The reforms are designed to deter, detect and disrupt money laundering and terrorism financing. Some of the changes modernise the legislation to reflect where money laundering happens, while others expand who needs to comply. Much of it is designed to bring Australia into line with accepted international standards. It will also give AUSTRAC, the Australian Transaction Reports and Analysis Centre, more powers to investigate and act.

But the part that has attracted the most attention is that from 1 July 2026, lawyers, along with accountants, trust and company service providers and real estate agencies, and other groups where there is a high risk of money laundering, will be required to comply. This has generated considerable conversation in the industry about how this will impact our profession and what it means for legal privilege, and how it will impact those operating in a corporate context.

Under the reform, corporate structures – particularly those offering services such as company formation, directorships, trust administration or asset holding – will need to:

• Implement AML/CTF programs that reflect the specific risks of their business.

• Appoint an AML/CTF compliance officer (AMLCO) responsible for updating policies as risks evolve.

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• Conduct risk-based customer due diligence, taking into account the type of service provided, the customer’s profile, jurisdictional factors and transaction specifics.

• Comply with record-keeping and reporting obligations to AUSTRAC.

AUSTRAC will have expanded powers to obtain information and issue civil penalties. The reforms introduce a more flexible approach to compliance, removing the need for regulatory pre-approval of AML/CTF programs, but this comes with a clear expectation that internal compliance will be proactive, robust and regularly reviewed.

What should businesses be doing now?

With the second tranche of reforms now legislated and commencement dates confirmed, businesses that fall within the scope of the new framework should begin reviewing their internal systems and preparing for compliance. This includes mapping out the services provided that may fall under the “designated services” category, conducting a risk assessment, and developing draft AML/CTF compliance policies.

Entities that fail to comply face a range of enforcement options, including civil penalty orders, enforceable undertakings, infringement notices, remedial directions and, in some cases, the appointment of an external auditor to review AML/CTF compliance.

This is not just a regulatory update – it’s a shift in compliance culture that aims to close long-identified gaps in Australia’s financial crime framework. Businesses that prepare early will not only avoid regulatory pain but will also demonstrate their commitment to responsible corporate conduct in an increasingly transparent business environment.

What about legal privilege?

AUSTRAC states that expanding the industries covered by AML/CTF to include lawyers does not impact legal professional privilege. If asked to provide information reasonably believed to be privileged, there is no compulsion to share it.

From 1 July 2026, lawyers will be required to:

• Enrol and register with AUSTRAC.

• Develop and maintain an AML/CTF program tailored to their business.

• Conduct initial and ongoing customer due diligence.

• Report certain transactions and suspicious activities.

• Make and keep records.

Most of requirements will be tied to the transfer of money in a range of circumstances, say, assisting clients to buy, sell or transfer real estate or legal entities or receiving, holding, controlling, or managing clients’ funds and/or property, but it will also cover things such as creating or restructuring a body corporate or legal arrangement.

Enforcement actions can include civil penalty orders, enforceable undertakings, infringement notices, remedial directions, and being required to appoint an external auditor to review your money laundering/terrorism financing risk management or AML/CTF compliance.

The passage of the bill marks the long-awaited introduction of the second tranche of reforms to Australia’s AML/CTF regime. It is a critical step towards addressing longstanding regulatory gaps and bringing Australia into alignment with international expectations set by the Financial Action Task Force (FATF). With the risk of FATF “grey-listing” looming, and the reputational and economic consequences that could follow, the reforms reflect an urgent move to strengthen Australia’s position in the global fight against financial crime.

Jessica Tsiakis is a partner at Holding Redlich.