The regulatory environment for anti-money laundering (AML) and counter-terrorism financing (CTF) in Australia is undergoing major reform under AUSTRAC’s leadership. Driven by amendments to the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) and updated regulatory rules, AUSTRAC’s reform agenda seeks to close long-standing gaps that have allowed organised criminals to exploit so-called “gatekeeper professions” and unregulated sectors. The initiative aims to strengthen Australia’s ability to detect, prevent and disrupt money laundering, terrorism financing and proliferation financing across the broader financial ecosystem.

Under the amendments, the legislative changes take effect for current reporting entities on 31 March 2026, while newly regulated sectors (often referred to as “Tranche 2” entities) become subject to full AML/CTF obligations on 1 July 2026.
The reforms follow industry consultation rounds and regulatory expectation updates.

These reforms are not merely cosmetic. They impose new obligations: stronger customer due diligence (CDD) frameworks, more robust AML/CTF programs, new value transfer / travel-rule obligations, updated definitions (including bearer negotiable instruments), new information collection powers for the regulator, and expectations to adopt a risk-based, outcomes-oriented approach rather than a check-box regime.

Reform changes and legal framework tightening

From a compliance standpoint, the amendments introduce or clarify multiple legal obligations. The AML/CTF Amendment Act 2024 shifted the regime from more static compliance to one oriented around measurable outcomes. Reporting entities will now be required to perform enterprise-level risk assessments covering money laundering (ML), terrorism financing (TF) and proliferation financing (PF). They must develop policies, procedures, systems and controls that are proportionate to the assessed risk. Senior management or governing bodies must explicitly oversee compliance, and a fit and proper AML/CTF compliance officer must be appointed.
Customer due diligence rules have been restructured: initial and ongoing due diligence must consider the risk associated with the type of service, the customer’s profile, jurisdictions involved and complexity of transactions. Enhanced due diligence applies in defined higher-risk circumstances. Simplified due diligence may still be applicable in low-risk scenarios but under clarified conditions.
The reforms also refine definitions that had been vague; for example, the definition of bearer negotiable instruments is replaced to align with international standards, reducing reporting of non-negotiable or non-bearer instruments in cross-border movement reporting.

On the value transfer side, designated services including remittance, virtual assets and other value transfer services will need to comply with the travel rule obligations: ordering, intermediary and beneficiary institutions must collect identity details, transmit payer/payee information along the transfer chain, screen for missing data and ensure full traceability. The new concept of International Value Transfer Services (IVTS) replaces earlier frameworks for international funds transfers, aligning regulatory obligations across technological or channel differences. Transitional arrangements preserve older requirements (IFTI) until full technical systems are in place.

Money laundering risks in gatekeeper sectors and new regulated industries

A key feature of the reform is the extension of regulatory reach into sectors historically used to launder illicit funds, or serve as intermediaries in layering/concealing funds. Gatekeeper professions such as real estate professionals (including agents, buyers’ agents and developers), lawyers, accountants, trust and company service providers, conveyancers, and dealers in precious metals and stones are newly defined as “reporting entities” under the designated services rules from 1 July 2026.

These professions often act as intermediaries in large transactions with high value, complexity, cross-jurisdiction flows, or asset conversions (e.g. converting cash into real estate or precious metals). Criminal organisations may exploit them to inject illicit cash, disguise ultimate beneficial ownership, structure transactions, or shift value across borders via trade or asset purchase.

The regulator emphasises that criminals exploit gaps in the financial system and unregulated sectors. By bringing these gatekeepers under the AML/CTF regime, including requiring enrolment, compliance programs, customer due diligence, suspicious matter reporting, record-keeping, and training, the regime aims to reduce the risk vectors that criminals have exploited.

For new sectors, the reforms include tailored guidance, starter compliance program templates, training modules and sector-specific risk indicators or typologies. These will help newly regulated businesses identify typical indicators of suspicious activity (e.g. unusual property purchases, large cash or precious metals purchases, complex trust structures, or rapid resale).

