Tranche 2 deadline: 1 July 2026—40 days remaining
AML/CTF Compliance · Lawyers & Law Firms
AML/CTF Compliance for Australian Law Firms — AUSTRAC Tranche 2
From 1 July 2026, Australian law firms providing designated legal services become reporting entities under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) as amended by the AML/CTF Amendment Act 2024. Tranche 2 is service-based, not entity-based — a sole practitioner doing property conveyancing is captured; a litigation-only firm may not be. Enrolment with AUSTRAC must be completed by 29 July 2026.
Built on AUSTRAC official guidance · AI-generated · Firm-specific · No legal knowledge required · Ready in 60 seconds
Scope questions
Is your law firm a reporting entity?
Tranche 2 captures firms based on the services they provide, not the type of entity they are. A sole practitioner conveyancer is a reporting entity. A national litigation firm with no designated services is not. Check against the designated services list below.
Source: AUSTRAC — Legal profession businesses ↗; AML/CTF Act 2006, s.6(5B), Table 6.
In scope — designated services
- ●Acting on a real property transaction
- ●Managing or controlling client money or assets
- ●Forming companies or trusts for clients
- ●Acting as or arranging nominee directors/shareholders
- ●Buying or selling a business entity or business assets
- ●Providing registered office or company secretarial services
Generally not in scope
- ○General litigation and dispute resolution
- ○Criminal defence
- ○Family law proceedings
- ○Drafting wills and powers of attorney
- ○Pure legal advice — no fund handling or transaction execution
- ○Barristers providing advocacy services only
Not legal advice — confirm your specific services at austrac.gov.au ↗.
Common mistakes
What law firms get wrong about AUSTRAC Tranche 2
Assuming the whole firm is in scope — or out of scope
Tranche 2 is service-based, not entity-based. A sole practitioner who handles one property settlement per year is a reporting entity. A large firm that does only litigation is not. Scope is determined service-by-service.
Treating the AUSTRAC Starter Kit as a finished product
The AUSTRAC Legal Profession Starter Kit is a template. It must be customised to your firm's specific services, clients, and risk profile. Filing it unchanged does not satisfy your program obligation under ss.81–85.
Not understanding the tipping-off prohibition after filing an SMR
Once you file an SMR, you cannot tell the client — or anyone else — that you have done so. The tipping-off prohibition under s.123 is a criminal offence. Many firms continue to act for a client after filing and inadvertently breach this.
Legal professional privilege note
Privilege is protected — firms are not required to disclose privileged communications in an SMR (s.247 AML/CTF Act 2006). However, underlying transaction facts — such as the movement of client funds, the mechanics of a property settlement, or the formation of a company — are generally not privileged. The obligation to report suspicious transaction facts coexists with the protection of privileged legal advice.
Your obligations
What must law firms do by 1 July 2026?
Six steps every in-scope law firm must complete. Klyvon generates all required documents automatically.
Confirm your designated services
Review Table 6 of s.6(5B) of the AML/CTF Act 2006. It is service-based, not entity-based. A sole practitioner doing property conveyancing is captured. A litigation-only firm may not be.
AML/CTF Act 2006, s.6(5B), Table 6
Enrol with AUSTRAC by 29 July 2026
Register at online.austrac.gov.au. Enrolment opened 31 March 2026. You need your ABN, firm details, and designated services list.
AML/CTF Act 2006, s.76
Appoint and notify your compliance officer by 30 May 2026
Name a compliance officer in writing and notify AUSTRAC. A principal or senior employed solicitor is appropriate — no specialist qualification required.
AML/CTF Act 2006, s.36
Build your AML/CTF Program (Part A + Part B)
Customise to your firm's services and clients. The AUSTRAC Starter Kit must be tailored — an unmodified Starter Kit does not satisfy your program obligation.
AML/CTF Act 2006, ss.81–85
Train all staff before 1 July 2026
All principals, employed solicitors, and support staff involved in designated services must complete AML/CTF awareness training. Annual refreshers required thereafter.
AML/CTF Rules 2007, Part 12
Go live — apply CDD before every designated service
From 1 July 2026, verify client identity before providing any designated service. File SMRs within 3 days of suspicion (24 hours for terrorism financing). Keep all records 7 years.
AML/CTF Act 2006, ss.32–35, 41
What you get
What does Klyvon's AI generate for your law firm?
