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Australia's AML Reforms: What Tranche 1 and 2 Entities Need to Know: A Practical Breakdown of What’s Changing and Why It Matters

Updated: Jun 16


The recent Financial Integrity Hub conference brought together regulators, law enforcement, industry, and global experts to discuss Australia’s upcoming AML/CTF reforms. These are the biggest changes in nearly 20 years and will impact all reporting entities — not just newly regulated sectors. Here’s what you need to know, in simple language.



Why the Reforms Are Happening


Organised crime groups are getting more sophisticated. They treat money laundering as a business, exploiting legal gaps, using professionals to help clean dirty money, and laundering funds through real estate, trusts, cryptocurrencies, and professional services. These crimes fuel drug trafficking, child exploitation, environmental destruction, and corruption.


AUSTRAC estimates that serious financial crime costs Australia over $68 billion a year.

The new reforms aim to close the gaps that criminals exploit, strengthen obligations across more industries, and shift everyone to a more risk-based, outcomes-focused approach.


Tranche 2 Is Just the Start


From 1 July 2025, lawyers, accountants, real estate agents, and dealers in precious metals and stones will be formally regulated. But the reforms also impact existing (Tranche 1) reporting entities. The updated Act and Rules will raise the bar across the board, especially around:


  • Governance and accountability

  • Customer due diligence (CDD)

  • Sanctions screening

  • Reporting and recordkeeping

  • Beneficial ownership


Everyone will be expected to better identify and manage risks, no matter their size or sector.


Focus on Risk and Harm — Not Just Rules


The new regime puts risk at the centre. It's not about ticking boxes. It’s about identifying how your services could be misused by criminals, and taking reasonable steps to stop that from happening.

This means:


  • Understanding your unique risks

  • Taking proportionate action to address them

  • Looking beyond legal risk and considering social and economic harm


Personal Accountability Will Matter


Compliance isn't just a team responsibility anymore. Boards, directors, and AML Compliance Officers will face clearer expectations and higher scrutiny.


Regulators and the public increasingly expect senior leaders to understand and own AML risk. Directors who ignore warnings or fail to act could face personal consequences.


AUSTRAC Is Getting Smarter


AUSTRAC is investing in AI, big data, and collaborative analytics. It has already uncovered laundering networks that weren’t visible before. This means:


  • Faster identification of suspicious patterns

  • More targeted enforcement

  • Less tolerance for inaction


AUSTRAC has also promised more guidance and practical tools to help businesses meet their obligations.


Starter Packs and Guidance Are Coming


To help new and smaller businesses comply, AUSTRAC is creating sector-specific starter packs. These will include templates for risk assessments and AML programs based on a "typical" business model.


If your business changes significantly, you’ll need to adjust your AML program accordingly — but these templates are a helpful starting point.


Sanctions, Scams, and Digital Risk Are in the Spotlight


Criminals are increasingly using scams, crypto, and digital platforms. The reforms bring sanctions compliance into AML programs and push for better tracking of virtual asset providers, cash-intensive businesses, and real estate transactions.


We also heard how scams and child exploitation are deeply connected to financial systems. This isn't just about money — it's about protecting lives and communities.


Get Started Now


Even though some details are still being finalised, the message is clear: don’t wait.

Here are a few things you can do today:


  • Identify who is responsible for AML in your business

  • Understand your sector’s risks

  • Review (or create) your AML/CTF program

  • Stay informed on guidance from AUSTRAC


If you’re not sure where to begin, our team can help.


Let’s Work Together to Close the Gaps


This reform is a big step forward for Australia. Whether you’re a bank, law firm, accountant, or real estate agency, you play a critical role in protecting our economy from criminal abuse.


We’re here to support you on that journey.



Lori Klaassen in the audience at the Integrity Insights: Financial Crime Summit 2025 Credit: FIH 2025

 
 
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