find AUSTRAC's official Tranche 2 guidance?
AUSTRAC's official Tranche 2 guidance, sector-specific information, Program Starter Kits, and the online eligibility checker are available at austrac.gov.au/amlctf-reform. This is the primary authoritative source. AUSTRAC also provides direct guidance through its help desk for entities with specific questions about their obligations.
How Klyvon helps
How does Klyvon help with AUSTRAC Tranche 2 compliance?
Klyvon generates five personalised compliance documents — AML/CTF Program, Client Due Diligence Forms, Compliance Officer Letter, SMR Template and Filing Guide, and AUSTRAC Enrolment Guide — using your firm details and industry-specific questions. Every document cites Act sections throughout and is built on AUSTRAC’s official guidance for your sector. Documents are ready in under 60 seconds.
Klyvon generates your starting documents quickly and affordably. We recommend review by a qualified AML/CTF adviser before operational reliance. Our documents are a strong starting point — not a substitute for legal advice, and not the only step required to achieve full compliance.
Generate your AML/CTF documents in under 60 seconds
Personalised to your business. Built on AUSTRAC official guidance. All 5 documents included. 7-day free trial. Cancel before trial ends — no charge.
Sector-specific guides