Tranche 2 for Professional Services: Summary Highlights
From 1 July 2026, AML/CTF obligations will apply to certain services typically provided by lawyers, accountants, real estate professionals, conveyancers, dealers in precious metals and stones, and trust and company service providers.
All in scope firms must enrol with AUSTRAC and implement a documented AML/CTF program based on a money laundering, terrorism financing and proliferation financing risk assessment.
Customer due diligence sits at the centre of Tranche 2 for professional services, including beneficial ownership checks, risk ratings and enhanced due diligence for higher risk clients and matters.
AUSTRAC has published reform guidance and a Risks and indicators of suspicious activity hub covering accountants, legal professionals, real estate and dealers in precious metals and stones, which professional firms are expected to use when building their risk assessments.
Common challenges include mapping complex service lines to “designated services”, fragmented systems, cross border structures, and balancing AML with client expectations and privilege.
Tranche 2 consultants help professional firms translate AUSTRAC’s guidance into practical procedures, templates and controls that protect the firm and still work in a billable hour environment.
Professional services firms advise, structure, execute and often sit close to client money. You form companies, set up trusts, run transactions, manage property, and move value across borders. That combination of influence and information is exactly why the Australian Government is now moving ahead with Tranche 2 for professional services.
From 1 July 2026, services typically provided by lawyers, accountants, conveyancers, real estate professionals, dealers in precious stones and metals, and trust and company service providers will fall within the Anti Money Laundering and Counter Terrorism Financing framework, supervised by AUSTRAC.
This article explains what that shift means in practice, how it affects the way you onboard and serve clients, and how a specialist Tranche 2 consultancy can help you get to a compliant, workable position before the reforms go live.
The new law and regulatory framework
The reform package
The Australian Government has introduced a package of reforms that modernises the AML/CTF regime and extends it to a wider group of “gatekeeper” professions. AUSTRAC’s AML/CTF Reform hub provides the central overview of these changes and how they apply to new and existing reporting entities.
The About the reforms page explains that AML/CTF law will be extended from 1 July 2026 to certain services typically provided by: lawyers, conveyancers, accountants, trust and company service providers, real estate agents and dealers in precious stones, metals and products.
For the professional services sector, the key technical detail sits in AUSTRAC’s Professional services (Reform) guidance, which outlines the new designated services under the AML/CTF Act.
Who is in scope under Tranche 2 for professional services
Using AUSTRAC’s guidance, you should assume you are in scope if you are a professional firm that, in or from Australia, provides any of the newly defined designated services, for example: austrac.gov.au+1
Law firms involved in planning or implementing property, business or asset transactions, managing client money or creating and managing legal persons.
Accounting practices that structure entities, manage client funds, design tax or corporate arrangements or prepare and execute transactions.
Conveyancers and real estate professionals who facilitate the sale, purchase or transfer of interests in real property.
Dealers in precious stones, metals and products engaged in high value transactions in jewellery, bullion or similar products.
Trust and company service providers that form companies, establish or administer trusts, provide registered offices or supply nominee directors or shareholders.
AUSTRAC has a dedicated Check if you may be regulated tool that lets professional firms step through typical services and work out if they will become Tranche 2 entities.
Tranche 2 timelines for professional services
AUSTRAC and government guidance set out clear milestone dates that professional services firms should now work towards.
Now through 2025
Review AUSTRAC’s reform guidance and start mapping your services to the new designated services list.
Begin designing your AML/CTF risk assessment and program, especially if you are in higher risk categories such as Tranche 2 for professional services that include trust and company service providers.
31 March 2026
AUSTRAC indicates that enrolment for newly regulated Tranche 2 entities opens via AUSTRAC Online around this date.
1 July 2026
AML/CTF obligations commence for Tranche 2 entities, which include the professional services sectors listed above.
Within 28 days of first providing a designated service
Newly regulated firms must enrol with AUSTRAC and provide details of their structure, services and key personnel, as set out in AUSTRAC’s Summary of obligations and Tranche 2 obligations factsheet.
In other words, by mid–2026 your professional services business is expected to be enrolled, risk assessed and operating under a documented AML/CTF program, rather than just planning one.
Core AML/CTF obligations for professional services
AUSTRAC’s Summary of obligations (Reform) and AML/CTF obligations factsheet for Tranche 2 entities outline the common requirements for newly regulated sectors.
Enrolment with AUSTRAC
Every in scope firm must:
enrol with AUSTRAC via AUSTRAC Online
describe its business structure and the designated services it provides
identify key personnel and contact details
keep these details updated when they change. austrac.gov.au+1
AML/CTF program
You must develop, implement and maintain a written AML/CTF program that:
is based on a documented risk assessment
sets out governance, roles and responsibilities
describes your policies, procedures, systems and controls for managing ML/TF and proliferation financing risk
covers customer due diligence, monitoring, reporting, record keeping, training and independent review
is approved by senior management and reviewed regularly.
For many professional firms this will be structured into:
Part A – risk assessment, governance, systems and controls.
Part B – customer identification and verification procedures.
