AML/CTF Tranche 2 for Accountants in Australia

Why Tranche 2 reforms are happening

Australia’s long awaited Tranche 2 reforms are now locked in. From 1 July 2026, certain services typically provided by accountants will be regulated under the Anti Money Laundering and Counter Terrorism Financing Act 2006 and the new AML/CTF Rules.

In simple terms, if your practice helps clients set up structures, move money or complete higher risk transactions, you will soon be treated as a gatekeeper to the financial system, not just a professional adviser.

This article is written specifically for accountants in Australia. It explains:

• the new law, rules and AUSTRAC guidance

• which accounting services are likely to be caught

• the key dates and practical timeline

• the AML/CTF obligations for accountants

• the main money laundering, terrorism financing and proliferation financing red flags for accountants

• best practice steps to build a proportionate, workable programme

• the real world challenges firms are already grappling with

• how specialist Tranche 2 consultants can shorten the journey.

Throughout, you will see links only to relevant AUSTRAC resources so you can go straight to the source material if you wish to explore further.

Tranche 2 for accountants 

What is changing
Australia has passed the Anti Money Laundering and Counter Terrorism Financing Amendment Act 2024, which expands the AML/CTF regime and modernises the Rules. From 1 July 2026, AML/CTF obligations will apply to certain services typically provided by accountants and other Tranche 2 professions.

Who in accounting is affected
You may be regulated if you provide designated services such as establishing or managing companies or trusts, managing client funds, or playing a central role in certain transactions, and those services have a geographical link to Australia.

Key dates
AUSTRAC’s reform hub confirms that Tranche 2 entities come under the regime from 1 July 2026, with guidance and education rolling out ahead of that date.

Core obligations for accountants
If you are in scope, you will need to enrol with AUSTRAC, assess your ML/TF/PF risks, implement an AML/CTF programme, conduct customer due diligence, monitor clients and transactions, report suspicious and threshold activity, train staff and keep records.

Key risk resources
AUSTRAC has published Risk insights and indicators of suspicious activity for accountants and a central Risks and indicators of suspicious activity page for Tranche 2 sectors. These are essential reading when designing your risk assessment and controls.

Where to start
Begin with AUSTRAC’s AML/CTF Reform, Check if you may be regulated (Reform) and Summary of obligations (Reform) pages.

The new Tranche 2 law, rules and guidance

The Anti Money Laundering and Counter Terrorism Financing Amendment Act 2024 amends the existing AML/CTF Act 2006 and is supported by new AML/CTF Rules 2025. The combined effect is to:

• expand the regime to Tranche 2 sectors, including accountants

• modernise key concepts such as value transfer, customer due diligence and proliferation financing

• simplify parts of the programme structure so that it is more obviously risk based and outcomes focused.

The Australian Government’s summary of the Amendment Act notes that the start date has been set to give newly regulated entities time to understand their obligations and to allow AUSTRAC to develop guidance and education materials.

AUSTRAC is the primary source of practical information. Its AML/CTF Reform hub brings together:

• an overview of the reforms and why they are happening

• key milestones, including the date Tranche 2 sectors come under regulation

• guidance for newly regulated entities on how to start preparing

• sector specific guidance and risk insight pages, including a dedicated resource for accountants.

If you remember nothing else, remember this: AUSTRAC expects a risk based, documented and lived approach, not just a policy sitting on a shared drive.

Which accounting services are in scope

AUSTRAC regulates services, not job titles. Whether you are a sole practitioner in the suburbs or part of a national network, the question is always: do you provide designated services that have a geographical link to Australia?AUSTRAC+2AUSTRAC+2

The New industries and services to be regulated (Reform) page sets out the sectors and services that will become regulated from 1 July 2026. Accountants are one of the listed Tranche 2 professions.

