While some see the incoming AML/CTF reforms as a burden, we see them as an opportunity to provide a superior client experience, writes Rolf Howard.
Editor’s note: To learn more about the upcoming AML/CTF Tranche 2 reforms, join us at our upcoming AML Edge event, being hosted on 19 March in Sydney and 26 March in Melbourne! Check out the agenda and buy tickets here.
Australia is currently facing a seismic shift in its legal and financial landscape. For years, the nation has stood as one of the few advanced economies without comprehensive anti-money laundering and counter-terrorism financing (AML/CTF) laws covering “gatekeeper professions”. That is about to change.
Starting 1 July 2026, the Tranche 2 reforms will officially bring lawyers, conveyancers, accountants, and real estate agents under the strict oversight of AUSTRAC. With organised crime estimated to cost Australia $68.7 billion annually, these sectors are now recognised as high-risk vehicles for money laundering.
For many firms, the transition will be a “sledgehammer” to their current operations. At Owen Hodge Lawyers, we decided not to wait for the deadline to react; we chose to act.
The $200,000 risk of unpreparedness
The stakes of the Tranche 2 reforms cannot be overstated. Failure to comply could result in fines as high as $200,000 for small firms – a penalty significant enough to put many out of business. We have already seen the fallout in other jurisdictions; in New Zealand, similar legislation led to substantial fines and disciplinary reviews for firms that unknowingly processed illicit transactions because they failed to identify “red flags”.
With AUSTRAC’s scope expanding from 17,000 to nearly 100,000 entities, the regulator has no room for delay in enforcement. Enrollment begins as early as March 2026, and by late 2026, Australia will face an audit by the Financial Action Task Force (FATF).
A cultural and technological shift
Preparing for these reforms is not a “box-ticking” exercise; it is a fundamental cultural change. Our firm’s strategy focuses on three core pillars:
Solving the data security dilemma
One of the greatest risks of AML compliance is the accumulation of sensitive client data. Storing vast amounts of identity documentation makes law firms “honeypots” for hackers. High-profile breaches at major organisations have shown that even large entities struggle to keep this data safe.
Our approach flips this paradigm. By using encrypted digital vaults, clients retain control of their own documentation. They upload their ID once and share it with us as needed; we never actually “possess” the files in our internal databases. This removes the target from our back: if our firm were ever breached, a hacker would find no confidential client ID documents to steal.
Beyond compliance: A competitive edge
While some see these reforms as a burden, we see them as an opportunity to provide a superior client experience. High-net-worth clients, particularly those involved in frequent property transactions, value the efficiency of not having to prove their identity repeatedly.
We “hard launched” our new systems on 1 September 2025 – a full 10 months ahead of the legislative deadline. By proactively navigating these changes, we aren’t just avoiding penalties; we are safeguarding our clients’ privacy and building a more resilient, future-ready profession.
Rolf Howard is the managing partner of Owen Hodge Lawyers.
