Are you a reporting entity under the AML/CTF Act?

Overview of the AML/CTF Act and its purpose

The Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) is a pivotal piece of legislation in Australia, designed to combat money laundering and the financing of terrorism. The Act establishes a framework for the identification, mitigation, and management of money laundering and terrorism financing risks. It mandates certain businesses and professions to implement measures to detect and deter these illicit activities, thereby safeguarding the integrity of Australia's financial system. From 1 July 2026 the range of businesses and professions coming within the ambit of the AML/CTF has been expanded to Tranche 2 entities where they provide a designated service.

Designated services under the AML/CTF Act

Under the AML/CTF Act, "designated services" refers to specific financial and non-financial services that are susceptible to exploitation for money laundering or terrorism financing. These services traditionally include, banking, financial services, gambling services, and bullion dealing (Tranche 1 entities). Since the commencement of the AML/CTF Act, entities providing these services were required to comply with the obligations set out in the Act, such as customer due diligence, reporting suspicious matters, and maintaining records.

Tranche 2 entities

Tranche 2 entities, encompass non-financial businesses and professions, including legal practitioners, accountants, conveyancers, real estate professionals (real estate agents, buyers’ agents and property developers), trust and company service providers and dealers in precious metals and stones. These entities were initially excluded from the AML/CTF regime but will now come under the regime from 1 July 2026 to close regulatory gaps and enhance the overall effectiveness of the AML/CTF regime. By bringing Tranche 2 entities under the Act's purview, the amendments ensure that a broader range of services is subject to scrutiny and compliance obligations.

Examples of designated services

Designated services under the AML/CTF Act encompass a wide range of activities.

Tranche 1 entities examples include:

• accepting deposits or making loans as part of a business

• providing financial advice or dealing in securities

• operating a gambling service, such as a casino or online betting platform

• factoring a receivable, where the receivable is factored in the course of carrying on a factoring business.

Tranche 2 entities examples include:

• selling or transferring real estate in the course of carrying on a business selling real estate, where the sale or transfer is not brokered by an independent real estate agent

• brokering the sale, purchase or transfer of real estate on behalf of a buyer, seller, transferee or transferor in the course of carrying on a business

• providing legal or accounting services that involve managing client funds

• assisting a person in the planning or execution of a transaction, or otherwise acting for or on behalf of a person in a transaction, to sell, buy or otherwise transfer a body corporate or legal arrangement, where:

(a) the service is provided in the course of carrying on a business; and

(b) the sale, purchase or other transfer is not pursuant to, or resulting from, an order of a court or tribunal

• selling or transferring a shelf company, in the course of carrying on a business

• assisting a person, in the course of carrying on a business to plan or execute, or otherwise acting on behalf of a person in, the creation or restructuring of:

(a) a body corporate (other than a corporation under the Corporations (Aboriginal and Torres Strait Islander) Act 2006); or

(b) a legal arrangement

• acting as, or arranging for another person to act as, a nominee shareholder of a body corporate or legal arrangement, on behalf of a person (the nominator), in the course of carrying on a business

• providing a registered office address or principal place of business address of a body corporate or legal arrangement, in the course of carrying on a business.

These services are considered high-risk due to their potential misuse for money laundering or terrorism financing purposes.

Enrolment with AUSTRAC

The Australian Transaction Reports and Analysis Centre (AUSTRAC) is Australia’s specialist financial intelligence unit and the national regulator for the AML/CTF regime. If your business provides or will provide a designated service under the AML/CTF laws, you must enrol with AUSTRAC. Enrolment for Tranche 2 entities will open on 31 March 2026 and you must be enrolled by 29 July 2026 (ie within 28 days of providing a designated service to avoid penalties)[1] . Note that Tranche 2 obligations commence on 1 July 2026.

To enrol you will be providing AUSTRAC with information about your business including:

• its structure

• number of employees

• names of any beneficial owners

• one or more associations of which the applicant is a member

• domain names of your websites through which the applicant provides or will provide its designated services

• description of business or principal activities

• approximate annual turnover for most recent financial year

• details of the designated service provided or to be provided

• information about the directors (if applicant is a company)

• details of any ultimate holding company

• information about the person completing the application and declaration.

Reporting obligations

There are a number of reporting obligations for a reporting entity. These include the following:

1. Suspicious Matter Reports - SMRs

Section 41 of the AML/ATF Act imposes on an obligation to report on any matters that raise a suspicion on reasonable grounds. These will be lodged when you suspect something about the transaction that doesn’t stack up or raises a concern at the relevant time. The relevant time will be when you are first asked to provide or are willing to provide a designated service or at a later time when grounds for suspicion arise. Examples include:

• a person is not the person they claim to be

• an agent for a person is not the person they claim to be

• you suspect the information you have been provided may be relevant to an investigation, prosecution of a person for an evasion or attempted evasion of a taxation or any other law or offence

• you suspect the information may be of assistance in the enforcement of the Proceeds of Crime Act 2002 or a state or territory equivalent law

• you suspect the service may be relevant to investigation or prosecution of an offence for financing of terrorism or money laundering.

2. Reports of threshold transactions - TTRs

These reports must be lodged within 10 business days of receiving cash of at least AUD $10,000 (or the foreign currency equivalent).

For International Funds Transfer Instructions (IFTI) into or out of Australia this must be lodged within 10 business days after the day the instruction was sent or received by a person.

3. Compliance reports

This must be submitted each year summarising how you have met your AML/CTF obligations in the previous year. It is based on a calendar year report period (ie 1 January to 31 December) and the report must be submitted within 3 months after that (ie by 31 March).

Getting ready 

By 1 July 2026 you must have in place your AML/CTF Policy and Program. You should also  have provided training to your staff on the obligations imposed on the business.

Businesses should remain vigilant and proactive in their compliance efforts, staying informed of legislative changes and industry best practices. By doing so, they can contribute to the integrity of Australia's financial system and protect themselves from the risks associated with money laundering and terrorism financing.

For assistance with understanding your compliance obligations, reach out to Corporate & Commercial team at Bartier Perry.

Author: Rebecca Hegarty

 

* Rebecca Hegarty is also a member of our Fraud & Corruption group.

This publication is intended as a source of information only. No reader should act on any matter without first obtaining professional advice.