Introduction

The countdown to Australia's most significant anti-money laundering reform in nearly two decades has entered its final stretch. On 31 March 2026, AUSTRAC officially opened enrolment for Tranche 2 entities which includes lawyers, accountants, conveyancers, real estate professionals, and dealers in precious stones and metals, marking a critical milestone on the road to full regulation from 1 July 2026.

For law firms across the country, the enrolment window is now open, and the clock is ticking. Here is what has changed, what is coming, and what your firm should be doing right now.

Enrolment Is Live And the Deadline Is Tight

From 31 March 2026, businesses providing professional designated services can enrol with AUSTRAC online. New reporting entities must complete their enrolment by 29 July 2026, just four weeks after the regime takes effect on 1 July. AUSTRAC has stressed that enrolment is a prerequisite for providing designated services under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act), as amended by the Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024.

The scale of this reform is substantial. An estimated 80,000 to 90,000 new reporting entities are expected to enter the AML/CTF regime, representing the largest single expansion since the original Act commenced in 2006.

The Consolidated Act and Rules Are Now in Force

The amended AML/CTF Act commenced for current reporting entities on 31 March 2026, with Tranche 2 entities following from 1 July. Alongside the Act, several key pieces of subordinate legislation have also taken effect:

• The Anti-Money Laundering and Counter-Terrorism Financing Rules 2025, as amended by the 2026 Amendment Rules, commenced on 31 March 2026.
• The Class Exemptions and Other Matters Amendment Rules 2026 introduced targeted exemptions, including for incidental legal assistance provided by community legal centres, legal aid, and duty lawyers, as well as services provided by barristers to Australian Government bodies.
• The Transitional Rules 2026 established a three-year initial customer due diligence (CDD) transition period for existing reporting entities, running from 31 March 2026 to 30 March 2029.

A consolidated version of the Act is now available on the Federal Register of Legislation.

New Amendment Bill Targets High-Risk Mechanisms

In a separate but related development, the Australian Government has introduced the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2026 into the House of Representatives. If passed, this Bill will empower the AUSTRAC CEO to restrict or prohibit reporting entities from using high-risk mechanisms to provide designated services, for example, exchanging money for virtual assets via cryptocurrency ATMs.

The Bill also proposes to amend the definition of "financing of terrorism" to reference new offences related to financing a state sponsor of terrorism, along with several technical amendments to the AML/CTF Act.

Sector-Specific Guidance Is Rolling Out

AUSTRAC first published reforms guidance in October 2025, followed by sector-specific guidance for Tranche 2 entities at the end of January 2026. Additional tailored guidance, including sector-specific examples addressing key issues raised by industry bodies, is forthcoming for both accountants and lawyers.

AUSTRAC has also committed to releasing a "starter programme kit" designed for small, low-complexity businesses in newly regulated industries to assist them in developing money laundering and terrorism financing (ML/TF) risk assessments and AML/CTF policies. The regulator has also updated its Suspicious Matter Reporting (SMR) reference guide to include best-practice expectations for drafting grounds-for-suspicion text.

Importantly, the amended Act includes protections for legal professional privilege (LPP). Nothing in the Act requires a lawyer to disclose information or produce a document that would otherwise be protected by LPP, a safeguard that the legal profession advocated strongly for during the reform process.

Key Takeaways for Law Firms

• Enrol now. The AUSTRAC enrolment portal is open. Do not wait until July: complete your enrolment as early as possible to avoid last-minute issues. The deadline is 29 July 2026.
• Finalise your AML/CTF programme. Every reporting entity must have a written, risk-based AML/CTF programme in place before 1 July 2026, including an ML/TF risk assessment, policies and procedures, a designated compliance officer, and an ongoing staff training plan.
• Appoint a compliance officer. If your firm has not yet designated an AML/CTF compliance officer, do so immediately. This person will be responsible for overseeing programme implementation and AUSTRAC engagement.
• Find suitable technology. Explore technology specialists like Legl that will help your firm to get compliant ahead of the 1 July deadline and help you to implement consistent, robust AML / CTF processes in your firm.
• Review the exemptions. Understand which exemptions may apply to your practice, particularly if you provide community legal services or act as a barrister for government bodies.
• Monitor AUSTRAC's guidance. Sector-specific guidance for lawyers is still being released. Subscribe to AUSTRAC updates and review the starter programme kit.

Looking Ahead

With just over ten weeks until Tranche 2 obligations commence, law firms should treat the period between now and 1 July as an intensive compliance build phase. AUSTRAC has signalled it will take an education-first approach in the early months, but that grace period will not last indefinitely. Firms that invest in robust compliance frameworks and technology now will be far better positioned than those scrambling to catch up after the deadline. The introduction of the Amendment Bill 2026 also signals that the Government intends to continue tightening the regime. We should expect further reforms as Australia works to align with evolving FATF standards.