Every document is generated for your specific firm — your name, your compliance officer, your designated services. Not the AUSTRAC Starter Kit. Every document is generated by AI trained on AUSTRAC's official guidance for your sector — then reviewed and owned by you.
AML/CTF Program (Part A + Part B)
Personalised · AI-generatedYour firm-specific compliance program citing the AML/CTF Act 2006 throughout. Covers legal professional privilege, tipping-off, SMR obligations, property transaction CDD, trust account controls, and your ML/TF risk assessment.
CDD Templates
Personalised · AI-generatedClient due diligence procedures for individual clients, companies, trusts, and beneficial owners — with enhanced CDD triggers for PEPs, high-value transactions, and complex ownership structures.
Staff Training Quiz + Certificate
Personalised · AI-generatedScenario-based training covering AML/CTF fundamentals, red flags for legal practices, tipping-off obligations, and how to file an SMR. Generates a dated certificate per staff member.
Compliance Officer Letter
Personalised · AI-generatedFormal appointment letter satisfying the written appointment requirement under s.36 AML/CTF Act 2006. Names your designated Compliance Officer and their responsibilities.
AI Suspicious Matter Report Assistant
Personalised · AI-generatedWhen suspicion arises, you have 3 business days to file with AUSTRAC. Klyvon's AI generates a formal 6-section SMR draft from the transaction details you enter — legal-sector red flags, tipping-off guidance, privilege considerations, and your firm's AUSTRAC ID pre-populated. You review and submit.
AI-generated documents are a starting point — reviewed and owned by you. All decisions remain with your firm.
Pricing
How much does AML/CTF compliance cost for a law firm?
The Australian government estimates manual compliance preparation costs $23,250 per business using consultants and lawyers. Klyvon generates your complete compliance documents from $129/month + GST — documents ready in under 60 seconds.
Klyvon Compliance Pro — Lawyers & Law Firms
$129/month
- ✓ AML/CTF Program (Part A + Part B)
- ✓ CDD Templates
- ✓ Staff Training Quiz + Certificate
- ✓ Compliance Officer Letter
- ✓ SMR Template + AUSTRAC Enrolment Guide
Cancel before trial ends — no charge · Documents ready in 60 seconds
Common questions
Common questions from law firms about AUSTRAC Tranche 2
Does my law firm need to enrol with AUSTRAC?
Yes, if your firm provides any designated legal services under Table 6 of s.6(5B) of the AML/CTF Act 2006 as amended. Designated services include: acting in real property transactions, managing or controlling 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 or business assets. Enrolment opens 31 March 2026 and must be completed by 29 July 2026. Source: AML/CTF Act 2006, s.76.
What are the designated services for lawyers under Tranche 2?
Under Table 6 of s.6(5B) of the AML/CTF Act 2006, designated legal services are: (1) acting on behalf of a client in a real property transaction; (2) managing or controlling client money, securities, or other assets; (3) forming a company, trust, or other legal arrangement for a client; (4) acting as or arranging for a person to act as a nominee director or shareholder; (5) providing a registered office, business address, or accommodation for a company or trust; and (6) acting on behalf of a client in the purchase or sale of a business entity or business assets. Source: AML/CTF Act 2006, s.6(5B).
Does legal professional privilege protect lawyers from SMR obligations?
Partially. The AML/CTF Act 2006 includes 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. Firms should seek guidance from their relevant law society on managing the tension between privilege and reporting obligations. Source: AML/CTF Act 2006, s.247.
What is tipping-off and how does it affect law firms?
Once a Suspicious Matter Report is filed with AUSTRAC, the tipping-off prohibition under s.123 of the AML/CTF Act 2006 applies. A reporting entity must not disclose to any person — including the client — that an SMR has been filed or that AUSTRAC is investigating. Breach of the tipping-off prohibition is a criminal offence. This creates practical complexity for law firms that continue to act for a client after filing an SMR. Firms must carefully manage communications to avoid inadvertently breaching s.123. Source: AML/CTF Act 2006, s.123.
Do I need a separate AML/CTF program for conveyancing services?
Yes, if your firm provides both general legal services and conveyancing services, AUSTRAC recommends (and its Starter Kit contemplates) that your AML/CTF Program address each designated service separately in its risk assessment. Mixed-practice firms — those providing both Legal Profession services and Conveyancing services — must ensure both service categories are captured in their Part A risk assessment and their Part B CDD procedures. Source: AUSTRAC Legal Profession Starter Kit 2026.
