AML/CTF Tranche 2 for Accountants: AUSTRAC Designated Services Compliance in Australia 2026

From 1 July 2026, the Australian accounting profession entered a new era of regulatory obligation. The expansion of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 — commonly known as the AML/CTF Tranche 2 reforms — brought accounting firms that provide certain "designated services" under the full oversight of AUSTRAC, Australia's financial intelligence and regulatory agency. For accounting practices that have not yet assessed their obligations, the time to act is now.

Understanding AML/CTF Tranche 2 and Its Impact on Accountants

The AML/CTF Tranche 2 reforms represent the most significant expansion of Australia's anti-money laundering framework in nearly two decades. The reforms extend the existing AML/CTF regime — which previously applied primarily to banks, financial institutions, and gambling operators — to a range of professional service providers, including accountants, lawyers, real estate agents, and trust and company service providers.

Critically, the reforms do not regulate the accounting profession as a whole. Rather, they regulate accounting firms based on the specific services they provide. An accounting firm becomes a "reporting entity" under the AML/CTF Act only if it provides one or more designated services as defined under Table 6 of the Act. Routine services such as standard tax return preparation, general financial advisory, and basic bookkeeping remain outside the scope of the regime — unless they are performed as part of a broader designated service.

Which Accounting Services Are Designated Services?

Understanding whether your firm's services trigger AML/CTF obligations is the essential first step. The following accounting activities are classified as designated services under the Tranche 2 reforms.

• Entity formation and restructuring — assisting in the planning, creation, or restructuring of companies, trusts, partnerships, or other legal arrangements on behalf of a client
• Asset and fund management — receiving, holding, controlling, or managing a client's money, securities, or other assets as part of a service
• Financing arrangements — organising or executing equity or debt financing arrangements for a body corporate or legal arrangement
• Nominee and office services — acting as a nominee shareholder or director, or providing a registered office or principal place of business for a client
• Shelf company sales — selling or transferring shelf companies to clients

If your firm provides any of these services, you are a reporting entity and must comply with the full suite of AML/CTF obligations. If you are uncertain whether a particular service is designated, AUSTRAC's guidance materials and the Act's definitions should be reviewed carefully — ideally with specialist legal or compliance advice.

Core Compliance Obligations for Reporting Entities

Accounting firms that are reporting entities under the AML/CTF Act must fulfil a comprehensive set of ongoing obligations. These are not one-off tasks — they represent a permanent compliance framework that must be embedded into the firm's operations.

Enrolment with AUSTRAC

Firms that commenced providing designated services from 1 July 2026 must enrol with AUSTRAC within 28 days of commencing those services. Firms that were already providing designated services before 1 July 2026 were required to enrol by 31 March 2026. Failure to enrol by the required deadline can result in daily accruing penalties of $18,780 per day.

AML/CTF Program

Every reporting entity must implement a documented, risk-based AML/CTF program tailored to the firm's specific risk profile. The program has two parts: Part A covers the firm's overall risk management framework, governance, and employee training; Part B covers the customer identification and verification procedures. The program must be reviewed and updated regularly to reflect changes in the firm's services, client base, and the broader risk environment.

AML/CTF Compliance Officer

Firms must appoint a designated AML/CTF compliance officer and notify AUSTRAC of this appointment. For firms that enrolled by 1 July 2026, the notification deadline was 29 July 2026. For firms enrolling after that date, notification must occur within 14 days of enrolment. The compliance officer is responsible for overseeing the firm's AML/CTF program and ensuring ongoing adherence to regulatory requirements.

Customer Due Diligence

Before providing a designated service, firms must verify the identity of clients and, where applicable, the beneficial owners of entities. This process — known as customer due diligence (CDD) — must be completed using reliable, independent source documents. Ongoing monitoring of client relationships is also required, with enhanced due diligence applying to higher-risk clients or transactions.

Suspicious Matter Reporting

If a firm suspects that a transaction or client activity is linked to money laundering, terrorism financing, or other relevant offences, it must submit a Suspicious Matter Report (SMR) to AUSTRAC as soon as practicable. Tipping off a client that an SMR has been filed is a criminal offence. Firms must also submit an Annual Compliance Report to AUSTRAC each year.

Record Keeping

All AML/CTF compliance documentation — including identity verification records, risk assessments, transaction monitoring records, and SMRs — must be retained for a minimum of seven years. These records must be available for inspection by AUSTRAC on request.

Penalties for Non-Compliance

The AML/CTF Act imposes significant penalties for non-compliance, and AUSTRAC has demonstrated a willingness to pursue enforcement action against regulated entities that fail to meet their obligations. Corporations can face civil penalties of up to $36.4 million per contravention, while individuals may face fines of up to $7.28 million.

Beyond financial penalties, AUSTRAC may issue infringement notices, mandate independent audits at the firm's expense, impose enforceable undertakings, or — in the most serious cases — seek criminal prosecution. The reputational damage associated with AUSTRAC enforcement action can be severe and long-lasting for professional services firms.

Australian Regulatory Context

The AML/CTF Tranche 2 reforms were enacted through the Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024, which received Royal Assent in November 2024. The reforms bring Australia into alignment with the Financial Action Task Force (FATF) recommendations, addressing longstanding concerns that Australia's AML/CTF framework had significant gaps compared to international standards.

AUSTRAC is the primary regulator for AML/CTF compliance in Australia. The agency provides extensive guidance materials, including sector-specific guidance for accounting firms, on its website at austrac.gov.au. Professional bodies including CPA Australia, Chartered Accountants ANZ, and the Institute of Public Accountants (IPA) have also published member guidance on Tranche 2 compliance.

It is important to note that AML/CTF compliance obligations exist alongside — and do not replace — existing professional obligations under the Tax Agent Services Act 2009, the Corporations Act 2001, and the ethical standards of professional accounting bodies. Firms must ensure their compliance frameworks address all applicable regulatory requirements simultaneously.

Practical Steps for Accounting Firms

For accounting firms that have not yet fully implemented their AML/CTF compliance framework, the following steps provide a practical roadmap for achieving compliance.

1. Conduct a services audit — identify all services your firm provides and determine which, if any, are designated services under Table 6 of the AML/CTF Act
2. Enrol with AUSTRAC — if you are a reporting entity and have not yet enrolled, do so immediately to avoid daily penalty accrual
3. Appoint a compliance officer — designate a senior staff member as AML/CTF compliance officer and notify AUSTRAC
4. Develop your AML/CTF program — document your risk management framework (Part A) and customer identification procedures (Part B)
5. Implement CDD procedures — establish processes for verifying client identity and beneficial ownership before providing designated services
6. Train your staff — ensure all relevant staff understand their AML/CTF obligations and know how to identify and report suspicious matters
7. Establish record-keeping systems — implement systems to retain all required documentation for the mandatory seven-year period

How MyMoney® Can Help

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Whether you need a compliance review, assistance developing your AML/CTF program, or ongoing support for your reporting obligations, MyMoney® makes it easy to find the right professional for your needs. Our marketplace connects you with experienced accountants who understand the Tranche 2 reforms and can help your firm achieve and maintain compliance.

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