AUSTRAC, Australia's financial intelligence agency and anti-money laundering and counter-terrorism financing (AML/CTF) regulator, has moved from education to investigation. On 28 August 2026, AUSTRAC announced it had begun issuing notices under section 167 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (the AML/CTF Act) to businesses that appear to be providing designated services without having enrolled.
"The time for preparation has passed," said AUSTRAC CEO Brendan Thomas. "Enrolment is a basic requirement." On 30 September 2026, Lawyers Weekly and Accountants Daily reported that law firms are facing closer scrutiny, describing the notices as "marking a shift from implementation to enforcement".
For legal practices brought into the regime by Tranche 2, being unenrolled is no longer a risk that can be managed quietly.
What happened
Tranche 2 extended AML/CTF obligations from 1 July 2026 to lawyers, accountants, conveyancers, real estate professionals, trust and company service providers and dealers in precious stones and metals. Businesses already providing newly regulated designated services had to enrol with AUSTRAC by 29 July 2026.
Enrolment at that deadline was uneven. An analysis published by Clyde & Co on 31 August puts accounting practices at roughly 50 per cent enrolled, registered real estate agencies at about 40 per cent, law firms at 12 to 14 per cent and retail jewellers at about 10 per cent. These are third-party estimates rather than AUSTRAC figures, so treat them as indicative. Even so, they suggest many legal practices that provide designated services may not yet have enrolled.
What a section 167 notice is
Section 167 allows AUSTRAC to require a person it reasonably believes holds information or documents relevant to the operation of the AML/CTF Act to provide that information, produce those documents, or make and supply copies.
Holding Redlich special counsel David Chambers notes that AUSTRAC can use material obtained under a notice "to test a law firm's risk profile against its records", and that a notice "is not a routine regulatory request". Accountants Daily reports that AUSTRAC may also use what it receives to determine whether designated services are being provided and to identify non-compliance beyond the notice's original scope.
The consequences of ignoring a notice are serious. Clyde & Co notes that failing to comply with a section 167 notice is an offence carrying up to six months' imprisonment, a fine of 30 penalty units, or both, and that giving false or misleading information to AUSTRAC can attract up to 10 years' imprisonment. Response deadlines can be as short as 14 days, so firms should confirm the exact timeframe against the notice they receive.
Legal professional privilege
For lawyers, the obvious question is legal professional privilege (LPP). AUSTRAC's guidance confirms that the AML/CTF Act "doesn't take away a person's right to refuse to give information that's protected by LPP".
Privilege must still be claimed properly. A recipient withholding privileged material in response to a section 167 notice must submit an LPP form, in a form approved by the AUSTRAC CEO, within the period specified in the notice. AUSTRAC warns that failing to submit the form in accordance with the Act may attract civil penalties.
Privilege is therefore preserved, but it is not automatic. It depends on a firm recognising the deadline and acting on it.
What this means for law firms
The practical implications fall into three areas.
Status. Firms must work out whether any of their work is a designated service. Clyde & Co lists eight categories for lawyers, including assisting in the planning or execution of a transaction to buy, sell or transfer real estate, and assisting in organising, planning or executing a transaction for equity or debt financing. If a firm provides any of these, enrolment is mandatory and the 29 July date has passed.
Evidence. An enrolled firm should be able to produce its AML/CTF program, risk assessment, training records and compliance officer appointment on request. Accountants Daily notes that AUSTRAC examines program approval, risk assessment, staff training, customer due diligence, ongoing monitoring, testing and remediation records. As Chambers puts it, "the time for asserting compliance is over and law firms must now be prepared to prove it."
Response. A firm that receives a notice needs a named person and a documented process to triage it, involve the responsible partner and, where relevant, claim privilege in time. Some firms use technology, including Legl, to keep these records consistent and retrievable.
Key takeaways
- Confirm your status now. If your firm provides any designated service and has not enrolled, contact AUSTRAC promptly rather than waiting for a notice.
- Be able to prove compliance. Keep your AML/CTF program, risk assessment, training records and compliance officer appointment ready to produce.
- Plan for a notice. Decide who opens AUSTRAC correspondence, who signs off the response and how deadlines are tracked.
- Protect privilege deliberately. Know where the approved LPP form is and submit it within the notice period.
- Seek advice. This article is general information, not legal advice. Take professional advice on your firm's position.
Looking ahead
Clyde & Co describes the notices as part of "a developing enforcement cycle" and expects heavier action to follow, including civil penalties, injunctions, undertakings and remedial directions. Watch for further AUSTRAC statements on enrolment, any published enforcement outcomes and updated guidance for the legal sector. With the enrolment deadline behind the profession, the regulator's focus is moving from who has enrolled to whether programs work in practice.
Sources
- AUSTRAC, AUSTRAC issues notices to non-enrolled businesses
- AUSTRAC, Enrol now and meet your obligations
- AUSTRAC, Legal professional privilege
- Clyde & Co, AUSTRAC takes compliance action in relation to Tranche 2 entities, 31 August 2026
- David Chambers, Holding Redlich, 31 August 2026
- Lawyers Weekly, AUSTRAC turns up AML/CTF heat on lawyers, 30 September 2026
- Accountants Daily, AUSTRAC turns to section 167 notices in AML crackdown, 30 September 2026
