Hot off the Press: AUSTRAC Announces Regulatory Expectations for AML/CTF Compliance

Whether you are already under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) or about to be from 1 July 2026 as a Tranche 2 entity providing a designated service, one thing guidance is sought on is what will be the expectation of the regulator in monitoring and enforcing compliance?

AUSTRAC has now published its expectations, acknowledging that the timeframes for compliance are looming. This is particularly important as there will be many Tranche 2 entities (lawyers, real estate professionals, conveyancers, accountants and trust and company providers) who will be preparing for compliance with the AML/CTF Act from 1 July 2026. 

So, what does AUSTRAC want us to keep in mind?

The important thing we are asked to remember is that the purpose and focus of the AML/CTF Act is to reduce the harm that money laundering, terrorism and proliferation financing (ML/TF/PF) causes, as well as other serious financial crime. 

So little time, so much to do

AUSTRAC is aware that preparation for the AML/CTF reforms takes time. The starting point is identifying whether you will fall within the ambit of the AML/CTF Act because you are a Tranche 2 entity and will be providing a designated service (defined in section 6). As we head to the 1 July 2026 compliance date, what will AUSTRAC expect from us?

As AUSTRAC says, it “does not expect perfection on day one. However, we do expect you to maintain your focus on reducing your money laundering risks. The core principles of identifying, mitigating and managing those risks remains unchanged”.

This means as you create your policies, procedures and hone your processes, it should be focussed on the ultimate goal and not just be a ‘tick a compliance box’ task. An example might be having a policy or procedures but no training for your staff in terms of implementation, or asking questions of your clients to tick a box but not really asking to understand the risk. 

Expectations for Tranche 2 entities

As a Tranche 2 entity we were particularly interested in the expectations of AUSTRAC for the ‘newbies’. 

AUSTRAC expects that by 1 July 2026 you will:

• be enrolled as a reporting entity - the online enrolment system will be able to be accessed from 31 March 2026

• have an AML program, either because you have adopted the starter program provided by AUSTRAC or have developed your own. The starter program will be available in December 2025

• have an AML/CTF Compliance Officer

• have trained your staff on your AML/CTF program and processes

• be ready to ask clients questions and report suspicious activity. 

While ‘perfection’ is not expected from day 1 in being able to identify and control money laundering risks, what is expected is “honest efforts” to comply and report suspicious activity. Those who wilfully ignore the obligation to enrol or are suspected to be involved, assisting with or are wilfully blind to money laundering in their business are within AUSTRAC’s enforcement sight after 1 July 2026. This provides some comfort to entities that are doing their best to set up for compliance, particularly smaller entities.

AUSTRAC assures us that it is committed to setting up Tranche 2 entities for success which means it will be focussed on providing guidance and education.  

The full text of the AUSTRAC Statement can be read here.

Timeframes

We look forward to the following:

• Finalisation of core guidance from AUSTRAC, expected October 2025

• Targeted consultation on Tranche 2 sector-specific guidance in industry working groups by AUSTRAC, expected October to November 2025

• Finalisation of Tranche 2 sector-specific guidance from AUSTRAC, expected December 2025

Whether you are just starting out on your compliance journey or need some assistance with a review or finishing touches, our AML/CTF Compliance team at Bartier Perry are ready to support you. Please don’t hesitate to get in touch to discuss ways we can help. 

Author: Rebecca Hegarty