Australia's FATF Mutual Evaluation Window Opens: What It Means for Law Firms

Australia’s international anti-money laundering scorecard is about to be rewritten, and for the first time the legal profession will be assessed as a regulated sector. The Financial Action Task Force (FATF) sets global standards for anti-money laundering and counter-terrorism financing (AML/CTF). Its assessments calendar lists November 2026 as the possible onsite period for Australia’s next mutual evaluation, with plenary discussion of the report pencilled in for June 2027.

This article looks at what the evaluation is, why lawyers feature so heavily in it, and what it means for firms four months into the expanded regime.

What a mutual evaluation is

A mutual evaluation is a peer review. The Department of Home Affairs, which leads Australia’s engagement with the FATF, describes the process as assessing both how effectively a country’s AML/CTF regime works in practice and its technical compliance with the FATF’s 40 Recommendations. AUSTRAC (the Australian Transaction Reports and Analysis Centre) leads engagement with the Asia/Pacific Group on Money Laundering (APG), with support from the department. Home Affairs notes that the current round of assessments reflects the FATF’s “increased expectations of global AML/CTF effectiveness”.

Australia’s last full evaluation was adopted at the FATF plenary on 27 February 2015 and published on 21 April 2015, following an onsite visit from 30 July to 12 August 2014.

Why lawyers are in the spotlight

The legal profession has been the weak point in Australia’s FATF record for more than a decade. Three of the 40 Recommendations deal specifically with designated non-financial businesses and professions (DNFBPs), the category that includes lawyers, accountants and real estate agents: Recommendation 22 (customer due diligence), Recommendation 23 (other measures, including suspicious matter reporting) and Recommendation 28 (regulation and supervision). In the FATF’s follow-up report of 27 March 2024, Australia was rated non-compliant on all three.

The Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024 (Cth), passed by Parliament on 29 November 2024 and given Royal Assent in December 2024, was designed in part to close that gap. AUSTRAC states that the reforms “make sure our laws meet international standards set by the Financial Action Task Force”. From 1 July 2026, the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) has applied to lawyers, conveyancers, accountants, real estate professionals, trust and company service providers, and dealers in precious stones and metals that provide designated services.

Effectiveness, not just legislation

New legislation should lift technical compliance ratings; the harder test is effectiveness. FATF assessors look for evidence that obligations are understood, applied and supervised in practice, and a regime that has only been live for a few months gives them limited material to work with.

Supervisory activity since July shows AUSTRAC is already gathering the kind of evidence assessors value. AUSTRAC has issued section 167 notices to businesses that appear to be providing designated services without enrolling, naming lawyers among the sectors involved. Accountants Daily reported on 2 October 2026 that AUSTRAC had issued its first infringement notices for failure to enrol in the accounting, real estate and jewellery sectors. AUSTRAC chief executive Brendan Thomas said at the time that “if businesses continue to ignore their obligations, AUSTRAC will take action”.

For law firms, a mutual evaluation does not usually mean a knock on the door from FATF assessors. It does mean the profession’s collective performance, including enrolment rates, the quality of suspicious matter reporting and how well firms understand their risks, will feed into Australia’s ratings. The Law Council of Australia has been revising its National Legal Profession AML/CTF Guidance Notes to reflect the finalised AML/CTF Rules and AUSTRAC guidance, as reported by the Queensland Law Society’s Proctor on 2 November 2026.

What a weak result would mean

Countries with significant deficiencies can be placed under enhanced follow-up, which means more frequent reporting to the FATF. A poor effectiveness rating for the DNFBP sector would also likely give AUSTRAC a mandate for more intensive supervision of the professions. Firms that can show a working program, rather than a document on a shelf, will be better placed whichever way the ratings fall. Digital onboarding and risk-assessment tools, such as those Legl provides to law firms, can help produce that evidence trail, although the obligations rest with the firm.

Key takeaways for compliance officers

• Confirm your enrolment. Check your firm’s enrolment with AUSTRAC is current and that the services you provide have been mapped against the designated services in the Act.
• Keep the program live. Make sure your AML/CTF program and money laundering and terrorism financing (ML/TF) risk assessment are approved, dated and reflect how the firm actually operates.
• Evidence your CDD. Check that customer due diligence records show what was collected, how it was verified and why the risk rating was chosen.
• Test your reporting process. Review suspicious matter reporting, including staff training, escalation routes and tipping-off controls.

Looking ahead

If the FATF timetable holds, Australia’s report is due for plenary discussion in June 2027, with publication typically following some months later. Between now and then, expect AUSTRAC to keep up its compliance activity across the newly regulated sectors, and watch for the Law Council’s updated guidance on reporting and notice obligations. The ratings that emerge will shape the supervisory climate for Australian law firms for the rest of the decade.

This article is general information only and is not legal advice.

Sources

• FATF — Assessments calendar (Australia: possible onsite November 2026, plenary June 2027)
• FATF — Australia country page (4th Follow-Up Report, 27 March 2024; Mutual Evaluation Report, 21 April 2015)
• Department of Home Affairs — Financial Action Task Force
• AUSTRAC — About the reforms
• AUSTRAC — AUSTRAC issues notices to non-enrolled businesses
• Accountants Daily — AML/CTF: AUSTRAC fires first fines as crackdown begins (2 October 2026)
• Queensland Law Society Proctor — Law Council updates AML/CTF guidance (2 November 2026)
• Law Council of Australia — National Legal Profession AML/CTF Guidance
• MinterEllison — AML/CTF: The countdown to commencement (20 February 2026)