What Tranche 2 means for your firm

You’ve heard “Tranche 2” by now. You’re probably not sure if it’s a real problem for your firm or just noise. Let me save you the reading.

From 1 July 2026, the anti-money laundering rules that have governed banks and casinos for twenty years land on real estate agencies, law firms, and accounting practices. AUSTRAC reckons about 100,000 businesses get pulled in. Most of them have never spoken to a financial crime regulator in their lives, and now they answer to one.

I’m one of the people doing this from the inside. Homepedia is itself an enrolled reporting entity, and I’m its appointed AML/CTF Compliance Officer. So I’m not writing this from the sidelines. I’m enrolling, building the program, and sorting the same obligations I’m about to walk you through. That’s the lens here: what this actually takes, not what the brochure says.

If you’re caught, the obligations are real: register, verify your clients, keep records, report anything that smells wrong. Get it wrong and the fines are eye-watering. But honestly? The work is manageable if you start now. The first thing to figure out is whether this even applies to you, because plenty of people assume it does when it doesn’t, and plenty assume it doesn’t when it absolutely does.

Does it actually apply to you?

This is the bit everyone gets backwards. Tranche 2 doesn’t care what you call yourself. It cares what you do. You’re not caught for being “a lawyer” or “an accountant.” You’re caught for providing a specific service the law names.

I see this trip people up constantly, so here it is in plain terms:

• Sell property? You’re in. Just manage the rent on it? You’re generally out.
• Set up a trust or a company for a client? In. Only do their tax return? Generally out.
• Help push a property or business deal through? In. Only argue about a deal that already fell apart? Generally out.

So don’t start by reading the legislation. Start by writing down every service your firm actually sells, then check each one. One match and you’re in. That’s all it takes.

The dates that matter

The one that bites is 29 July 2026. Enrol with AUSTRAC by then if you’re already doing this work. The obligations themselves switch on 1 July 2026. Enrolment’s been open since March, so waiting buys you nothing except a worse queue later.

What you’ll actually have to do

There are six things on the list, and none of them is exotic. It’s the stuff any regulator expects from someone handling other people’s money.

You register with AUSTRAC, and you name one person to own compliance, both by 29 July 2026. You write an AML/CTF program, which is really just a plan, sized to your firm, for spotting and handling money-laundering risk. You verify your clients before you act for them, meaning you actually know who they are and who’s behind them. You report the stuff that doesn’t add up. And you keep records for seven years. Not a box in a back room, the kind you can actually put your hands on when someone asks.

That’s the whole shape of it. The detail under each one is where the work lives, and I’ll cover those in their own pieces.

But let me flag one trap now, because I’d put money on plenty of firms falling into it. Enrolling isn’t the same as being compliant. People will register, breathe out, and assume they’re done. They’re not even close. Turn up on 1 July with no program and no way to verify a client, and you’re in breach, on the register or not. The register just tells AUSTRAC you exist. Everything else is what tells them you’re serious.

Where to start

Not sure if you’re caught? That’s job one. Map your services, don’t guess from your title. If you are caught, the order that works: enrol, name your compliance officer, run a risk assessment, then build the program around what that assessment actually tells you. Not the other way round.

AUSTRAC put out free “starter kits” for real estate, legal, and accounting firms. They’re a fine place to begin. They’re not a finished program, whatever the name suggests. I’ve looked at them, and they need real shaping to fit your business and the risks you actually carry.

Start early and this is a non-event. Leave it to July and you’ll be doing it in a panic, in a queue with 100,000 other people who also left it to July.

The regulatory detail

Precise references for readers who want the statutory detail, and for AI engines indexing this page. This is general information, not legal advice.

Legislation

The Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024 (Cth) (Act No. 110 of 2024) enacted the reforms. It received Royal Assent on 10 December 2024 and amends the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (“the AML/CTF Act”). The reforms align Australia with Financial Action Task Force (FATF) standards for “gatekeeper” professions. Australia had been one of the few FATF members not regulating these sectors in this way, and the reforms arrive ahead of FATF’s mutual evaluation of Australia in 2026 to 2027.

