Anti-Money Laundering and Counter-Terrorism Financing 2006 Act: What you need to know!

31 March 2026: The changes for reporting entities (except threshold transactions and suspicious matter reporting) continue until 2029 with registration for the professional services sector that are regulated sectors known as Tranche 2 entities.

1 July 2026: All Tranche 2 entities must meet AML/CTF obligations.

No, only those that are Tranche 2 entities, who provide “designated services” that are high-risk for money laundering or terrorism financing.  It is not dependent on the business’ revenue or size.

From 1 July 2026 Tranche 2 entities which include real estate, accounting, legal, trust and company services and precious metals and stones dealers will need to comply.

The obligations apply where the regulated business is involved in ‘assisting’ or ‘otherwise acting on behalf of‘ another person in relation to a relevant transaction.  

AUSTRAC clarifies what ‘assisting’ means, as that triggers the AML/CTF obligations for Tranche 2, as follows:

The key issue therefore is not so much giving advice but being a part of and assisting a client in a transaction where there is a transfer of value (money).

The Act excludes ancillary or advisory roles that do not directly advance a transaction.

Brokering, planning, or executing the sale, purchase, or transfer of real estate, preparing contracts, conducting title searches or holding funds in trust, even if the transaction does not ultimately proceed, would be considered assisting.

General advice (such as discussing the pros and cons of property ownership before a client decides to buy), or a simple referral to a third party, or transactions involving short-term leases or court-ordered transfers are not designated services.

For clarity a conveyancer preparing a contract for the sale of real estate after the buyer and seller agree on a price is assisting, whereas a solicitor advising on the legal effect of contract terms, without taking steps to execute the transfer is not.

It can therefore be difficult to draw the line between ‘assisting’ and simply ‘advising’ but erring on the side of caution you might decide that you are regulated and therefore put in place the necessary protections under the AML/CTF obligations.

AUSTRAC indicates when the ‘incidental service exemption’ in section 63A of the AML/CTF Act will apply and clarify that a ‘transfer of value’ that is reasonably incidental to another service will not be regulated, where the other service is not a designated service.

This exemption does not apply to financial institutions or if it involves an international value transfer service, gambling service providers, currency exchanges and virtual asset service providers.

The examples given by AUSTRAC suggest AUSTRAC may adopt a broad interpretation of section 63A, therefore reducing compliance for low-risk activities such as:

• Where a stockbroker sells shares on behalf of a client and transfers the funds to the client’sbank account. As the ‘transfer of value’ is incidental to the stockbroking services (even though stockbroking services are likely to be a designated service) this likely falls under the exemption.

• The sale of gift cards which can only be used with certain retailers, which then transfer the value to the retailer when the gift card is presented, fall under the exemption as the ‘transfer of value’ is incidental to the retail services.

• Online marketplaces for sale and purchase of goods and services via a financial institution or remitter to the retailers of those services are considered incidental to retail services.

AUSTRAC does make it clear that if the service provided is a ‘specialised value transfer service’, the value transfer service is not reasonably incidental and will be regulated.

AUSTRAC’s Guide clarifies it is an outcome-focused, risk-based approach requiring every business to assess the risks to money laundering, terrorism financing and financing risks in their ‘transfer of value’ transaction.

Failing to comply with the AML/CTF obligations can expose a business to huge civil fines (up to $31.3 million for corporations, $6.26 million for individuals) and criminal charges (jail time up to 20 years for serious money laundering offences).

It can also involve orders to disqualify a person from acting as a director, daily penalties, and significant reputational damage.

Penalties vary depending on the severity of the breach like the Westpac AUD$1.3 billion fine for breach and the CBA fine of AUD$700 million by the Federal Court for AML/CTF breaches.

The fines are calculated using penalty units up to 100,000 for a corporation and 20,000 for an individual with a penalty unit being $300 per unit.

AUSTRAC can also seek enforceable undertakings by a business to take certain actions to rectify non-compliance.

Sanicki Lawyers Corporate Group

Robert Toth I Special Counsel I Accredited Commercial Law Specialist

robert@sanickilawyers.com.au  Mobile + 61 412 673 757