Australia’s anti-money laundering and counter-terrorism financing landscape is undergoing its most significant transformation in decades. Driven by the Amended AML/CTF Act 2024 and guided by AUSTRAC, the Second Exposure Draft AML/CTF Rules will commence on 31 March 2026. This article unpacks the reforms, explores key obligations for reporting entities, and highlights how businesses can prepare for compliance.

AML/CTF Rules Australia: What You Need to Know

The new AML/CTF Rules Australia framework streamlines regulatory requirements and expands the regime to cover emerging sectors. All businesses providing designated services—ranging from real estate professionals to virtual asset service providers—must enrol on the Reporting Entities Roll within 28 days of commencing services. Remittance and virtual asset providers face enhanced registration scrutiny, assessing ML/TF risk exposure, compliance programs, and key personnel before granting approval.

Core program requirements include rigorous risk assessments, independent evaluations, tailored AML/CTF policies (including financial sanctions controls), and robust personnel due diligence. Reporting groups—automatic or by election—must coordinate obligations, with a designated lead entity accountable for group-wide compliance under section 236B.

Key Changes in Customer Due Diligence

The consultation feedback prompted significant updates to customer due diligence (CDD). Date and place of birth verification for individuals has been simplified: place of birth is no longer mandatory, and date of birth need only meet global travel-rule standards when required. Delayed verification is now broadly available for low-risk customers, with a 30-day window to complete outstanding checks, provided mitigating policies are in place. Simplified due diligence for low-risk, regulated entities—such as listed public companies or government bodies—removes beneficial ownership checks when ML/TF risk is demonstrably low. Trust beneficiaries are clarified: obligations extend only to identifying beneficiaries of fiduciary arrangements, not the customer’s customers.

Mergers and acquisitions benefit from deemed compliance: when a reporting entity acquires another’s customer base, transferred records satisfy initial CDD requirements, avoiding duplicated onboarding processes.

Advanced Reporting: SMRs, TTRs, and the Travel Rule

AUSTRAC’s updated Suspicious Matter Report (SMR) and Threshold Transaction Report (TTR) fields reflect modern payment methods and virtual assets. Reporting entities must report cash transactions of AU$10,000 or more, and submit SMRs for any suspected ML/TF or related serious offences. The updated forms capture granular data for digital payments, telegraphic transfers, and virtual asset movements, empowering AUSTRAC and law enforcement with actionable intelligence.

Under the travel rule, ordering, beneficiary, and intermediary institutions must collect, verify, and transmit payer and payee information with every international or domestic transfer of value, including tokenised card payments where specified. Exemptions exist for low-value or excluded transfers as outlined in the Rules.

Navigating Reporting Groups and Exemptions

Reporting groups allow large financial groups to manage AML/CTF obligations collectively. A business group automatically forms a reporting group when one entity controls another; members can also elect to form a group by mutual agreement. The lead entity—chosen by control or agreement—oversees group-wide compliance, but obligations may be delegated internally under clear arrangements, with ultimate liability resting on the lead.

Class Exemption Rules preserve targeted exemptions from the 2007 Rules, including for certain securities issuances, debt collectors, and commodity warehousing. Chapters relevant to deposits, warrants, and salary packaging remain in force, updated for terminology and concepts under the Amended Act.

Preparing for 31 March 2026: Practical Steps

1. Review Your Enrolment and Registration
   – Confirm any designated services you provide and enrol on the Reporting Entities Roll within 28 days.
   – If you offer remittance or virtual asset services, prepare detailed registration materials: ML/TF risk assessments, AML/CTF program documentation, personnel due diligence, and evidence of key personnel qualifications.
2. Update AML/CTF Programs and Policies
   – Incorporate financial sanctions controls to freeze assets and screen for designated persons.
   – Revise CDD procedures to reflect delayed verification provisions, simplified checks for low-risk entities, and updated beneficiary identification rules.
3. Test and Evaluate
   – Conduct an independent evaluation of your AML/CTF program design and effectiveness.
   – Train personnel on new Rule requirements, ensuring staff understand reporting obligations for SMRs, TTRs, and travel-rule compliance.
4. Leverage Reporting Groups
   – If part of a corporate group, decide whether to form or adjust a reporting group.
   – Agree on a lead entity and document delegation of obligations, maintaining access to records for compliance.
5. Engage in Consultation
   – Make submissions by 27 June 2025 to AUSTRAC on any aspects needing clarification or guidance.

Conclusion

Embracing the Second Exposure Draft AML/CTF Rules is critical for businesses to navigate Australia’s evolving financial crime landscape. By understanding enrolment, registration, CDD, reporting, and group obligations, entities can build resilient compliance frameworks that meet global standards and safeguard the financial system. Early preparation—reviewing programs, updating policies, and engaging with AUSTRAC—will ensure a smooth transition by 31 March 2026.

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Related Links

• Australian Government Department of Home Affairs AML/CTF Reform
• AUSTRAC New AML/CTF Rules Second Consultation
• Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Amended)
• AUSTRAC 2024 National ML/TF Risk Assessment
• FATF Recommendations: International Standards

Other FinCrime Central News About AUSTRAC’s Actions

• AUSTRAC’s Stern Mercedes Benz AML Audit Sparks Urgent Industry Overhaul
• Innovative Fintel Alliance Boosts AUSTRAC’s Fight Against Money Laundering
• AUSTRAC CEO Focuses on Gambling Industry Compliance: Action Promised
• Austrac’s Crackdown on Crypto and Remittance Firms Over AML Failures

Source: AUSTRAC’s Public Consultation on the Second Exposure Draft Rules

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