Implementation, enforcement expectations and transition timeline

From a practical compliance standpoint, the regulator has set clear expectations and timelines. For existing reporting entities, the reforms begin on 31 March 2026, with obligations such as new reporting requirements, redesigned AML/CTF programs, updated due diligence obligations, and changes in value transfer obligations. Entities are expected now to develop implementation plans, update internal controls, review policies and systems, and start taking tactical improvements ahead of the commencement date.

Newly regulated sectors (Tranche 2) will have access to enrolment and registration starting from 31 March 2026, and must be fully compliant by 1 July 2026. That means by then, they must have a registered status (if providing virtual asset services, also registration rather than only enrolment), an AML/CTF compliance officer, trained staff, and a tailored AML/CTF program (they can use a starter program provided by the regulator or develop their own).

After 1 July 2026, enforcement activity in those new sectors will escalate. The regulator indicated that entities that wilfully ignore the obligation to enrol or are complicit or wilfully blind to money laundering will be priorities for enforcement. For current entities, failure to manage ML/TF risks is already a regulatory concern and will remain so under the enhanced regime.

Because the reforms are tied also to the upcoming mutual evaluation under international norms (by the Financial Action Task Force), there is heightened regulatory urgency to align with global standards.

Impacts on compliance programs and detection capability

The shift from compliance checklists to a risk-based, outcomes oriented framework means that compliance officers must think beyond meeting formal requirements. Controls must meaningfully reduce the risk of money laundering, terrorism financing or proliferation financing. That means analysing client profiles, transaction patterns, jurisdictions, product types, and potential layering or integration schemes used by criminal actors.

Program design will need to be scalable to business size, complexity and risk exposure. Starter kits provided by the regulator are intended to support smaller or newly regulated firms to set up baseline compliance programs. Ongoing risk assessments should feed into policy updates, staff training, suspicious activity detection, and reporting.

Because sectors like real estate or precious metals often deal with cash or high value items, the AML risk may be significant (e.g. cash purchases, hidden beneficial owners, purchases and resales or conversions into other assets). Virtual asset service providers are also impacted, with obligations to register and comply with transfer rules. The travel rule for value transfer means that each participant in the transfer chain must collect, hold and transmit payer/payee details, increasing traceability and reducing anonymity avenues for criminals moving illicit funds.

This enhanced traceability and integrated control environment reduces opportunities for layering or integration of illicit funds. It also supports better detection of suspicious patterns across sectors that historically were outside regulatory scope.

Final thoughts on evolving AML environment

The regulatory reforms represent a significant tightening of the Australia AML/CTF framework. Gatekeepers and high-risk sectors that were previously less regulated will soon be caught under full obligations, closing key loopholes exploited by organised criminals. Enforcement expectations are rising, and compliance programs must move from box-checking to genuinely risk-driven systems focused on outcomes.

The upcoming mutual evaluation means that the regulator must demonstrate compliance with international standards, and the reforms appear designed to meet those obligations. Firms that act early, update systems, conduct risk assessments, train staff, implement robust CDD, and maintain proper reporting will be better placed to manage money laundering risks. Meanwhile those who delay or ignore obligations face increasing regulatory scrutiny and potential enforcement.

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Related Links

• Official page on AML/CTF reforms and upcoming obligations
• Summary of changes for current reporting entities under the amended law
• Summary of obligations for newly regulated (Tranche 2) entities
• Information on new value transfer and travel rule obligations
• Regulatory expectations and priorities for 2025-26

Other FinCrime Central Articles About AUSTRAC’s Regulation Changes

• AUSTRAC Sets 2026 as Milestone Year for AML/CTF Reform
• AUSTRAC’s Public Consultation on the Second Exposure Draft Rules Ignites Clarity
• Australia Enforces Tougher AML Regulations for Crypto ATM Operators

Source: AUSTRAC

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