The Professional services (Reform) guidance explains that, for accountants and other advisers, obligations arise when you do more than simply give a view. You are in scope where, in the course of business, you:

• help create, operate or manage companies, trusts or similar structures

• manage client money, client accounts or trust funds beyond standard fee collection

• act, or arrange for someone to act, as a director, secretary, partner, trustee or similar role

• play a central part in planning or executing certain transactions, rather than providing theoretical advice.

Given the variety of accounting work, a practical first step is to sit with your service list and work through AUSTRAC’s interactive Check if you may be regulated (Reform) tool. It asks simple questions about what you do and flags where you might have AML/CTF obligations.

Timelines and milestones that matter to accountants

The reforms are not retrospective and they are not overnight. AUSTRAC has been clear that Tranche 2 sectors, including accountants, come under the regime from 1 July 2026.

Between now and then, three streams of activity will run in parallel.

1. Law and rules
   The Amendment Act has been passed and the associated AML/CTF Rules have been tabled. These create the legal framework.

2. Guidance and education
   AUSTRAC is progressively publishing reform guidance, including preparing for the changes if you are newly regulated, how to develop your AML/CTF programme, and sector specific material such as the risk insights page for accountants.

3. Enrolment and go live
   AUSTRAC’s reform hub explains that new regulated services and entities will need to be ready by 1 July 2026. Newly regulated entities are expected to use the lead time to assess their status, develop their programme and prepare to enrol.

In practical terms, most accounting firms need an internal roadmap that runs across 2025 and the first half of 2026, rather than a rushed sprint in the final quarter.

AML/CTF obligations for accountants

AUSTRAC’s Summary of obligations (Reform) page lists the core obligations that apply to Tranche 2 entities, including accountants.

If your accounting services are in scope, you will need to do the following.

Enrol with AUSTRAC

You must enrol with AUSTRAC before you provide any designated services. AUSTRAC will publish more detailed enrolment steps for newly regulated entities, but the expectation is clear: if you are caught, you must be visible to the regulator.

Assess your ML/TF and PF risks

The new regime places explicit emphasis on a documented risk assessment. AUSTRAC’s AML/CTF programme guidance explains that you must identify, assess and understand the money laundering, terrorism financing and proliferation financing risks that arise from:

• the nature, size and complexity of your practice

• the services you offer and how they are delivered

• the types of clients you serve

• the countries and regions you deal with.

The AML/CTF programme (Reform) materials and the overview of customer due diligence (Reform) page give a clear structure for how to approach this.

Develop and implement an AML/CTF programme

You must maintain a written AML/CTF programme that sets out how you will manage your risks in practice. Under the reformed regime, this is less about rigid Parts A and B and more about a coherent, risk based framework. AUSTRAC’s guidance covers:

• governance and accountability, including the appointment of an AML/CTF compliance officer

• policies and procedures for customer due diligence and enhanced due diligence

• how you will monitor transactions and behaviour

• how you will detect, investigate and report suspicious matters

• record keeping, staff training and independent review.

For newly regulated accountants, AUSTRAC has said it is developing starter programme kits to help smaller businesses put a baseline framework in place.

Perform customer due diligence

Customer due diligence is no longer a simple identity check. AUSTRAC’s CDD overview explains that you must understand who your customer is and why they are using your services both before you start and throughout the relationship.

For accountants, that means:

• identifying and verifying the customer and any beneficial owners of entities you act for

• understanding the purpose and intended nature of the relationship and services

• assessing the customer’s risk level

• applying enhanced due diligence where risk is higher, for example where structures are complex or funds come from higher risk jurisdictions.

AUSTRAC’s Source of funds and source of wealth (Reform) guidance explains how to judge whether a client’s funds and wealth make sense in light of their profile and activities.

Monitor and report

You must monitor your customers and transactions for unusual or suspicious activity and submit formal reports to AUSTRAC when required. AUSTRAC’s reform pages on AML/CTF programmes and reporting explain that this includes:

• Suspicious matter reports when you suspect on reasonable grounds that a person or activity may involve crime, ML/TF or other serious offences

• Threshold transaction reports for certain large cash dealings

• Other reports such as international funds transfer instructions, where relevant

• An annual compliance report summarising how you are meeting your obligations.