What is an AML/CTF compliance officer and who can be appointed?
An AML/CTF Compliance Officer is the individual named in your AML/CTF Program who is responsible for managing the firm's AML/CTF obligations, overseeing staff training, and making regulatory notifications. There is no requirement for the Compliance Officer to be a qualified AML specialist — in most law firms, a principal or senior employed solicitor will be appointed. The appointment must be in writing and documented in your AML/CTF Program. Source: AML/CTF Act 2006, s.36.
Can I use the AUSTRAC Starter Kit as my AML/CTF program?
No. The AUSTRAC Starter Kit for Legal Profession Businesses is a template designed to help firms understand their obligations — it is not a ready-to-use AML/CTF Program. It must be customised to your firm's specific services, client types, risk profile, and compliance controls before it constitutes a compliant AML/CTF Program under ss.81–85 of the AML/CTF Act 2006. Submitting the Starter Kit unchanged to AUSTRAC would not satisfy your program obligations. Source: AUSTRAC Legal Profession Starter Kit guidance 2026.
What are the penalties for law firms that don't comply with AUSTRAC?
Under Part 15 of the AML/CTF Act 2006 (Cth), civil penalties for body corporates can reach $33,000,000 per contravention and $6,600,000 for individuals. Criminal penalties apply for operating without enrolment and for serious or wilful non-compliance. AUSTRAC publishes all enforcement actions publicly, creating reputational risk beyond the financial penalty. Law firms also face potential consequences under state Law Society professional conduct frameworks if found to be non-compliant. Source: AML/CTF Act 2006, Part 15.
When is the AUSTRAC enrolment deadline for law firms?
Law firms providing designated services must enrol with AUSTRAC by 29 July 2026. Enrolment opened 31 March 2026 at online.austrac.gov.au. A compliance officer notification must also be submitted by 30 May 2026. Operating designated services without enrolment is a contravention of s.76 of the AML/CTF Act 2006 — it is a strict liability offence with civil penalties accruing daily. Source: AML/CTF Act 2006, s.76.
What does customer due diligence look like for a legal practice?
Before providing a designated service, a law firm must: (1) verify the identity of the client — full name, date of birth, and residential address for individuals; (2) for companies, verify the entity's identity (ASIC extract) and identify the beneficial owners; (3) for trusts, verify the trust's identity and the identity of beneficiaries and controlling parties. Enhanced CDD is required for high-risk clients including politically exposed persons (PEPs) and clients from high-risk jurisdictions. Source: AML/CTF Act 2006, ss.32–35; AML/CTF Rules 2007, Parts 3–4.
Does Tranche 2 apply to barristers?
Barristers typically do not directly provide designated legal services — they are generally instructed by solicitors and do not manage client funds, execute property transactions, or form companies. However, barristers who are self-employed and directly accept client money or who provide company formation services may be caught. Most barristers providing only litigation or advocacy services should not be reporting entities, but each barrister should confirm their specific services against the designated service table. Source: AML/CTF Act 2006, s.6(5B), Table 6.
How long does it take to build a compliant AML/CTF program?
Building a compliant AML/CTF program from scratch using consultants typically takes 4–8 weeks and costs $10,000–$50,000. Using Klyvon, law firms can generate a customised AML/CTF Program document (Part A and Part B), CDD templates, a staff training quiz and certificate, an SMR template, and a compliance officer letter in under 60 seconds. Review and final sign-off by a principal typically takes 1–2 hours. Source: AUSTRAC AML/CTF compliance guidance 2026; Klyvon platform.
Can Klyvon help me write a Suspicious Matter Report?
Yes. Klyvon Pro includes an AI Suspicious Matter Report assistant. Enter the transaction date, transaction details, and the suspicious elements you observed. Klyvon's AI generates a formal, AUSTRAC-formatted SMR draft covering all six required sections — reporter obligations under s.41 of the AML/CTF Act 2006, matter details, grounds for suspicion, suspicious indicators, recommended action, and AUSTRAC submission notes. The draft is reviewed by you and submitted directly via AUSTRAC Online. Pro users receive 25 SMR drafts per month.
Build your law firm’s AML/CTF program
The 29 July 2026 enrolment deadline is 40 days away.