Tranche 2 for Precious Metals, Stones, and Product Services: AML/CTF Duties and How To Get Ready

If your business trades in gold, diamonds, jewellery, bullion, luxury watches or similar products, Tranche 2 is about to change how you do business in Australia.

From 1 July 2026, certain services provided by dealers in precious stones, metals and related products become regulated under the Anti Money Laundering and Counter Terrorism Financing Act, with AUSTRAC as the supervisor.

This new regime recognises what many of us already know. Precious metals and stones are attractive to criminals. They are high value, easy to move, simple to store, and can double as both an investment and a status symbol. AUSTRAC now treats the sector as one of the most at risk for money laundering in Australia.

The aim of this article is simple. As a specialist Tranche 2 consultancy, we want to explain what Tranche 2 for precious metals, stones, and product services means in practice, and how your business can comply without losing sight of customers and sales.

The new Tranche 2 landscape for precious metals and stones

What the new law does

The AML/CTF Amendment Act 2024 and new AML/CTF Rules implement Australia’s long awaited Tranche 2 reforms. These reforms expand the regime to Designated Non Financial Businesses and Professions, often called DNFBPs.

AUSTRAC’s reform summary confirms that from 1 July 2026 the new regime applies to designated services typically provided by:

• real estate professionals

• dealers in precious stones, metals and products

• lawyers and conveyancers

• accountants

• trust and company service providers.

The precious metals, stones and product services category is explained in AUSTRAC’s dedicated reform guidance for this sector, which sits under its “new industries and services to be regulated” pages.

Which businesses are likely to be in scope

Although the final detail sits in AUSTRAC guidance and the Rules, the public material and specialist commentary indicate that Tranche 2 for precious metals, stones, and product services will generally capture:

• bullion dealers and refiners that buy or sell gold, silver, platinum or palladium

• jewellery retailers and wholesalers that deal in high value precious metals and stones

• luxury watch and timepiece retailers where products contain precious metals or stones

• businesses that buy, sell or trade high value items containing precious metals or stones such as investment grade coins or certain collectible items.

External guidance summarises that services involving transactions of ten thousand Australian dollars or more in physical currency or virtual assets can trigger AML obligations for dealers in precious metals and stones, although bullion is generally treated as higher risk and often subject to stricter expectations regardless of transaction size.

If you provide these types of services, AUSTRAC’s “check if you will be regulated” tool is the fastest way to confirm whether your business will be regulated under Tranche 2 for precious metals, stones, and product services.

Timelines and what has to happen when

Your timetable is now set by legislation and AUSTRAC guidance, not by internal preference. Key dates look like this:

• Now until early 2026
  AUSTRAC is publishing plain English guidance on risk, red flags and AML/CTF programmes for new sectors, including detailed resources for dealers in precious stones, metals and other products.

• 31 March 2026
  Enrolment opens for Tranche 2 entities on AUSTRAC Online, in line with the wider reform timeline for current and new reporting entities.

• 1 July 2026
  AML/CTF obligations commence for Tranche 2, which includes dealers in precious stones, metals and products that provide designated services with a geographical link to Australia.

• Within 28 days of first providing a designated service, and in any case by 29 July 2026
  Newly regulated entities must complete enrolment with AUSTRAC and provide details about their structure, services, key personnel and contact points.

There is no benefit in waiting. The guidance now available is enough to start design work and gap analysis.

Core AML/CTF obligations for precious metals, stones, and product services

AUSTRAC’s Summary of obligations (Reform) and the Tranche 2 obligations factsheet set out the common duties for all newly regulated businesses.

For Tranche 2 for precious metals, stones, and product services, you should assume at least the following responsibilities.

Enrol with AUSTRAC

You must:

• enrol as a reporting entity using AUSTRAC Online

• disclose your business structure, designated services, key people and contact details

• keep that information current and accurate.

Develop and maintain an AML/CTF programme

AUSTRAC’s programme guidance explains that every reporting entity must have a written AML/CTF programme that:

• identifies, mitigates and manages the business’s ML/TF and proliferation financing risks

• sets out governance, roles and reporting lines

• describes systems and controls for customer due diligence, monitoring, reporting and record keeping

• is approved by the governing body or senior management

• is reviewed regularly and updated when risks, products or regulations change.

The programme is normally split into:

• Part A for governance, risk and controls

• Part B for customer identification and verification procedures.

