Australia's Tranche 2 AML/CTF reforms: what they are and what they mean for our clients
From 1 July 2026, Australia's anti-money laundering and counter-terrorism financing (AML/CTF) regime extends to professional services firms for the first time. Known as the "Tranche 2" reforms, these changes bring accountants, lawyers, real estate professionals, and trust and company service providers under the regulation of AUSTRAC, Australia's financial intelligence agency. As an accounting and advisory practice providing designated services, Liston Newton Advisory becomes a "reporting entity" enrolled with and regulated by AUSTRAC under the new regime. This article explains what is changing, why, and what our clients can expect.
Why the law is changing
Australia's AML/CTF regime has applied to banks, casinos and other financial businesses since 2006. However, Australia has long been one of only a handful of countries that did not regulate the so-called "gatekeeper" professions — the lawyers, accountants and corporate service providers whose services can be misused to disguise the ownership of assets or move illicit funds. The Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024 closes that gap and brings Australia into line with the international standards set by the Financial Action Task Force (FATF). The reforms are expected to bring tens of thousands of additional Australian businesses under AUSTRAC regulation.
Importantly, the regime regulates services, not professions. A business is captured because of the specific "designated services" it provides, regardless of its industry label.
The designated services we provide
Liston Newton Advisory provides a number of services that are designated services under the new regime, including:
- Business structuring services
- Buying, selling or transferring a company or other legal entity
- Facilitating business equity and debt financing
- Nominee shareholder services
- Providing registered office or principal place of business address services
- Shelf company services
- Facilitating or performing roles in companies and other corporate or legal arrangements
Because we provide these services, we are a "reporting entity" under the AML/CTF Act from 1 July 2026.
What the reforms require of firms like ours
As a reporting entity, we are required to enrol with AUSTRAC, undertake an assessment of the money laundering and terrorism financing risks our services could be exposed to, and maintain an AML/CTF program — a documented set of policies, procedures and controls designed to identify, mitigate and manage those risks. We must appoint an AML/CTF compliance officer at management level, train our people, keep records, and report certain matters to AUSTRAC, including suspicious matters and cash transactions of $10,000 or more.
Central to the regime is customer due diligence. Before providing a designated service, we must establish who our client is and, where the client is a company, trust or other structure, identify the individuals who ultimately own or control it. We must also keep that knowledge up to date for as long as we continue to provide designated services.
What this means for our clients
For most clients, the practical effect is straightforward: we will be asking for more information than we have in the past, and we are required by law to obtain it before we can act.
Clients can expect to be asked to verify their identity with documents such as a passport or driver licence — including longstanding clients we know well, as the law does not distinguish between new and existing relationships. Clients with companies, trusts or other entities can expect questions about ownership and control, and in some circumstances we may need to ask about the purpose of a transaction or the source of funds involved. From time to time we will also ask clients to confirm that the information we hold remains current.
These requests are a legal requirement that applies to every firm providing these services in Australia. They do not reflect any judgement about an individual client, and all information collected is handled in accordance with our privacy policy and used only for the purposes required by law.
Our commitment
We support the objectives of the reforms. Strengthening Australia's defences against money laundering and terrorism financing protects the integrity of the businesses, structures and transactions our clients entrust to us. We have been preparing for commencement and are committed to meeting our obligations in a way that keeps the experience for our clients as smooth as possible.
If you have questions about how the Tranche 2 reforms may affect you or your business, please contact Peter Antonius, Group CEO on 03 9509 0366 or contact us.
This article is general information only and does not constitute legal or financial advice. Information is current as at June 2026. Further detail on the reforms is available from AUSTRAC at austrac.gov.au.
Frequently Asked Questions — AML/CTF Reforms and What They Mean for You
1. What are the Tranche 2 AML/CTF reforms?
From 1 July 2026, Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) laws extend to accounting and advisory practices, lawyers, real estate professionals and trust and company service providers. Because Liston Newton Advisory provides a number of “designated services” under the new regime — such as business structuring, assisting with the purchase or sale of entities, nominee shareholder services and registered address services — we are a “reporting entity” regulated by AUSTRAC, Australia’s financial intelligence agency, and must comply with new legal obligations.
2. What is customer due diligence (CDD)?
Customer due diligence is the process the law requires us to complete before we can provide a designated service. In practical terms, it means we must establish and verify who you are, understand who ultimately owns and controls any entities involved, and understand the nature and purpose of the services you are asking us to provide. CDD is not a one-off exercise — we are also required to keep this information up to date for as long as we continue to act for you.
