AML Tranche 2 for law firms and conveyancers: what changed on 1 July 2026 and what your practice must do

What Tranche 2 is

Australia regulated banks, remitters and casinos for money laundering from 2006 (Tranche 1) but left out the professions that structure and settle transactions. The Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024 closed that gap: from 1 July 2026 lawyers, conveyancers, accountants, real estate agents, trust and company service providers and dealers in precious metals are reporting entities when they provide a designated service. The legal profession's concern in the consultation was privilege; the Act as passed preserves it.

Which legal and conveyancing services are designated

One designated matter, taken on in the course of practice, is enough. Volume affects the length of your program, not whether you need one.

• Assisting a client to plan or carry out the purchase, sale or transfer of real estate: conveyancing and property settlements.
• Assisting with the sale, purchase or transfer of a business, a body corporate or a legal arrangement.
• Receiving, holding, controlling or managing a client's money, accounts, securities or other property as part of helping them plan or carry out a transaction, typically through the trust account.
• Assisting with equity or debt financing of an entity, or organising contributions to create or manage one.
• Creating, restructuring, operating or managing a company, trust, partnership or similar arrangement.
• Acting as, or arranging for someone to act as, a director, secretary, partner, trustee, nominee shareholder or registered office; selling or transferring a shelf company.

Which are not

A practice that does only these things is not a reporting entity. Keep a dated file note of the analysis. Most general practices provide at least one designated service, usually conveyancing or company work.

• Litigation, dispute resolution and court work.
• Legal advice that does not lead to the firm acting in a transaction or managing funds for one.
• Wills and estate planning, family law, criminal law, employment law.
• Trust money held only for payments incidental to non-designated work (litigation settlement funds, payments to courts, the ATO or insurers).
• Receiving your own fees.

Legal professional privilege

Privileged communications stay privileged. A suspicious matter report does not require you to disclose them, AUSTRAC cannot compel them, and the Act sets out a process for asserting and resolving privilege claims. The fact of the retainer, the client's identity, the transaction and the movement of money are generally not privileged, and a suspicion formed from those facts must be reported. Where a report involves privileged information the deadline is 5 business days instead of 3, with AUSTRAC's privilege form for the information withheld. Privilege does not remove the duty to enrol, adopt a program or verify clients.

The dates that matter

• 29 November 2024: Amendment Act passed.
• 31 March 2025: reformed tipping-off offence commenced.
• 31 March 2026: enrolment opened for Tranche 2; new AML/CTF Rules 2025 commenced for existing entities.
• 1 July 2026: obligations commenced. Firms already providing a designated service had until 29 July 2026 to enrol.
• 30 September 2027: first annual compliance report (for 1 July 2026 to 30 June 2027).
• 30 June 2029 to 31 December 2030: first independent evaluation, by the last two digits of the AUSTRAC account number.

The obligations, in practice terms

1. Enrol with AUSTRAC and keep the details current (14 days for changes).
2. Adopt an AML/CTF program: risk assessment plus policies, approved by a partner or principal, reviewed yearly in practice and independently evaluated every three years.
3. Appoint a compliance officer at management level.
4. Verify every client on a designated matter before the service starts: identity (VOI counts as the verification step), beneficial owners, purpose, risk rating; delayed verification only where the Rules allow, including for the other party in a property transaction.
5. Monitor and review clients by risk (commonly 24, 12 and 6 months for low, medium and high).
6. Report: suspicious matters within 3 business days (24 hours for terrorism financing, 5 business days with a privilege claim), cash of AU$10,000 or more within 10, the annual compliance report by 30 September.
7. Keep records for seven years after the matter or relationship ends.
8. Train staff and screen the people in roles that touch designated matters and trust money.

Conveyancers

Licensed conveyancers and settlement agents are reporting entities for every transfer they act in. The ARNECC verification-of-identity check you already do becomes the verification step of AML customer due diligence; the AML file adds beneficial owners, purpose, a risk rating, a review date and, for higher risk, source of funds. AUSTRAC has a separate conveyancing starter kit, and our VOI versus AML guide shows how to run both in one workflow.

Pre-commencement clients

Clients you already had a business relationship with on 1 July 2026 are pre-commencement customers. You may keep acting without initial due diligence until a trigger: a suspicious matter report obligation, a significant change in the matter, or doubts about who they are. In practice most firms verify every client at the next designated matter, because conveyancing and transactional files are short-lived.

How AUSTRAC said it would supervise new entities

AUSTRAC's regulatory expectations for 2025–26 commit it to education, sector starter kits and tailored guidance for Tranche 2, with enforcement reserved for businesses that wilfully ignore enrolment or are complicit in, or wilfully blind to, money laundering. A firm that enrolled, adopted a program and verifies its clients will be treated very differently from one that did nothing.

The AUSTRAC starter kits and PracticeAML

AUSTRAC publishes free program starter kits for the legal profession and for conveyancers: a getting-started guide, a document library and worked examples of dealing with clients. If your practice fits their profile (small, mostly Australian individual clients, little high-risk work), read them first. PracticeAML covers the same ground in software: a questionnaire generates and versions your program, clients are recorded with the document sighted and a risk rating, matter deadlines and privilege notes are kept, reports start the legal clock, training is logged and every action lands in an audit trail. Many firms use both: the kit to check completeness, the software to run the program day to day.