Conduct a documented ML/TF/PF risk assessment

You must carry out and document a risk assessment that reflects your actual business model. This assessment should cover:

• customer types, such as walk in customers, high net worth clients, wholesale clients and trade accounts

• product types, for example bullion bars, coins, loose stones, finished jewellery, luxury watches

• delivery channels, including in store, online, phone and cross border sales

• geographic risk, such as links to certain overseas markets or high risk regions

• payment methods, including cash, bank transfer, card and virtual assets.

AUSTRAC’s risk insights and indicators of suspicious activity for dealers in precious stones, metals and other products is specifically designed to feed into this risk assessment.

Customer due diligence

Customer due diligence is now central to your Tranche 2 obligations. In practice this means:

• identifying and verifying customers before, or as soon as practicable after, providing a designated service

• identifying and verifying beneficial owners of customer entities

• understanding the purpose of the business relationship and, where relevant, the expected pattern of activity

• assigning risk ratings and applying enhanced due diligence for higher risk customers or transactions

• keeping information updated and current, not just collecting it once.

Given the nature of the sector, CDD will often need to address:

• high value one-off buyers

• repeat buyers whose activity pattern suddenly changes

• trade clients buying or selling on behalf of others

• purchases by companies, trusts or other legal persons.

Monitoring and reporting

You must implement systems and processes to:

• monitor transactions and behaviour for unusual or suspicious patterns

• investigate alerts and document the outcome

• submit Suspicious Matter Reports to AUSTRAC when you suspect ML/TF/PF or other serious crime

• lodge Threshold Transaction Reports for relevant cash transactions at or above the reporting threshold

• capture information for international transfers and high risk payments where required.

Record keeping, training and assurance

You will also need to:

• retain records of CDD, transactions, suspicious matter investigations and AML/CTF programme details for at least the statutory retention period

• provide AML/CTF training to staff who interact with customers, process payments, manage inventory or make AML decisions

• arrange independent or at least suitably objective reviews of Part A of your programme on a risk based cycle.

ML/TF/PF risks and red flags in Tranche 2 for precious metals, stones, and product services

Why this sector is attractive to criminals

AUSTRAC’s risk material is very clear. Dealers in precious stones and metals are among the sectors most at risk of being used for money laundering in Australia.

Reasons include:

• high value in a compact form

• easy storage and concealment

• global resale markets

• flexible and sometimes subjective valuation, especially for stones and high end pieces

• a mix of cash, card, bank transfer and sometimes virtual assets as payment methods.

Criminals range from low level gangs using jewellery to store and display wealth, through to sophisticated organised crime groups and corrupt officials moving significant value into bullion, diamonds or luxury watches.

Key red flags for customers and behaviour

Drawing on AUSTRAC’s specific indicators for precious metals and stones, along with sector commentary, you should pay close attention when customers:

• make multiple cash purchases just under the reporting threshold

• insist on paying large sums in cash or virtual assets without a clear commercial explanation

• show little interest in the quality, design or price of items and focus only on moving value

• use different individuals to perform ordering, payment and collection

• ask you to hold items in store or ship them to unusual or high risk locations

• refuse to provide identification or give inconsistent personal details

• present business profiles that do not match the volume or value of purchases they make.

Product and transaction red flags

At the transaction level, Tranche 2 for precious metals, stones, and product services should push you to treat the following scenarios as higher risk:

• sudden spikes in orders by a customer with no obvious change in circumstances

• large purchases that are quickly resold or returned in exchange for refunds to different accounts

• complex chains of invoices or split payments involving several related entities

• repeated international shipments to high risk jurisdictions or free trade zones known for weak oversight

• purchases of easily resold items such as gold bars, investment coins or popular luxury watches where there is no plausible non financial purpose.

Channel and geography red flags

Risk is also higher when:

• all contact is through intermediaries, online marketplaces or messaging platforms

• customers have unclear or unverifiable addresses or use mailboxes and forwarding services

• buyers or payers are based in countries with weak AML regimes or significant organised crime or corruption risk

• there is any link to sanctioned countries or individuals.

Your AML/CTF programme should integrate these red flags into point of sale and back office checks so that staff know when to pause, ask more questions and escalate.

Best practices for precious metals, stones, and product services under Tranche 2

Start with a realistic risk assessment

Use AUSTRAC’s risk insights and indicators for dealers in precious stones, metals and other products as your starting point, then map that guidance against your own products, customer base and locations.