Train staff and keep records

Finally, you must train relevant partners, managers and staff on the risks and controls that apply to their roles and retain records for minimum periods, including:

• customer identification data and verification steps

• transaction records and internal investigations

• risk assessments and AML/CTF programme documents

• staff training records and outcomes

• independent review reports and remediation plans.

Money laundering, terrorism financing and proliferation financing red flags for accountants

AUSTRAC has gone to unusual lengths to spell out what suspicious activity looks like from an accountant’s perspective. Its Risk insights and indicators of suspicious activity for accountants page sets out common risk themes and dozens of red flags.

Drawing on that guidance, some of the most important indicators fall into four broad groups.

Client profile and behaviour

You should pay particular attention where:

• A client’s stated wealth or income does not match what you see in their accounts or lifestyle.

• The client insists on secrecy, becomes defensive when asked routine questions, or pressures you to skip standard checks.

• The client uses complex structures or multiple entities without a clear commercial reason.

• Third parties appear to control the client’s decisions but do not wish to be identified.

Engagement scope and purpose

Red flags can emerge before a single transaction occurs. Examples include:

• Requests to set up companies, trusts or other structures in a pattern that does not align with any genuine tax or business planning objective.

• Clients asking you to hold money or assets “temporarily” in your trust account in a way that does not fit a defined engagement.

• Requests to help transfer assets quickly to another person or entity with no clear reason or documentation.

Transaction patterns

In your role as adviser, bookkeeper or tax agent, you may notice:

• Frequent large cash deposits or withdrawals that do not match the nature of the business.

• Round number transactions with no clear supporting invoices or contracts.

• Unusual payments to or from unrelated third parties, particularly in higher risk jurisdictions.

• Rapid movement of funds between related entities in a circular pattern that has no clear commercial purpose.

• Proliferation financing indicators

The reformed regime brings proliferation financing into sharper focus. For accountants, indicators can include:

• Clients involved in trade of dual use goods or high risk technologies where ownership and counterparties are opaque.

• Unusual routing of payments for goods through third countries linked to weapons programmes or sanctions concerns.

• Structures that obscure the true end user of sensitive goods or technology.

AUSTRAC’s risk insight page for accountants encourages you to combine these indicators rather than treating each in isolation. A single unusual feature may be explainable. A cluster of them, with poor explanations from the client, should trigger internal escalation and possibly a suspicious matter report.

Best practice: how accountants can build a proportionate AML/CTF framework

Good AML/CTF practice for accountants is not about turning your firm into a bank. It is about embedding a measured, risk based approach that fits how you already work. AUSTRAC’s AML/CTF programme and CDD guidance suggest several practical best practices.

Start with a realistic risk assessment

Take AUSTRAC’s sector risk insights and apply them to your own client base. Segment your clients by:

• service type (compliance only, advisory, structuring, outsourced finance function and so on)

• ownership structures (simple, moderately complex, highly complex)

• geography (domestic only, some offshore, higher risk jurisdictions).

Document why some segments are higher risk and how you will respond.

Design clear CDD standards with room for judgement

Create standard CDD packages for different risk levels. For example:

• basic identity checks and limited beneficial ownership verification for genuinely low risk clients

• more detailed verification, source of funds and source of wealth checks for higher risk engagements, especially where you are setting up structures or managing funds.

Ensure your teams understand when and how to escalate a case to the compliance officer for enhanced due diligence.

Embed controls into existing workflows

Instead of bolting AML checks on at the end, build them into:

• new client acceptance and engagement letter processes

• company and trust formation workflows

• onboarding packs for outsourced accounting and virtual CFO services

• year end and tax planning cycles, where you may revisit risk and CDD.

