How accountants will need to comply with Australia’sTranche 2 AML/CTF laws
Tranche 2 of Australia's Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) reforms significantly impact accountants. They now fall into the category known as Tranche 2 reporting entities that provide certain designated services.
Some of the high-risk designated services offered by accountants include:
- Managing clients’ funds, securities, and other assets
- Helping buy and sell real estate and businesses
- Creating, operating, and managing companies
- Providing a registered business address for clients
- Nominee services, like acting as a director, trustee, or shareholder.
If you offer any of these designated services or others not listed, you will have compliance obligations. If so, you need to meet two key deadlines:
- Enrol with AUSTRAC (Australian Transaction Reports and Analysis Centre) by 31 March 2026.
- Comply with all Tranche 2 obligations by 1 July 2026.
If you’re impacted and need advice, talk to our team today.
Tranche 2 AML/CTF requirements for accountants
AUSTRAC outlines the obligations that accountants will need to comply with. Here’s a summary:
1. Appoint an AML/CTF Compliance Officer: This role must be at management level and it’s responsible for making sure your business complies with its AML/CTF obligations. If you’re a sole trader or small business, you can get help or advice from an independent adviser like One AML, but you remain responsible for AML/CTF compliance.
2. Develop an AML/CTF Program: All reporting entities must develop, implement, and maintain a tailored AML/CTF Policy and Risk Assessment.
3. Conduct staff AML/CTF training: All reporting entities, including accountants, must implement AML/CTF risk awareness training for employees who provide designated services and whose roles pose a money laundering (ML) or terrorism financing (TF) risk.
4. Enrol with AUSTRAC: Reporting entities must enrol from 31 March 2026 and ensure their information remains up to date. Check that you need to enrol with AUSTRAC, then get in touch with our team.
5. Perform Customer Due Diligence (CDD) and Know Your Customer (KYC): When onboarding clients, accountants must have processes in place to ensure they understand who their customers are and can effectively manage money laundering (ML) and terrorism financing (TF) risks.
6. Monitor and report certain activities to AUSTRAC: With Tranche 2, accountants will be obligated to report suspicious transactions to AUSTRAC. This requires a better understanding of red flags and indicators of illegal activities, as well as being able to identify and report suspicious transactions promptly.
7. Keep AML/CTF records: You must make and maintain accurate and complete records for at least seven years. These provide evidence of your due diligence, risk management practices, and compliance with AML/CTF obligations.
8. Maintain ongoing compliance and training: Accountants are expected to set up and maintain robust AML/CTF compliance programs tailored to their specific business risks. You’re also required to provide regular employee training on AML awareness and reporting obligations.
9. Conduct independent AML/CTF evaluations: These are required every three years to assess the effectiveness of your AML/CTF program. This will help identify any weaknesses or deficiencies in your program and make sure it remains up-to-date and aligned with regulatory requirements.
See our Tranche 2 compliance timeline and roadmap
Accountants as gatekeepers
Tranche 2 acknowledges the role of accountants as key gatekeepers in detecting and preventing money laundering. As professionals with access to sensitive financial information, they are well-positioned to spot discrepancies or unusual patterns that may indicate illicit financial activities.
The legislation emphasises the importance of accountants' professional judgment, ethical responsibilities, and their duty to act in the public interest. This highlights the elevated status and influence of the accounting industry in the fight against financial crime.
Build your reputation and client trust
The introduction of Tranche 2 underlines the importance of high professional standards within the accounting industry. By complying with the new AML/CTF obligations, accounting firms can enhance their reputation as trusted advisers and demonstrate their commitment to integrity and ethical conduct.
Fostering client trust is essential in an environment where financial crime threats continue to evolve, and stakeholders want assurances that their financial affairs are handled with the highest level of care.
Red flags for Tranche 2 entities
Under Australia's Tranche 2 AML/CTF reforms, accountants, lawyers, and real estate agents will soon be on the front lines of detecting and reporting suspicious financial activity. These suspicious matters are often referred to as red flags, and they could indicate money laundering (ML) or terrorism financing (TF).
Understanding potential red flags is important for these ‘gatekeeper’ professions to meet their new obligations and avoid facilitating financial crime.
While AUSTRAC is expected to release detailed guidance, a range of red flags based on international standards and existing AML/CTF knowledge can already be identified. Here are some general red flags, based on Financial Action Task Force (FATF) guidance and AUSTRAC:
- Unusual or unexplained large transactions, especially those inconsistent with a client’s known profile or business activity.
- Use of complex ownership structures, such as shell companies, trusts, or offshore accounts, to obscure the source or ownership of funds.
- Reluctance by clients to provide complete information or supporting documentation for transactions or the source of funds.
- Clients seeking to avoid reporting or identification requirements or requesting unusual levels of secrecy.
- Transactions involving high-risk countries or jurisdictions known for weak AML/CTF controls.
- Frequent or unexplained movement of funds between unrelated entities or accounts.
Red flags for accountants
- Preparation of accounts or tax filings that don’t match the client’s known business activities or financial profile.
- Requests to structure transactions to avoid reporting thresholds or regulatory attention.
- Requests to set up companies, trusts, or offshore vehicles with unclear or opaque ownership.
- Unusual or unexplained transfers between client accounts or between related entities with no clear business purpose.
- Clients who are reluctant to provide documentation or provide inconsistent information.
How One AML can help accountants prepare for the Tranche 2 AML/CTF laws
If your business is affected by Tranche 2, One AML can help you understand and meet your AML/CTF obligations. Get in touch today, as advisory resources are limited and time is short. We provide robust, cost-effective, and seamless solutions.