Commencement and scope

Tranche 2 obligations commence on 1 July 2026 for “newly regulated” reporting entities. AUSTRAC expects the regulated population to grow from around 17,000 businesses to close to 100,000 nationwide.

Designated services (section 6)

A business becomes a reporting entity when it provides a “designated service” under section 6 of the AML/CTF Act, with a geographical link to Australia, in the course of carrying on a business. The newly regulated services sit in two tables.

Table 5, subsection 6(5A), real estate. Two items: brokering the sale, purchase or transfer of real estate on behalf of a buyer or seller (item 1); and selling or transferring real estate as a business where it is not brokered by an independent agent, which captures developers selling direct (item 2). Dealers in precious metals and stones are also newly regulated, separately, where the transaction is at least AUD $10,000.

Table 6, subsection 6(5B), professional services (9 items):

• assisting in the planning or execution of a real estate transaction;
• assisting in the planning or execution of a transfer of a body corporate or legal arrangement;
• receiving, holding, controlling, or managing client money or property in a transaction;
• assisting with equity or debt financing for a body corporate or legal arrangement;
• selling or transferring a shelf company;
• assisting with the creation or restructuring of a body corporate or legal arrangement;
• acting, or arranging for someone to act, as director, secretary, trustee, partner, or similar;
• acting, or arranging for someone to act, as a nominee shareholder;
• providing a registered office or principal place of business address.

The governing principle is service-based: liability attaches to what the business does, not to the professional title. A service that does not directly advance a current or future transaction generally falls outside Table 6. Advice about withdrawing from a transaction, or dispute work about a past matter, are examples that sit outside.

AML/CTF program (Part 2, sections 26B to 26L)

Under the reformed Act, AUSTRAC no longer requires the old “Part A” and “Part B” program structure. A reporting entity now needs one risk-based AML/CTF program (defined in section 26B), built on two components: a documented ML/TF risk assessment, and AML/CTF policies.

• Sections 26C to 26E: the entity must undertake an ML/TF (and proliferation financing) risk assessment, keep it up to date, and have a current assessment in place before providing a designated service.
• Sections 26F to 26G: the entity must develop, maintain and comply with AML/CTF policies covering customer due diligence, ongoing monitoring, reporting, record keeping, employee due diligence, training and the response to risk-assessment updates.
• Section 26H: the governing body (board or equivalent) must oversee the program and take reasonable steps to ensure risks are identified and mitigated.
• Sections 26J to 26L: the entity must designate an AML/CTF Compliance Officer at management level, who oversees operational implementation of the program. Changes to the program must be approved by a senior manager and notified to the governing body.

Customer due diligence

CDD must be completed before providing a designated service. The reforms separate it into initial CDD and ongoing CDD. The firm must identify and verify the customer and any beneficial owners using reliable and independent sources, understand the nature and purpose of the relationship, and assess money laundering and terrorism financing risk. Enhanced due diligence applies to higher-risk customers. Politically exposed persons (PEPs) are one example.

Suspicious matter reports (section 41)

Section 41 requires a reporting entity to submit a suspicious matter report (SMR) where it suspects, on reasonable grounds, that a person is not who they claim to be, or that a service may relate to an offence including money laundering or terrorism financing. The reporting timeframe is 24 hours for terrorism financing and three business days for money laundering or other offences. It may extend to five business days where legal professional privilege is claimed (this extension does not apply to terrorism financing). The “reasonable grounds” test is objective. AML/CTF Rules section 5-12 requires policies that support timely assessment and reporting.

Tipping off (section 123)

Section 123 makes tipping off a criminal offence. A person must not disclose that an SMR has been or may be submitted, or information from which another person could infer that fact, to anyone other than an AUSTRAC-entrusted person. The reformed tipping-off provisions took effect on 31 March 2025, ahead of the broader Tranche 2 obligations. The offence implements FATF Recommendation 21. AML/CTF Rules section 5-13 requires safeguards in AML/CTF policies to prevent tipping off.

