Australia’s AML/CFT Law Tranche 2 Expanding Compliance Requirement

The Albanese Government of Australia has taken a progressive step to improve AML compliance in the country with the introduction of the “Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Amendment Bill 2024” in the parliament on 11 Sep 2024.

This ruling extends AML laws to cover tranche 2 entities such as “lawyers, accountants, real estate professionals, and dealers in precious stones and metals.” This implies that newly obligated entities will also have to follow new AML CFT regulations in Australia as other entities.

Gaps in Australia’s AML Regulations

Billions of Australian dollars are produced every year through illicit activities such as “drug trafficking, tax evasion, cybercrime, human trafficking and arms trafficking.” Money obtained from these illegal operations is used to finance severe financial crimes.

The financial watchdog, “The Financial Action Task Force (FATF),” determined that Australia failed to act upon some of the FATF recommendations related to the DNFBP sector. Australia’s previous AML/CFT regime lacked regulations for “tranche-2” businesses such as “lawyers, accountants, and real estate agents.”

Even though there were “clear warnings that criminal gangs and terrorists were exploiting the economy of Australia, still the earlier government had done nothing for nearly ten years to save the financial system of the country and expose Australia to risks,” as stated by the media center of the Attorney-General’s Department of Australian Government.

Protecting Australia from the FATF Grey List

As per a media release from the Attorney General’s portfolio, Australia is at risk of being included on the FATF “greylist.” 

Being on the grey list will damage the reputation of the country’s financial sector worldwide and cause significant harm to the public and businesses in Australia.

This legislation will also assist the country in complying with international AML regulations recommended by FATF.

Highlights of the Australia’s New AML/CFT Amendment Bill

• The government is taking steps to keep the AML/CFT rules simple and clear to a better understanding.
• Businesses will prevent and detect financial crimes by implementing measures effectively.
• The provisions will permit businesses to set their resources according to their preferences by implementing a risk based approach in line with their unique requirements.
• These modifications will improve the quality of financial data.
• Businesses will safeguard themselves from being taken advantage of by criminals, making preventing illicit activities easier.

When New AML Regulations for Tranche 2 Entities in Australia Will Come into Effect?

• March 31, 2026 – New CDD rules kick in, and previously unregulated industries must start prepping.
• July 1, 2026 – Full rollout of the updated AML regime, giving AUSTRAC sharper tools to keep us all compliant.

Stakeholder Participation in Tranche 2 Legislation

The Government appreciates the participation of “tranche 2” entities in discussing the bill for providing helpful feedback. The new ruling aims to update Australia’s AML/CFT regime to keep up with the worldwide financial system.

It can protect their financial systems by closing the loopholes that criminals find to misuse the financial systems.

Expanding AML Regulations to Virtual Assets

Bill extends rules to cover “virtual asset service providers,” which are misused by “serious and organized groups” to hide the source of the funds obtained by illicit activities.

Read Also:

• Impact of Federal Government’s Recommended AML/CFT Guidelines On Lawyers and Other Professional Services
• UAE Govt Issues New Amendments in the AML Law
• SRA Announces New Requirements for Legal Professionals

AUSTRAC and Lawmakers’ Collaboration

The Australian Government expects everyone from the Australian Parliament to participate and support passing the bill to combat financial crimes such as money laundering and terrorism financing in Australia.

AUSTRAC and the Attorney-General’s Department have worked closely with various groups on the proposed changes during 2023 and 2024.

• They held “two rounds of consultations” in this duration, sharing details through seven consultation papers.
• They have conducted “over 100 meetings” with industry experts and the government in recent years, including roundtable discussions.
• The department received “270 written submissions” from these consultations and discussions. 217 submissions have been made public with permission on the department’s official website.

We can consider this as “high time” for  DNFBP (Designated Non-Financial Businesses and Professions) or tranche 2 entities to ensure AML compliance with the latest AML/CFT regime, considering these new amendments to the bill.

This implies that lawyers, accountants, real estate professionals, and dealers in precious stones and metals, in Australia may now be required  to undergo mandatory AML screening, such as PEP Screening and Sanctions Screening,  as other obligated entities have been required to do.