AML/CTF Tranche 2 in Australia 2026: What Tax Agents Must Know About AUSTRAC Obligations

From 1 July 2026, Australia's anti-money laundering and counter-terrorism financing (AML/CTF) framework expanded dramatically to capture a new class of professionals — including registered tax agents, accountants, lawyers, and conveyancers. Known as the "Tranche 2" reforms, these changes under the Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024 represent the most significant expansion of Australia's financial crime compliance regime in nearly two decades.

If you engage a tax agent for business structuring, trust management, or financial transactions, understanding these new obligations is essential. Equally, if you are a tax professional, your compliance obligations have fundamentally changed — and the penalties for non-compliance are severe.

Understanding the AML/CTF Tranche 2 Reforms

Australia's AML/CTF framework has long applied to banks, financial institutions, and remittance dealers. The Tranche 2 reforms extend these obligations to "gatekeeper" professions — those whose services are frequently exploited to disguise beneficial ownership, facilitate tax evasion, or move illicit funds across borders.

The reforms align Australia with international standards set by the Financial Action Task Force (FATF), which had long identified Australia as non-compliant for failing to regulate professional services providers. The FATF's mutual evaluation process placed significant pressure on the Australian Government to act, and the resulting legislation passed in 2024 with a commencement date of 1 July 2026.

Tax agents who provide "designated services" with a nexus to Australia are now classified as "reporting entities" under the AML/CTF Act 2006. This classification triggers a comprehensive set of compliance obligations that go well beyond standard tax practice requirements.

Which Tax Agent Services Are Now Designated?

Not every service a tax agent provides falls within the AML/CTF regime. The legislation targets specific high-risk activities where tax professionals act as intermediaries for financial transactions or legal arrangements. Understanding which services are "designated" is the first step in determining your obligations.

• Company and trust creation or restructuring — Assisting clients to establish, restructure, or manage companies, trusts, or other legal arrangements on behalf of a client
• Registered office and principal place of business services — Providing a registered office address or principal place of business address for a client entity
• Equity and debt financing assistance — Helping clients arrange equity or debt financing, including capital raises and loan structuring
• Client money and asset management — Managing client money, property, securities, or digital assets on their behalf
• Real estate transactions — Assisting clients in buying, selling, or transferring real estate
• Nominee director and shareholder services — Acting as, or arranging for, nominee directors, shareholders, or trustees

Critically, standard tax return preparation, BAS lodgement, and general tax advice that do not involve these specific activities are not designated services. However, many tax agents provide a mix of services, and even a single designated service triggers full reporting entity obligations.

Key Compliance Obligations for Tax Agents

Once classified as a reporting entity, a tax agent must implement a comprehensive AML/CTF compliance framework. The obligations are substantial and require significant investment in systems, training, and governance.

AUSTRAC Enrolment

The enrolment window for newly regulated entities opened on 31 March 2026, with a deadline of 29 July 2026. Tax agents who provide designated services and have not yet enrolled with AUSTRAC are already in breach of their obligations. Enrolment is completed through the AUSTRAC Online portal and requires detailed information about the business, its ownership structure, and the designated services it provides.

AML/CTF Program

Every reporting entity must develop and maintain a written AML/CTF program. This document must include a risk assessment identifying the money laundering and terrorism financing risks specific to the firm's client base, services, and delivery channels. It must also document the policies, procedures, and controls the firm uses to mitigate those risks.

The program must be reviewed regularly and independently evaluated at least every three years. For smaller tax practices, this may require engaging an external compliance specialist to conduct the evaluation.

Customer Due Diligence (CDD)

Before providing a designated service, tax agents must verify the identity of their clients and any beneficial owners. Standard CDD requires collecting and verifying government-issued identification documents. Enhanced due diligence (EDD) is required for higher-risk scenarios, including politically exposed persons (PEPs), clients from high-risk jurisdictions, and complex ownership structures.

Ongoing CDD is also required — tax agents must monitor client relationships and transactions for unusual or suspicious activity throughout the engagement, not just at onboarding.

Suspicious Matter Reporting

Tax agents must file Suspicious Matter Reports (SMRs) with AUSTRAC when they form a suspicion that a transaction or activity may be related to money laundering, terrorism financing, tax evasion, or other serious crimes. There is no monetary threshold for SMRs — the obligation is triggered by suspicion alone, regardless of the transaction amount.

Threshold Transaction Reports (TTRs) must also be filed for cash transactions of A$10,000 or more. Tax agents who handle client funds must have systems in place to detect and report these transactions promptly.

