Nearly four months after the anti-money laundering and counter-terrorism financing (AML/CTF) regime reached the legal profession on 1 July 2026, much of the focus has been on enrolling with AUSTRAC (the Australian Transaction Reports and Analysis Centre), appointing a compliance officer and drafting a program. The harder work is spotting risk in live matters, and few matters carry more of it than those that cross a border.
This article looks at why cross-border work deserves particular attention, what AUSTRAC's national risk assessment says about the role of professional service providers, and which red flags compliance officers can build into intake and matter reviews. It is general information, not legal advice.
Why borders matter
AUSTRAC's 2024 Money Laundering in Australia National Risk Assessment describes Australia as an attractive destination for foreign proceeds of crime, citing its stable institutions and real estate market. It also notes that trade and investment ties with Asia create pathways that criminals exploit. Partner financial intelligence units surveyed for the assessment see Australia as an important destination for illicit proceeds from the region, particularly the Pacific and Asia.
For law firms, the practical point is that conveyancing, corporate, trusts and estates and investment work can all involve foreign clients, foreign funds or foreign structures. A firm does not need an "international" practice group to have cross-border exposure.
The facilitator problem
The same assessment points to the "persistent involvement of professional service providers" in building complex business structures and banking arrangements. It says lawyers, accountants and offshore service providers are used to set up onshore and offshore structures that obscure transactions and beneficial ownership, and that lawyers and accountants are named as intermediaries used to launder proceeds of bribery and corruption.
That is the context in which Tranche 2 (the extension of the AML/CTF Act to lawyers and other "gatekeeper" professions) should be read. The regime exists partly because legal services can lend legitimacy to funds whose origin is unclear. A firm's own risk assessment should say plainly how exposed it is to that pattern.
Secrecy, tax havens and opaque structures
The national risk assessment describes secrecy jurisdictions and tax havens as enduring money laundering risks because they provide opaque legal structures, and it flags offshore service providers operating in them for adverse reporting. It also describes trade-based money laundering as an attractive channel for moving proceeds across borders, with indicators including over- or under-invoicing and "U-turn" activity.
For a firm, this suggests that the jurisdiction of a client, a counterparty, a source of funds or a holding entity should each be recorded and rated. The Financial Action Task Force (FATF), the international standard-setter, publishes lists of jurisdictions subject to increased monitoring and to calls for action. Compliance officers should check the current lists rather than rely on a static internal table.
Red flags to build into intake and matter reviews
The following are practical prompts drawn from the risks above. They are our analysis, not an AUSTRAC checklist, and firms should read them alongside AUSTRAC's published risk insights and indicators for legal professionals.
- A client or counterparty based in, or funds routed through, a secrecy jurisdiction or a jurisdiction with weak AML controls, with no clear commercial reason.
- Ownership chains that pass through several layers of trusts or companies in different countries, making the ultimate beneficial owner hard to identify.
- Funds arriving from a third party in another country that has no obvious connection to the matter.
- Pressure to complete quickly, or to avoid in-person or documentary verification, on a matter involving foreign parties.
- Invoicing or pricing in a transaction that does not match market value, or funds that leave and return via different parties.
- A request to hold money in the firm's trust account without a corresponding legal service, or to refund funds to a different account or jurisdiction.
Key takeaways
- Rate jurisdiction explicitly. Record the country of the client, beneficial owners, counterparties and source of funds in your risk assessment, and check FATF lists regularly.
- Look through the structure. Do not accept a corporate or trust structure at face value. Document how the beneficial owner was identified.
- Question third-party funds. Unexplained foreign payers and refund requests to different accounts should trigger escalation.
- Train for the pattern, not the checklist. Fee-earners should understand why the facilitator risk applies to them.
- Keep the escalation trail. Record why a flag was raised, who reviewed it, and the outcome, including where a matter was declined.
Looking ahead
AUSTRAC has said that after 1 July 2026 it will prioritise enforcement against entities that wilfully ignore the obligation to enrol, or are complicit with, or wilfully blind to, money laundering. Wilful blindness is precisely the risk on cross-border matters where warning signs are visible but not acted on. Watch for further AUSTRAC guidance for the legal sector and any outcomes that comment on professional facilitators. Firms using platforms such as Legl to centralise client due diligence and risk evidence may find it easier to show how a cross-border flag was handled.
