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Navigating AUSTRAC’s Tranche 2 reforms

Robin Rajadhyaksha & Berril John

Strengthening AML/CTF compliance across Australia’s professional and commercial sectors

In brief

Australia’s anti money laundering and counter terrorism financing (AML/CTF) framework is undergoing its most significant reform in almost two decades.

From 1 July 2026, the long-anticipated Tranche 2 reforms will extend AML/CTF obligations beyond financial institutions to a broader range of professional and commercial sectors, including lawyers, accountants, real-estate professionals, trust and company service providers (TCSPs), and dealers in precious metals and stones.

These reforms will reshape compliance, due-diligence and risk-management practices across Australia’s non-financial economy, closing long-standing gaps identified by the Financial Action Task Force (FATF).

The big picture - why Tranche 2 matters

Global alignment

Tranche 2 will address FATF’s 2015 findings that Australia lacked regulation of “Designated Non-Financial Businesses and Professions” (DNFBPs).

Risk exposure

Professions such as law, accounting and real estate are sometimes used, often unknowingly, to conceal beneficial ownership, move funds or create complex structures.

Regulatory expectation

The reforms are expected to significantly strengthen Australia’s alignment with global AML/CTF standards, which in turn could improve the nation’s standing in future FATF evaluations and global financial-integrity benchmarks.

Business opportunity

Organisations that begin preparing now will be better placed to implement AML/CTF controls efficiently once AUSTRAC issues sector specific guidance in early 2026. Early readiness will also signal to clients, investors and counterparties that the organisation is committed to transparency, ethical conduct and responsible risk management.

Tranche 2 represents not just a compliance obligation but a pivotal moment for organisations to build credibility, enhance stakeholder trust and demonstrate leadership in governance.

Sectors in scope under Tranche 2

Under Tranche 2, AML/CTF obligations will apply to the following sectors when they provide designated services:

Sector	Examples of designated services
Legal	Managing client money, establishing companies or trusts, facilitating property or business transactions.
Accounting & TCSPs	Establishing entities, managing client accounts, acting as trustee or nominee.
Real estate	Buying, selling or leasing property, managing client funds.
Precious metals &stones	Trading high-value items such as gold, silver, diamonds, or gemstones.

Entities providing these services must enrol with AUSTRAC and maintain compliant AML/CTF programs.

Key obligations at a glance

Core obligation	Summary of requirement
Enrolment with AUSTRAC	Enrol with AUSTRAC from 31 March 2026
AML/CTF program	Develop and maintain a risk-based AML/CTF program, including governance, risk assessment, customer due diligence, and reporting procedures.
Customer due diligence (CDD)	Identify and verify customers and beneficial owners; apply ongoing monitoring and enhanced due diligence for higher-risk clients.
Reporting to AUSTRAC	Submit Suspicious Matter Reports (SMRs), Threshold Transaction Reports (TTRs), and International Funds Transfer Instructions (IFTIs) as required.
Record keeping	Retain transaction, identification and training records for seven years.
Independent review	Conduct a regular independent review of the AML/CTF program, typically every two to three years, or more frequently if there are significant changes to your business, risk profile or regulatory obligations, to assess effectiveness and compliance.

Implementation timeline

Milestone	Target date	Required action
Sector guidance	Already published	AUSTRAC has released sector-specific guidance for lawyers, accountants, real estate agents, TCSPs, and dealers in precious metals & stones. This includes designated services, obligations, risk examples, and transitional information.
Starter program kits & templates released	January 2026	AUSTRAC to publish sector-specific templates and guidance kits.
Enrolment opens	31 March 2026	Entities begin enrolling as reporting entities. Enrolment must be completed before providing any designated services and no later than 29 July 2026.
Tranche 2 obligations commence	1 July 2026	Entities must comply with AML/CTF program, reporting and record-keeping obligations
First independent review cycle	2027 onwards	Commence independent AML program review.

Next steps for organisations & how Crowe can help

Next steps for organisations	How Crowe can help
Determine applicability: Confirm whether your organisation provides a designated service under Tranche 2.	Tranche 2 readiness assessments: We determine applicability, identify designated services, scope exposure, and benchmark current controls.
Conduct a readiness review: Identify compliance gaps and prioritise actions.	Risk & gap assessments: We review existing processes, assess gaps against AUSTRAC and Treasury expectations, and provide a prioritised remediation roadmap.
Plan for independent evaluation: Schedule your first AML/CTF review to demonstrate compliance maturity.	Independent evaluation: Reviews of AML/CTF program effectiveness against AUSTRAC obligations and Global Internal Audit Standards.
Develop an AML/CTF program: Build governance, risk assessments, policies, procedures, and CDD/EDD processes tailored to your risk profile.	AML/CTF program design: End to end program development across governance, frameworks tailored to business size, complexity, and sector.
	Customer due diligence frameworks: Risk-based onboarding, beneficial ownership checks, ongoing monitoring, EDD triggers, and review cycles aligned with AUSTRAC expectations.
Engage and train staff: Build business wide awareness of Tranche 2 obligations.	Training & awareness: Targeted AML/CTF training for Boards, Executives, and operational teams, including designated service obligations.

Why partner with Crowe

Crowe’s Risk Consulting bring deep expertise in AML/CTF compliance, risk governance, and assurance.

Proven experience: Extensive experience advising government, financial institutions, and non-financial businesses on AML/CTF compliance and assurance.
Integrated expertise: Combining regulatory insight, internal audit methodology, and practical implementation support.
Global perspective: Access to Crowe’s international AML specialists and alignment with global FATF standards.

Connect with our team to understand your organisation’s obligations under AUSTRAC’s Tranche 2 reforms.

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