Record Keeping

All customer due diligence records, transaction records, and AML/CTF program documentation must be retained for a minimum of seven years. This is a significant record-keeping obligation that goes beyond the standard five-year retention period required under tax law.

Staff Training

Tax agents must provide regular AML/CTF training to all staff who are involved in providing designated services. Training must cover how to identify suspicious activity, the firm's reporting obligations, and the consequences of non-compliance. Training records must be maintained and made available to AUSTRAC on request.

Common Mistakes and Red Flags

The transition to Tranche 2 compliance has been challenging for many tax practices, and several common mistakes have already emerged in the early months of the regime.

• Assuming standard tax work is exempt — Many tax agents incorrectly assume that because they primarily prepare tax returns, they are not affected. If the firm provides any designated service — even occasionally — full reporting entity obligations apply.
• Delayed AUSTRAC enrolment — The 29 July 2026 enrolment deadline has passed. Tax agents who have not yet enrolled are in breach and should enrol immediately and seek legal advice about their exposure.
• Inadequate beneficial ownership verification — Verifying the identity of a company director is not sufficient. Tax agents must identify and verify all beneficial owners — individuals who ultimately own or control 25% or more of the client entity.
• Treating the AML/CTF program as a one-off exercise — The program must be a living document, reviewed and updated as the firm's risk profile changes. A program written in 2026 and never revisited will not satisfy AUSTRAC's requirements.
• Failing to train all relevant staff — AML/CTF training obligations extend to all staff involved in designated services, not just senior practitioners. Administrative staff who handle client onboarding or funds must also be trained.

Australian Regulatory Context

The AML/CTF Tranche 2 reforms are administered by AUSTRAC (the Australian Transaction Reports and Analysis Centre), Australia's financial intelligence agency and AML/CTF regulator. AUSTRAC has broad enforcement powers, including the ability to issue infringement notices, accept enforceable undertakings, and seek civil penalty orders through the Federal Court.

Civil penalties for corporations can reach up to A$31.3 million per contravention — a figure that reflects the seriousness with which the Australian Government views financial crime compliance. While AUSTRAC has indicated an "education-first" posture for small businesses making administrative mistakes in the early stages of the regime, the regulator has made clear that serious or systemic failures will attract enforcement action.

The Tax Practitioners Board (TPB), which regulates registered tax agents under the Tax Agent Services Act 2009 (TASA), has also signalled that AML/CTF compliance will be considered as part of its assessment of whether a tax agent meets the "fit and proper" requirements for registration. A failure to comply with AUSTRAC obligations could therefore jeopardise a tax agent's registration.

The Australian Institute of Company Directors (AICD), CPA Australia, Chartered Accountants ANZ, and the Institute of Public Accountants (IPA) have all published guidance to assist their members in understanding and implementing the new obligations. Tax agents should consult their professional body's resources as a starting point.

Questions to Ask When Choosing a Tax Agent

For businesses and individuals who engage tax agents for services that fall within the Tranche 2 regime, it is important to understand how your tax agent is managing their new obligations. The following questions will help you assess whether your tax agent is compliant.

• Are you enrolled with AUSTRAC as a reporting entity? — If your tax agent provides designated services, they must be enrolled. Ask for confirmation.
• Do you have a written AML/CTF program? — A compliant tax agent should be able to confirm that they have a documented program in place.
• What customer due diligence will you conduct on my business? — Expect your tax agent to ask for identity verification documents for you and any beneficial owners of your business.
• How do you handle suspicious matter reporting? — A compliant tax agent should have clear procedures for identifying and reporting suspicious activity, including an understanding of their obligation to report without tipping off the client.
• Have your staff received AML/CTF training? — Ask whether all relevant staff have been trained and when training was last conducted.
• How do you keep your AML/CTF program up to date? — Look for evidence of regular review and independent evaluation.

How MyMoney® Can Help

Navigating the AML/CTF Tranche 2 reforms requires a tax agent who is not only technically proficient in tax law but also fully compliant with Australia's new financial crime framework. The stakes are high — for both the tax agent and their clients.

MyMoney® connects Australian businesses and individuals with registered tax agents who understand the full scope of their obligations under the new regime. Whether you need help with trust structuring, business transactions, or ongoing tax compliance, our marketplace makes it easy to find a qualified professional who meets the highest standards.

Post a Brief to describe your tax and compliance needs and receive proposals from registered tax agents in your area. Or Browse Tax Agents to explore profiles, qualifications, and client reviews. Finding the right tax agent has never been more important — or more straightforward.