How Can Australian Accountants Prepare for AML/CTF Compliance?

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Australian accountants will see notable shifts in their regulatory landscape in 2026 due to the broadening of anti-money laundering and counter-terrorism financing (AML/CTF) rules. These anti-money laundering reforms, known as Tranche 2, will bring accountants into the AML/CTF regime as regulated entities. This expansion is a crucial step in aligning Australia with global standards set by the Financial Action Task Force (FATF) in the fight against money laundering and terrorism financing.

This guide is designed to assist accountants in understanding the impact of these Tranche 2 AML/CTF reforms. It will provide essential information on what these changes mean for accountants and the key steps they need to take now to ensure compliance and effectively navigate the new regulatory landscape.

Understanding the Urgency of AML/CTF Tranche 2 for Accountants

The Expansion of AML/CTF to Accountants: Tranche 2 Explained

The Australian government is broadening its AML/CTF framework to include accountants through the introduction of Tranche 2. These reforms aim to align Australia with global standards set by the Financial Action Task Force (FATF).

A significant milestone in these reforms was the passage of the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2024 (Cth), which became law on 10 December 2024. This legislative change designates certain services offered by professionals, including accountants, as regulated under the AML/CTF regime. As a result, accountants must now adhere to these enhanced regulations to ensure compliance and contribute to the integrity of the financial system.

Why Now? The 2026 Deadline and Key Dates for Accountants

Accountants must recognise the urgency of complying with AML/CTF Tranche 2 due to the approaching implementation deadline of 1 July 2026. Taking action now is essential for accounting practices to adequately prepare for these significant changes. The following key milestones highlight the importance of immediate attention:

• December 2024: The Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2024 (Cth) is passed, formalising the legislative changes.
• 31 March 2026: Registration opens with AUSTRAC for accountants providing designated services, marking a critical step toward compliance.
• 1 July 2026: All reforms come into effect, making AML/CTF compliance mandatory for accountants offering designated services.

These dates indicate that the timeline for implementation is already in motion, with the final deadline less than two years away. Therefore, it is crucial for accounting practices to begin their preparation without delay to ensure full compliance by July 2026.

The Impact of AML/CTF Reforms on Accountants: Designated Services and Obligations

Identifying the 9 Designated Services Relevant to Accountants

The AML/CTF reforms will significantly impact accountants by designating specific services that trigger compliance obligations. These designated services aim to address potential vulnerabilities to money laundering and terrorism financing. If accountants offer one or more of these nine services, they will be classified as reporting entities under the AML/CTF regime.

The 9 designated services relevant to accountants are:

• Real estate transactions: Assisting clients in buying, selling, or transferring real estate, unless mandated by a court or tribunal order. This includes services provided in the course of carrying on a business.
• Body corporate or legal arrangement transactions: Helping clients in transactions to sell, buy, or transfer a body corporate or legal arrangement, unless required by a court or tribunal order and provided in the course of business.
• Managing client funds, accounts, or property: Receiving, holding, controlling, or managing client money, accounts, securities, virtual assets, or other property as part of assisting in a transaction within the scope of business activities.
• Equity or debt financing transactions: Assisting clients in organising, planning, or executing transactions for equity or debt financing related to a body corporate or legal arrangement in the course of business.
• Selling or transferring shelf companies: Selling or transferring a shelf company as part of business operations.
• Creating or restructuring bodies corporate or legal arrangements: Assisting clients in planning or executing the creation or restructuring of a body corporate (excluding certain Indigenous corporations) or a legal arrangement during business activities.
• Acting as or arranging for nominee positions: Acting as, or arranging for someone to act as, a director or secretary of a company, a power of attorney, a partner in a partnership, a trustee of an express trust, or an equivalent position in another legal arrangement on behalf of a client during business operations.
• Acting as or arranging for nominee shareholders: Acting as, or arranging for another person to act as, a nominee shareholder of a body corporate or legal arrangement on behalf of a client within business activities.
• Providing registered office or principal place of business address: Offering a registered office address or principal place of business address for a body corporate or legal arrangement in the course of business.

Core AML/CTF Compliance Obligations for Accounting Practices

Accountants who provide designated services must adhere to core AML/CTF compliance obligations as reporting entities. Meeting these obligations is essential to comply with the anti-money laundering reforms. To ensure compliance with the AML/CTF regime, accounting practices need to undertake several key actions, including:

• Enrolling with AUSTRAC: Accountants must register with AUSTRAC as reporting entities. Registration is scheduled to open from 31 March 2026.
• Developing an AML/CTF program: Establish a comprehensive AML/CTF program that includes a risk assessment of the accounting practice, its clients, and the services offered. This program should mitigate identified risks of money laundering and terrorism financing and must be documented with clear policies and procedures for various compliance activities.
• Conducting Customer Due Diligence (CDD): Verify client identities, understand the nature of their business, and assess the risk associated with each client and the services being provided. Customer due diligence is a critical aspect of the AML/CTF program and is essential for identifying and managing potential risks.
• Appointing a Compliance Officer: Nominate a Compliance Officer responsible for overseeing the implementation and management of the AML/CTF program and ensuring ongoing compliance.
• Implementing AML/CTF Risk Awareness Training: Establish and implement an AML/CTF risk awareness training program for all relevant staff. This training should educate employees about AML/CTF risks, compliance obligations, and the practice’s AML/CTF program and procedures.
• Ongoing Customer Due Diligence and Transaction Monitoring: Conduct ongoing customer due diligence and monitor transactions to identify any suspicious activities. Continuous monitoring ensures that client activities align with the accountant’s understanding of their business and risk profile.
• Reporting Suspicious Matters to AUSTRAC: Report suspicious transactions or activities to AUSTRAC, including situations where there are concerns about potential money laundering or terrorism financing.
• Submitting an Annual Compliance Report to AUSTRAC: Submit an annual compliance report detailing how the accounting practice has met its AML/CTF obligations throughout the year.
• Undergoing Independent Reviews of the AML/CTF Program: Conduct regular independent reviews of the AML/CTF program by an external or internal party to ensure its effectiveness. These reviews help identify areas for improvement and ensure the program remains robust and compliant.