3. What will you ask me for?
For individuals, we will ask you to verify your identity using reliable documents such as a passport or driver licence. For companies, trusts, partnerships and self-managed superannuation funds, we will also need information about the structure itself (such as constitutions, trust deeds or partnership agreements) and the identity of the individuals who ultimately own or control it. In some circumstances we may also need to ask about the purpose of a transaction or where the funds involved have come from.
4. What is a beneficial owner, and why do you need to identify them?
A beneficial owner is an individual who ultimately owns or controls an entity — generally a person who holds 25% or more of it, directly or indirectly, or who exercises effective control over it (for example, through the ability to appoint directors or make key decisions). The law requires us to look through companies and trusts to the real people behind them, because complex structures are one of the main ways criminals attempt to disguise the ownership of illicit funds. This applies to every client with an entity, regardless of how straightforward the structure is.
5. I’ve been a client for years — why do I need to provide identification now?
The law does not distinguish between new and longstanding clients. Every firm providing designated services in Australia must hold verified identity information for the clients it acts for, even where the relationship goes back decades. As registered tax agents, we have always verified client identity under the Tax Practitioners Board’s proof-of-identity requirements, so providing identification will be familiar to many clients — but the AML/CTF regime is a separate and broader obligation, so we may need to ask for information even where you have verified your identity with us before. Being asked is not a reflection of any concern about you — it is simply a legal requirement that applies to everyone.
6. What is enhanced due diligence (EDD)?
Enhanced due diligence is a deeper level of checking that the law requires in higher-risk situations. Where it applies, we must take additional steps beyond standard CDD. Depending on the circumstances, this can include obtaining more detailed identification information, asking about your source of funds (where the money for a particular transaction has come from) or source of wealth (how your overall wealth was accumulated), seeking senior management approval before proceeding, and monitoring the services we provide more closely.
7. When does enhanced due diligence apply?
The main triggers include situations we assess as carrying a higher money laundering or terrorism financing risk, clients or beneficial owners who are foreign politically exposed persons, transactions connected to countries identified as high-risk by the Financial Action Task Force, and transactions that are unusually large or complex or that have no apparent economic or lawful purpose. If EDD applies to you, it does not mean we suspect wrongdoing — many of the triggers, such as holding a foreign public office or transacting with certain countries, are entirely circumstantial.
8. What is a politically exposed person (PEP)?
A PEP is someone who holds, or has held, a prominent public position — such as a head of state, government minister, senior politician, judge, senior military officer or senior executive of a state-owned enterprise — along with their immediate family members and close associates. The law treats PEPs as warranting closer attention because public office can be misused for corruption. We are required to determine whether our clients and their beneficial owners are PEPs, and enhanced due diligence is mandatory for foreign PEPs.
9. Can you act for me before the checks are complete?
Generally, no. The law requires initial CDD to be completed before we provide a designated service. In limited circumstances verification can be finalised shortly afterwards, but as a rule we cannot commence — or in some cases continue — designated services where the required information has not been provided. Responding promptly to our requests is the best way to avoid delays to your work.
10. What happens if I don’t provide the information?
If we cannot complete the required due diligence, we are legally unable to provide the designated service, and in some cases may need to cease acting. We may also have other obligations under the Act in those circumstances. We will always work with you to make the process as straightforward as possible, but we cannot waive these requirements for any client.
11. Will I need to provide my information more than once?
Possibly. Ongoing CDD means we must keep your information current, so we will periodically ask you to confirm your details, and we may need updated information when your circumstances change — for example, a change in the ownership or control of your entities — or when you ask us to provide a new designated service. Where we hold current, verified information, we will rely on it rather than asking again unnecessarily.
12. Is my information kept private?
Yes. The information we collect is handled in accordance with our privacy policy and the Privacy Act, stored securely, and used only for the purposes required by law. We are required to retain CDD records for seven years. AML/CTF laws operate alongside, not instead of, our existing confidentiality obligations to you.
13. Does this change the cost or speed of your services?
The reforms apply to every firm in our profession, and some additional steps at the start of an engagement are unavoidable. We have designed our processes to keep any impact, including fees, to a minimum, and providing requested documents promptly will help us complete the checks quickly.
14. Where can I find more information?
AUSTRAC publishes information about the reforms at austrac.gov.au. If you have any questions about how the new requirements apply to you or your entities, please contact one of our team.
This document is general information only and does not constitute legal advice. Information is current as at June 2026.