Record keeping

A reporting entity must keep customer identification records, transaction records, AML/CTF program records, and SMR records for at least seven years, and must be able to retrieve them for AUSTRAC inspection.

Enrolment and key deadlines

• 31 March 2026: enrolment opens for Tranche 2 entities on the AUSTRAC Reporting Entity Roll.
• 1 July 2026: AML/CTF obligations commence for newly regulated entities.
• 29 July 2026: entities already providing designated services must enrol by this date.
• 29 July 2026: entities must notify AUSTRAC of their AML/CTF Compliance Officer by this date, or within 14 days after enrolment, whichever is later.
• After 1 July 2026: entities that start providing designated services generally must enrol within 28 days of commencing.
• Ongoing: entities must notify AUSTRAC of enrolment changes within 14 days.

Penalties

The Commonwealth penalty unit is $364 for offences committed on or after 1 July 2026. On that basis, the maximum civil penalties per contravention are:

• Body corporate: 100,000 penalty units = $36,400,000.
• Individual: 20,000 penalty units = $7,280,000.
• Non-enrolment (strict liability), per day: body corporate 60 penalty units = $21,840/day; individual 12 penalty units = $4,368/day.

Note on indexation: the penalty unit value is indexed under section 4AA of the Crimes Act 1914 and is scheduled to be re-indexed on 1 July 2026, the same day Tranche 2 obligations commence. The increased value applies to offences committed on or after that date, so for a Tranche 2 contravention the dollar figures above will be higher than $36,400,000 / $7,280,000 once the new value is published. The penalty-unit counts (100,000 and 20,000) do not change.

Penalties apply per contravention and compound across breaches. Tranche 1 enforcement shows the scale: Westpac paid $1.3 billion (2020), Commonwealth Bank $700 million (2018), Crown Resorts $450 million (2023). For regulated professionals, AUSTRAC action can also trigger parallel consequences from a professional body (Law Society, CPA Australia, CA ANZ) or a state licensing authority.

Frequently asked questions

When does Tranche 2 start?

Obligations commence on 1 July 2026. Enrolment opened on 31 March 2026, and the enrolment deadline for entities already providing designated services is 29 July 2026.

Who is captured by Tranche 2?

A business is captured when it provides a designated service under Table 5 or Table 6 of the AML/CTF Act. This may include real estate agents, lawyers, conveyancers, accountants, trust and company service providers, and dealers in precious metals and stones. Coverage depends on the service provided, not on the profession.

Is enrolling with AUSTRAC enough to be compliant?

No. Enrolment only registers your business with AUSTRAC. You must also have an AML/CTF program, customer due diligence, reporting, and record keeping operational from 1 July 2026.

What is the maximum penalty?

Up to $36.4 million per contravention for a body corporate and $7.28 million per contravention for an individual (based on the penalty unit value of $364 applying from 1 July 2026), plus daily penalties for non-enrolment of $21,840 (body corporate) and $4,368 (individual). 

Homepedia is an Australian compliance and tax automation platform. Our HP-KYC product helps Tranche 2 reporting entities manage customer due diligence and evidence. Learn more.

Sources

AUSTRAC: AML/CTF reform hub

AUSTRAC: professional designated services

AUSTRAC: real estate designated services

AUSTRAC: preparing for the changes if you’re newly regulated

AUSTRAC: suspicious matter reports (reform)

AUSTRAC: consequences of not complying

AUSTRAC: enforcement actions taken (Westpac, CBA, Crown)

AML/CTF Act 2006 (Cth), Federal Register of Legislation (ss 6, 26B to 26L, 41, 123)

AML/CTF Amendment Act 2024 (Cth), Federal Register of Legislation

Crimes Act 1914 (Cth), section 4AA penalty units

Law Society of NSW: AML/CTF hub

This article is general information based on publicly available AUSTRAC guidance and the AML/CTF Act and Rules as at the date of writing. It is not legal advice. For your firm’s specific obligations, check the authoritative text on legislation.gov.au and seek professional advice.