Key Steps Accountants Should Take Now for AML/CTF Readiness

Conducting a Preliminary Risk Assessment for Your Accounting Practice

Accountants should begin preparing for the upcoming AML/CTF changes by undertaking a risk assessment of their accounting practice. This initial step is crucial for understanding the specific AML/CTF risks that your business might face.

A risk assessment involves evaluating various aspects of your practice, including:

• Types of Clients: Assess the different categories of clients you serve.
• Services Provided: Review the range of services your practice offers.

By conducting a preliminary risk assessment, you can identify areas that may be more susceptible to money laundering or terrorism financing. Consider the following factors to tailor your AML/CTF program effectively:

• Nature of Clients: Understand the profiles and backgrounds of your clients.
• Geographical Locations: Evaluate the regions where you operate and their associated risks.
• Designated Services: Identify the specific services you offer that may trigger AML/CTF obligations.

Understanding these elements will help you address the most pertinent risks effectively, ensuring that your AML/CTF program is both comprehensive and targeted.

Reviewing and Updating Customer Due Diligence (CDD) Processes

Another essential step for accountants is to review and update their Customer Due Diligence (CDD) processes. As part of the AML/CTF compliance obligations, accountants need to verify the identity of their clients and understand the nature of their business relationships.

To ensure your CDD processes align with the upcoming AML/CTF requirements, consider the following actions:

• Identify and Verify Clients: Examine how you currently identify and verify your clients.
• Monitor Transactions: Review how you monitor client transactions for suspicious activities.

Updating your CDD processes may involve incorporating new procedures to meet enhanced due diligence standards. This includes:

• Enhanced Scrutiny for High-Risk Clients: Implement more rigorous checks for clients deemed high-risk.
• Transaction Monitoring Enhancements: Strengthen the mechanisms for monitoring and reporting suspicious transactions.

By updating these processes, you ensure that your accounting practice remains compliant with the latest AML/CTF regulations, thereby mitigating potential risks effectively.

Initiating AML/CTF Risk Awareness Training for Staff

Initiating AML/CTF risk awareness training for staff is a vital step in preparing for the new regulatory landscape. Training ensures that all team members understand the importance of AML/CTF compliance and their individual responsibilities in upholding these obligations.

Effective AML/CTF training should cover several key areas:

• Recognising Suspicious Activities: Teach staff how to identify and report unusual transactions.
• Understanding CDD Requirements: Ensure everyone is aware of the procedures for verifying client identities and conducting due diligence.
• Adhering to the AML/CTF Program: Reinforce the importance of following your firm’s AML/CTF policies and procedures.

Starting this training early will not only prepare your staff for the changes but also foster a culture of compliance within your accounting practice. A well-informed team is better equipped to identify and mitigate potential risks, ensuring that your practice remains secure and compliant.

By taking these key steps now, accountants can effectively prepare for AML/CTF Tranche 2 reforms, ensuring their practices remain compliant and resilient against potential financial crimes.

Understanding Customer Due Diligence (CDD) and Simplified CDD

The Importance of Customer Due Diligence in AML/CTF Compliance

Customer due diligence (CDD) is a critical aspect of AML/CTF compliance for accountants. It is essential for accountants to assess the risk levels associated with their clients. This process involves:

• Undertaking due diligence on clients and their related businesses.
• Identifying beneficial owners, especially for high-risk transactions.

By conducting thorough customer due diligence, accountants can effectively manage and mitigate the risks of money laundering and terrorism financing within their practice. This helps to protect the integrity of the financial system and ensures accountants are not unknowingly facilitating illicit activities.

Simplified Customer Due Diligence: A Practical Approach for Accountants

Simplified customer due diligence is a practical approach that accountants can use for clients assessed as low risk. This method acknowledges that not all clients pose the same level of money laundering or terrorism financing risk. For accountants who have established long-term relationships with clients and have already conducted know-your-client (KYC) activities, a less intensive approach to CDD may be appropriate.

This simplified approach means that if an accountant’s risk assessment indicates a client presents a low risk of engaging in money laundering or terrorism financing, they are not required to undertake the same extensive due diligence measures as they would for a high-risk client. This risk-based approach allows for a more efficient and tailored application of CDD, ensuring that compliance efforts are proportionate to the actual risk involved. It moves away from a one-size-fits-all approach, recognising the diverse nature of client relationships and risk profiles in accounting practices.

Conclusion

The expansion of AML/CTF regulations to include accountants marks a significant shift in the Australian regulatory landscape. These anti-money laundering reforms, known as Tranche 2, are not just a future consideration but a present imperative for accountants. With the rapidly approaching deadline of 1 July 2026, it is crucial for accounting practices to recognise the urgency and begin taking proactive steps towards compliance without delay.

To navigate these changes effectively and ensure your practice is ready, it is essential to seek expert guidance. Contact Client A today to explore our proven solutions and specialised knowledge in AML/CTF compliance. Preparing now will not only ensure adherence to the new regulations but also safeguard your practice against potential risks and demonstrate your commitment to maintaining the highest standards of professional integrity in the face of evolving anti-money laundering and counter-terrorism financing obligations.

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