With the passing of the AML/CTF Amendment Bill 2024, the Australian legal sector is preparing for a significant regulatory shift. ‘Tranche 2’ as it’s known, of the Anti-Money Laundering and Counter-Terrorism Financing reforms will see lawyers (alongside real estate agents, accountants, and many others), brought within the scope of AUSTRAC’s oversight from 1 July 2026.
This means that many lawyers will soon be subject to these new compliance obligations, designed to further strengthen and help protect Australia’s financial system from criminal abuse. So, who exactly will be impacted, and what steps can affected legal professionals take now to prepare?
Firstly, a quick recap on what Tranche 2 is
Tranche 2 refers to the second phase of Australia’s AML/CTF reforms. Tranche 1, introduced in 2006, focused primarily on financial institutions and casinos. Tranche 2 expands this coverage to “gatekeeper professions”. Essentially, those professions that could be used to move, hide, or legitimise illicit funds (either knowingly or unknowingly). This includes:
- Lawyers
- Conveyancers
- Accountants
- Real estate agents and developers
- Trust and company service providers
- Dealers in precious metals and stones
From 1 July 2026, these sectors will be subject to obligations under the AML/CTF Act, including customer due diligence (CDD), suspicious matter reporting, and record keeping.
Which legal service providers are impacted by Tranche 2 regulations?
Not all lawyers will be subject to the new regulations. The obligations are linked to the designated services your firm provides. According to AUSTRAC, the following legal activities may trigger AML/CTF obligations:
- Helping clients buy, sell or transfer real estate or businesses
- Managing client funds or trust accounts in relation to transactions
- Establishing or restructuring companies, trusts, or legal arrangements
- Acting as a company director, trustee or similar fiduciary role on behalf of a client
- Providing registered office or business address services
- Assisting in equity or debt financing transactions
- Selling shelf companies
If your firm is involved in transactional work, particularly in property, commercial, or corporate law, it’s highly likely you’ll be affected.
Why are lawyers being included in the new AML/CTF scope?
If you needed to set up an elaborate company structure, who would you seek help and advice from? Your lawyer. Lawyers are intrinsically linked with business and the financial system and can hold large sums of money on behalf of their clients. Historically, criminals have used legal professionals to:
- Establish complex corporate structures
- Conduct property transactions to launder money
- Hold or move funds obtained from questionable endeavours
Inclusion in AML/CTF reforms aligns Australia with most developed countries, many of which have had similar regulations in place for a number of years. The Financial Action Task Force (FATF) has long recommended that member countries regulate legal professionals involved in high-risk services.
What should legal professionals do now to prepare for AML/CTF Tranche 2?
Currently, identity verification practices in the legal sector vary significantly. Some firms follow comprehensive protocols (especially those dealing in conveyancing), while others rely on basic document sighting, outdated manual processes, or even no identity checks. And although many legal professionals are aware of the risks associated with client impersonation and document fraud, others are unaware that their current processes may leave them vulnerable, both from a compliance and reputational standpoint.
AUSTRAC is still finalising the requirements for legal practices under the new Tranche 2 regulations. However, it is prudent for firms to take steps now to work with a proven industry partner, such as Scantek, to stay up to date with the necessary changes as AUSTRAC announces them.
There are clear actions that law firms can take now to reduce their future compliance burden. These include:
1. Review your services
Use AUSTRAC’s designated services tool to determine if your firm offers regulated services. If you’re a general practice, identify which team members or departments will be affected by the new rules.
2. Begin reviewing your client onboarding process
If your firm still verifies identity by sighting documents in person or asking clients to email ID, now is the time to modernise. A secure digital verification solution, such as Scantek, can reduce your risk and set you up for seamless compliance.
Scantek provides:
- Back-to-source document checks
- Biometric facial matching
- Geolocation data
- Secure audit trails and data storage
These tools support your business in fulfilling Customer Due Diligence (CDD) requirements and flagging suspicious activity, all while maintaining a seamless client experience.
3. Consult the Law Council of Australia guidance
The Law Council of Australia has developed AML guidance for legal professionals, outlining how lawyers can proactively assess money laundering risks and implement internal policies. Whilst these guidance notes don’t yet directly address Tranche 2 reforms, they are an excellent starting point ahead of the 2026 deadline.
Their guidance covers:
- Risk-based assessments for legal services
- Ethical implications for reporting
- Practical implementation of client identification policies
- Confidentiality considerations
4. Start training your staff
Early conversations and training will reduce stress closer to the rollout. Ensure that everyone involved in the impacted services, from junior legal assistants to senior partners, understands what is coming and how it may affect their work.
5. Choose an identity partner with AML/CTF experience
Scantek has worked with AML/CTF-regulated industries for years, including gaming, banking and finance. We are an Australian-owned and operated company with a history of successfully supporting businesses that handle sensitive client data, keeping that data within Australia.
Our experience in AML/CTF-regulated industries means that we understand the reporting, data handling, and audit needs of AML compliance. Our tools are designed to help you meet your obligations without disrupting your daily workflow.
Next steps ahead of the 2026 deadline
Across 2025 and into early 2026, AUSTRAC will release:
- AML/CTF Starter Kits for low-complexity small businesses
- Practical guidance on CDD, risk assessments, and record keeping
- Clarification on legal professional privilege protections under the AML/CTF framework
Appoint a partner to champion your firm’s AML/CTF compliance and stay in touch with your professional body (like your state Law Society) to ensure you’re across these resources.
Final thoughts on AML/CTF Tranche 2 reforms for legal practitioners
The Tranche 2 AML/CTF reforms represent a major shift for legal professionals involved in transactional work. With a compliance deadline of 1 July 2026, now is the time to review your client onboarding processes, start internal discussions, and adopt secure tools to help protect your firm and your clients.
Choosing a partner like Scantek means you’ll be supported every step of the way with a digital solution built for privacy, compliance, and accuracy, with a proven track record supporting AML/CTF-impacted industries..
Book a demo today to see how Scantek’s verification platform makes AML/CTF compliance seamless and secure.