With fewer than three weeks until commencement, Australia's legal profession is entering the final stretch before the most significant expansion of anti-money laundering regulation in a generation. From 1 July 2026, legal practitioners who provide certain "designated services" become reporting entities under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006, joining a regime that, until now, has applied chiefly to banks, financial institutions and the gambling sector.

The change flows from amendments passed in December 2024, collectively known as the "Tranche 2" reforms. AUSTRAC, the national financial intelligence regulator, opened enrolment for the newly captured sectors on 31 March 2026, and firms that provide a designated service must complete enrolment by 29 July 2026. On 1 July, AUSTRAC's regulated population will grow from around 19,000 businesses to close to 100,000 nationwide, taking in lawyers, accountants, conveyancers, real estate professionals, and dealers in precious stones and metals.

Why lawyers are now in scope

Tranche 2 responds to a long-acknowledged gap in Australia's defences against financial crime. Certain services lawyers provide including handling client funds, facilitating real estate transactions, or structuring complex legal arrangements, can be exploited to facilitate money laundering (ML), terrorism financing (TF) and proliferation financing (PF). AUSTRAC CEO Brendan Thomas described the reforms as "the most significant overhaul of Australia's AML/CTF framework in more than 20 years", aimed at "closing long-standing gaps, lifting protections across the economy and making it harder for criminals to hide, move or enjoy the proceeds of crime."

Recognising the profession's particular sensitivities, the Amendment Act also clarifies the treatment of legal professional privilege. According to the Department of Home Affairs, the reforms preserve the core intention of privilege while ensuring that reporting entities handling client information can still meet their obligations - a balance practitioners will need to navigate carefully in day-to-day matters.

What firms must have in place

From 1 July, captured practices must enrol and register with AUSTRAC, develop and maintain an AML/CTF program, appoint an AML/CTF compliance officer at management level, train staff, perform initial and ongoing customer due diligence (CDD), report suspicious matters and certain transactions, and keep records.

The program itself is two-part: a set of policies that set out what the practice will do, and processes that set out how those steps are carried out day to day. Both sit on top of a documented risk assessment that maps the practice's exposure across services, client types, jurisdictions and delivery channels. Critically, appointment of the compliance officer and customisation of the program must be complete before commencement on 1 July, not after.

AUSTRAC's Starter Kits

To ease the burden on smaller practices facing their first engagement with AUSTRAC, the regulator has released sector-specific Program Starter Kits, described as the first of their kind globally. The Legal Profession Program Starter Kit is designed for small, low-complexity practices: broadly, those with 15 or fewer personnel that do not regularly act for high-risk clients or undertake complex cross-border work.

The kit is not a one-size-fits-all template. It provides core building blocks including a risk assessment framework, policy and process documents, and a library of operational forms that each practice must customise to its own profile before the materials become its AML/CTF program. Mixed practices offering both legal and conveyancing services face an added step: they must work through both the Legal Profession and Conveyancing kits and maintain two separate risk assessments. Tools such as Legl can help firms operationalise these CDD and risk-assessment obligations within a single workflow rather than juggling disconnected spreadsheets and forms.

Reasonable effort, not perfection

AUSTRAC has been at pains to manage expectations, signalling that it does not expect "perfection" on day one. Firms that apply reasonable effort like enrolling, standing up a program and a compliance officer, training staff, and genuinely attempting to ask questions and report, "should not expect a visit from our enforcement teams," the regulator has indicated. The message for the early months is that demonstrable engagement matters more than flawless execution.

Key Takeaways

Enrol without delay. If your practice provides a designated service, enrolment must be completed via AUSTRAC Online by 29 July 2026.

Appoint your compliance officer before 1 July. The AML/CTF compliance officer must sit at management level and hold delegated responsibility for oversight.

Build the two-part program now. A documented risk assessment, policies and processes must be customised and approved by senior management before commencement.

Map mixed services carefully. Practices offering both legal and conveyancing work need two separate risk assessments.

Treat the Starter Kit as a base, not a finish line. Larger or higher-risk practices can use it as a foundation but must build beyond it to meet AUSTRAC's expectations.

Get the right technology in place. For active clients and new clients, firms will need to undertake CDD, ongoing monitoring and other processes that tools like Legl support.

Looking Ahead

The 1 July commencement is a starting point, not a finish line. In the second half of 2026, watch for how AUSTRAC's enforcement posture develops once obligations are live, for further sector-specific guidance, and for how legal professional privilege interacts with suspicious matter reporting in practice. Firms that approach AML/CTF as an ongoing, iterative discipline with regular reviews of client risk and refreshing processes, rather than a one-off pre-deadline scramble will be best placed when the regulator's attention sharpens.

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