ML/TF/PF risk assessment
The risk assessment is the foundation of your program. AUSTRAC’s reform guidance and broader risk papers stress that firms must identify, assess and document the ML/TF risks they face and use that assessment to guide their controls.
For Tranche 2 for professional services, that means analysing:
client types – individuals, SMEs, complex corporate groups, high net worth individuals, foreign clients, PEPs
services – legal, tax, transaction advisory, conveyancing, real estate brokerage, TCSP activities and corporate administration
delivery channels – in person, online, via referrers or intermediaries
geographic footprint – local only or cross border, and exposure to higher risk jurisdictions.
Customer due diligence
Customer due diligence is at the core of Tranche 2 for professional services. Firms must:
identify and verify customers, including beneficial owners where the customer is not a natural person
understand the purpose and intended nature of the business relationship or transaction
risk rate customers and engagements
perform enhanced due diligence for higher risk clients, structures and jurisdictions
undertake ongoing due diligence so that information remains current and consistent with observed activity.
For trust and company service providers, lawyers and accountants this also means paying particular attention to how complex structures are used and who really controls them.
Monitoring, reporting and record keeping
Professional services firms will be required to:
monitor relationships and matters for unusual or suspicious activity
investigate red flags and document decisions
submit Suspicious Matter Reports (SMRs) where the firm suspects that a client, transaction or instruction may involve ML/TF or other serious offences
submit Threshold Transaction Reports (TTRs) for large cash transactions where relevant
retain AML/CTF records for at least the minimum periods set out in the legislation and rules.
AUSTRAC’s Risks and indicators of suspicious activity hub provides sector specific indicators that can help you design realistic monitoring settings.
ML/TF/PF red flags for professional services firms
AUSTRAC describes lawyers, accountants, real estate agents, financial advisers and trust and company service providers as “gatekeepers” because they can be used to mislead or bypass the financial system.
Its risk insights and typologies papers highlight recurring themes that are relevant across Tranche 2 for professional services.
Client related red flags
Watch for clients who:
are evasive or inconsistent when asked about identity, ownership or control
cannot explain their source of wealth in a way that is plausible and documented
use nominees or intermediaries in ways that clearly distance themselves from control of assets
have adverse media relating to fraud, tax evasion, corruption or organised crime
are PEPs or closely connected to PEPs and want complex structures that obscure ownership.
Service and transaction red flags
Risk increases where professional services are used to:
create many entities or trusts in quick succession without clear commercial need
route funds through client or trust accounts in ways that do not match the stated purpose of the engagement
buy or sell real estate at values that do not align with market norms
move funds offshore and back again without a clear business rationale
structure transactions using your advice and execution to disguise beneficial owners or sources of funds.
Channel and jurisdiction red flags
You should be cautious where:
instructions and onboarding are carried out only through third parties and you do not meet or verify the underlying client
clients resist video calls, secure portals or basic CDD steps
the engagement has significant links to high risk or secrecy jurisdictions or sanctioned countries.
These red flags should feed directly into your AML/CTF program, risk assessment, training and SMR decision making.
Best practices for Tranche 2 for professional services
Treat Tranche 2 as strategic risk management
AUSTRAC’s regulatory expectations for 2025–26 emphasise that reforms are about managing substantive risks and harms, not just technical compliance.
Firms that treat Tranche 2 for professional services as a strategic risk programme rather than a tick box exercise will be better placed with both AUSTRAC and their clients.
Build a usable, risk based AML/CTF program
Your program should:
be written in clear, firm specific language
link directly to your client lifecycle and matter workflows
include diagrams, checklists and decision trees, rather than only narrative
allocate roles and responsibilities in a way that reflects how work actually happens.
AUSTRAC’s Summary of obligations and education about reforms pages provide a good starting structure for program design and documentation.
Centre your approach on beneficial ownership and control
For lawyers, accountants and especially trust and company service providers, beneficial ownership and control are the main risk themes in AUSTRAC’s strategic analysis.
You should:
document ownership and control structures clearly, including controllers, settlors and beneficiaries
adopt consistent rules on when nominee arrangements are acceptable
ensure ownership information is refreshed when structures change and not only at onboarding.
Use AUSTRAC guidance as your design blueprint
There is now a rich set of material that speaks directly to Tranche 2 for professional services. In particular:
AML/CTF obligations factsheet for Tranche 2 reporting entities via the education hub.
Design your program so that if AUSTRAC asks “where did you take this from”, you can point straight back to these pages.
Train for judgement, not just process
AUSTRAC’s Risks and indicators of suspicious activity and typology reports show that patterns matter more than any single indicator.
Good Tranche 2 training for professional services should:
use realistic case studies for your own practice areas
explain how different red flags combine into a suspicion
give staff confidence to escalate early
be refreshed regularly as AUSTRAC releases sector specific guidance.
Common challenges when implementing Tranche 2 for professional services
Professional firms across sectors tend to face similar problems.