Segment risk by:

• customer type

• product type

• transaction size and frequency

• channel (in store or online)

• geography and shipping destination.

The output should not sit in a drawer. It must drive your procedures, thresholds and training.

Design a programme that matches how you actually trade

An effective AML/CTF programme for Tranche 2 for precious metals, stones, and product services is:

• written in clear, practical language

• structured around the customer journey, from initial enquiry to sale and after sales support

• explicit about who is responsible for approvals and escalation

• supported by checklists, forms and guidance that staff can use while serving customers.

Strengthen CDD and source of funds checks

You do not need to interrogate every customer who buys a modest gold chain. You do need more information when:

• transactions are large or frequent

• customers are high risk by location, occupation or adverse media

• the pattern of buying is unusual for the profile.

For higher risk situations, expect to:

• verify identity using reliable documentation or electronic tools

• identify beneficial owners and controllers of businesses or trusts

• understand and record the source of funds and, where appropriate, source of wealth.

Integrate monitoring into your systems

If you already use a point of sale or inventory system, work out how to:

• flag transactions that exceed certain thresholds

• identify repeated purchases by the same customer or linked parties

• generate reports that support suspicious matter investigations.

You do not necessarily need a large enterprise AML platform, but you do need consistency, auditability and the ability to explain to AUSTRAC how you detect unusual activity.

Train staff, especially front line and management

Training should focus on:

• what money laundering and terrorism financing look like in a jewellery or bullion shop

• sector specific red flags

• how to collect and verify customer information

• how to escalate concerns to the AML/CTF contact without tipping off the customer

• the commercial value of a strong compliance reputation.

Common challenges in implementing Tranche 2 for this sector

Across the precious metals and stones sector, we see similar pain points as businesses prepare for Tranche 2.

1. Legacy processes and point of sale systems
   Many businesses still rely on basic tills and manual ledgers. Extracting reliable customer and transaction data for AML purposes can be difficult without system upgrades.

2. High customer volumes and limited time
   Busy retail environments create pressure to process sales quickly. Staff may feel they have no time for KYC questions unless processes are very simple.

3. Cash culture and resistance to change
   Parts of the bullion and jewellery sector still prioritise cash payments and anonymity. Shifting that culture to one where questions are normal can be challenging.

4. Limited internal AML expertise
   Many businesses have never designed a formal AML/CTF programme or risk assessment and are unsure where to start with AUSTRAC’s technical material.

5. Balancing compliance and customer experience
   There is a real concern that AML checks will scare off legitimate high value customers. The solution lies in clear communication, smart process design and staff training.

How Tranche 2 consultants can help precious metals and stones businesses

This article appears on the blog of a firm that works every day with Tranche 2 entities, including dealers in precious stones, metals and products. Our role is to stand between dense regulation and your day to day reality, and to translate the former into something that fits the latter.

Here is how we typically support businesses facing

Tranche 2 for precious metals, stones, and product services.

Tranche 2 readiness review

We begin with a short review that:

• maps your products, channels and customers against AUSTRAC’s definition of designated services for this sector

• identifies which parts of your business will be reporting entities

• highlights immediate risk gaps and early wins.

ML/TF/PF risk assessment tailored to your business

Using AUSTRAC’s risk insights and indicators alongside recognised industry checklists, we help you create a documented, defensible risk assessment that:

• reflects your real customer mix and product range

• sets clear criteria for low, medium and high risk customers and transactions

• links naturally into your CDD and monitoring procedures.

AML/CTF programme design and documentation

We then develop a complete AML/CTF programme that:

• meets AUSTRAC’s Part A and Part B expectations

• uses plain language your staff can follow

• includes working checklists, forms and decision trees for front line and back office teams

• builds in roles, reporting lines and board or owner oversight.

Technology and RegTech support

Drawing on market experience and independent commentary, we help you evaluate and implement:

• electronic verification and screening tools

• transaction monitoring configurations suitable for high value goods

• reporting processes that make SMR and TTR preparation efficient and accurate.

Training, culture and independent review

Finally, we support you to:

• deliver training tailored to sales staff, managers and owners

• embed a culture where asking reasonable questions is normal

• schedule and complete independent reviews so that your framework remains current as AUSTRAC guidance evolves.

Our aim is not only to help you avoid enforcement action. It is to position your business as a trusted, modern dealer that banks, insurers and regulators are comfortable to work with.