The smoother you make the process, the less resistance you will face from partners and staff.

Use technology where it genuinely helps

For many firms, a combination of:

• electronic identity verification

• sanctions and PEP screening

• simple risk rating tools

• case management for suspicious matter investigations

will significantly reduce manual effort and improve consistency, provided you configure the tools to fit your risk assessment rather than relying on default settings. AUSTRAC’s reform guidance emphasises that technology does not remove your obligations, but can support a more effective programme.

Train with real accounting scenarios

General AML training has limited impact on accountants. Use AUSTRAC’s accounting specific risk insights to build training that connects directly with what your teams see.

For example:

• unusual requests in tax planning

• property transactions with offshore buyers or layered entities

• rapid movement of funds in and out of client accounts.

This is where your AML/CTF obligations stop feeling abstract and start feeling relevant.

The real implementation challenges for accounting practices

Most of the accountants I speak to are not questioning whether the reforms are coming. Their concern is how to implement them without clogging up the practice. Common challenges include:

1. Deciding exactly where the line is
   Distinguishing between pure advisory work and designated services can be nuanced, especially in corporate structuring, tax planning and private wealth work. That is why AUSTRAC’s professional services guidance and the “Check if you may be regulated” tool are so important.

2. Retrofitting controls to long standing clients
   Many firms have clients who have been with them for decades. Asking for identification, beneficial ownership details and source of funds information can feel awkward. There is a skill in explaining that this is now a legal requirement, not a sign of mistrust.

3. Limited in house compliance capacity
   Small and mid sized firms rarely have dedicated risk teams. Yet the obligations around risk assessment, programme design, reporting and independent review are the same in principle as for large firms, scaled to size and complexity.

4. Fragmented systems and data
   Accounting practices often use separate tools for tax, accounts production, payroll, practice management and document storage. Aligning these with your AML/CTF requirements and avoiding duplication is a non trivial design task.

5. Keeping pace with evolving guidance
   AUSTRAC is still releasing reform guidance and risk insights. Someone in the firm has to track those updates, interpret them and feed them back into your programme.

The firms that are making the best progress are those that treat Tranche 2 as a change programme with ownership at partner level, rather than a side project for a busy manager.

How Tranche 2 consultants can help accountants

Bringing in a consultant does not remove your responsibilities. It does, however, help you move faster, avoid common mistakes and keep your internal bandwidth focused on client work.

An experienced Tranche 2 consultant who understands AUSTRAC’s expectations can support you in several ways.

Scoping and strategy

A consultant can sit with your leadership team and:

• map your services against AUSTRAC’s new industries and services to be regulated and professional services (Reform) guidance

• use the Check if you may be regulated tool alongside your own data to define which parts of the practice are in scope

• propose a phased implementation plan that fits your size and risk profile.

Risk assessment and programme design

They can help you:

• design a formal ML/TF and PF risk assessment that aligns with AUSTRAC’s AML/CTF programme (Reform) expectations

• draft an AML/CTF programme, policies and procedures tailored to accountants, embedding AUSTRAC’s red flag indicators for accountants into your controls.

• Process and technology

Consultants with both AML and accounting experience can:

• streamline your onboarding and engagement processes so that CDD becomes part of normal file opening

• review your existing systems and suggest proportionate RegTech solutions for identity verification, screening and case management.

Training and culture

They can:

• design and deliver training that uses realistic accounting scenarios and AUSTRAC’s own examples

• coach partners and managers on how to discuss AML requirements with clients and staff without damaging relationships.

Independent review and continuous improvement

Finally, they can:

• conduct independent reviews of your AML/CTF framework once it is in place, as expected under AUSTRAC’s programme guidance

• help you respond to review findings and regulatory feedback in a structured, defensible way.

The outcome should not be a thick binder no one reads, but a lean framework that your partners actually use and that stands up to AUSTRAC scrutiny.