Service mapping and scope
Professional practices offer an intricate mix of advisory, transactional, structuring and administrative services. Mapping these cleanly to AUSTRAC’s designated services list is not always straightforward and requires judgement as well as legal input.Fragmented systems and data
Client information often sits in separate systems for onboarding, billing, document management and company secretarial work. That makes it hard to get a single view of customer risk and activity.Cross practice and cross border engagements
Many firms serve the same client through several practice groups and foreign offices. Keeping a joined up view of risk, beneficial ownership and funds flow in that environment is challenging.Privilege, confidentiality and AML/CTF reporting
Law firms in particular need to reconcile AML/CTF reporting obligations with legal professional privilege and client confidentiality. Getting the boundaries wrong either way carries real risk.Cultural resistance and time pressure
Fee earners already feel stretched by billable targets. Without clear leadership, Tranche 2 for professional services can be seen as a compliance burden rather than a core part of client and firm protection.
How Tranche 2 consultants can help your firm
This article appears on the blog of a firm that specialises in helping professional services businesses prepare for Tranche 2 for professional services. Our role is to stand between dense regulation and your practice reality and make them work together.
Typically, we support firms through:
Tranche 2 readiness review
Mapping your service lines against AUSTRAC’s Professional services (Reform) and New industries and services to be regulated guidance.
Identifying which entities within your group will be reporting entities.
Highlighting high impact gaps and an implementation roadmap.
ML/TF/PF risk assessment and risk appetite
Designing or refining your enterprise wide risk assessment using AUSTRAC’s risk insights and typologies for gatekeeper professions.
Helping leadership articulate a risk appetite that is realistic and defensible, especially for complex cross border work.
AML/CTF program design and documentation
Drafting an AML/CTF program aligned with AUSTRAC’s Summary of obligations and reform guidance.
Writing procedures, templates and checklists that fit your practice workflows and practice management systems.
Technology and data enablement
Reviewing your current systems and suggesting pragmatic ways to support CDD, screening, monitoring and reporting without over-engineering.
Ensuring you can evidence decisions and maintain the records AUSTRAC expects.
Training, culture and independent review
Designing tailored training for partners, fee earners, support staff and the AML/CTF team.
Supporting independent evaluations so you can show AUSTRAC that your Tranche 2 framework is not only documented, but effective.
The end result is an AML/CTF framework that helps you protect your firm, your clients and your reputation, without losing sight of commercial reality.
"Successful Tranche 2 implementation depends less on policy volume and more on leadership behaviour. When partners treat AML/CTF as part of professional responsibility, it becomes embedded rather than resisted."
FAQs – Tranche 2 for professional services in Australia
1. What is Tranche 2 for professional services?
Tranche 2 for professional services is the extension of Australia’s AML/CTF regime to certain services typically provided by lawyers, accountants, conveyancers, real estate professionals, dealers in precious stones and metals, and trust and company service providers. These businesses become reporting entities when they provide defined designated services with a link to Australia.
2. When do Tranche 2 obligations start for professional services firms?
AML/CTF obligations for Tranche 2 entities, including professional services firms, commence on 1 July 2026. AUSTRAC indicates that enrolment opens in March 2026 and that new reporting entities must enrol within 28 days of first providing a designated service.
3. Which professional services are covered by the reforms?
AUSTRAC’s Professional services (Reform) guidance explains that designated services include certain legal, accounting, conveyancing, real estate and trust and company services. The New industries and services to be regulated and Check if you may be regulated pages help firms confirm whether specific services fall in scope.
4. What are the main AML/CTF obligations under Tranche 2 for professional services?
Core obligations include: enrolment with AUSTRAC, a documented ML/TF/PF risk assessment, a written AML/CTF program, risk based customer due diligence, ongoing monitoring of relationships and matters, suspicious matter and threshold transaction reporting, record keeping, staff training and independent review.
5. Why are professional services considered high risk for money laundering?
AUSTRAC’s strategic analysis describes lawyers, accountants, real estate agents and trust and company service providers as gatekeepers, because they can create structures, handle client money and facilitate property or business transfers. Criminals exploit these services to disguise beneficial ownership and move illicit funds through apparently legitimate transactions.
6. What are common red flags in Tranche 2 for professional services?
Common red flags include opaque or complex ownership without clear commercial rationale, nominee roles used to hide control, unexplained wealth or transactions, frequent use of high risk jurisdictions, unusual flows through client or trust accounts and resistance to basic CDD checks. AUSTRAC’s Risks and indicators of suspicious activity hub and sector risk insights provide detailed examples that firms should build into their monitoring.
7. Do small firms still need a full AML/CTF program?
Yes. Any firm that falls within Tranche 2 for professional services must have an AML/CTF program once it provides designated services. AUSTRAC allows a proportionate approach, so smaller and lower risk firms can adopt simpler controls, but the core elements of risk assessment, CDD, monitoring, reporting, record keeping and training must still be in place and effective.
8. How can Tranche 2 consultants support our firm?
Specialist Tranche 2 consultants help professional services firms by mapping services to AUSTRAC’s designated services, completing or refining ML/TF/PF risk assessments, drafting AML/CTF programs, designing CDD and beneficial ownership frameworks, advising on technology and reporting, training staff and supporting independent reviews. This allows your firm to meet its AML/CTF obligations with confidence while remaining focused on client work.
