Robbie Goldberg

Country Director, Australia at Legl

Introduction

With barely thirty days until Australia's Tranche 2 anti-money laundering and counter-terrorism financing (AML/CTF) obligations commence on 1 July 2026, the final pieces of the regulatory picture are falling into place. In late May, the Australian Transaction Reports and Analysis Centre (AUSTRAC) published an updated Statement of Expectations setting out how it intends to regulate in the 2026–27 financial year, and new reporting forms are now available to preview in AUSTRAC Online. At the same time, law societies across the country are finalising amendments to the Australian Solicitors' Conduct Rules (ASCR) to resolve the ethical tensions the new regime creates — with public consultations in the ACT and Queensland closing on 1 June 2026.

For compliance officers at Australian law firms, this is the consolidation phase. The legislation is settled, the guidance is published, and the remaining work is operational: enrolment, programme sign-off, training, and making sure the firm can actually file a report on day one.

AUSTRAC sets out its regulatory posture for FY27

AUSTRAC's May 2026 Statement of Expectations is the clearest signal yet of how the regulator will approach the tens of thousands of newly regulated businesses entering the regime. The statement sits alongside the amended Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) and the Anti-Money Laundering and Counter-Terrorism Financing Rules 2025, which commenced for existing reporting entities on 31 March 2026.

The practical message for law firms is consistent with what AUSTRAC has said throughout the reform programme: the regulator expects genuine, risk-based effort rather than perfection from day one, but it does expect firms to have enrolled, appointed an AML/CTF compliance officer, and adopted a programme proportionate to their money laundering and terrorism financing risk. Enrolment opened on 31 March 2026, and Tranche 2 entities must be enrolled by 29 July 2026.

New reporting forms are live to preview in AUSTRAC Online

AUSTRAC is releasing new threshold transaction report (TTR) and suspicious matter report (SMR) forms, and most law firms will use these new forms from 1 July 2026. Firms that enrol as reporting entities can preview the forms and complete training on them inside AUSTRAC Online now — a sensible step before the first live filing. Transitional arrangements apply only to entities that were already enrolled before 31 March 2026, which existing firms can run on legacy forms during a transition window; new Tranche 2 entrants start on the new forms immediately.

From commencement, suspicious matter reports must be lodged within three business days of forming a suspicion (24 hours where terrorism financing is suspected), and TTRs for cash transactions of $10,000 or more within 10 business days. Having the underlying due diligence and transaction data already captured in a system like Legl makes practising the mechanics of filing now, rather than discovering the form for the first time under a statutory deadline, an easy risk to retire this month.

Conduct rules catch up with the AML/CTF regime

One of the most significant June developments sits outside the AML/CTF Act entirely. Law societies are finalising amendments to two of the Australian Solicitors' Conduct Rules to address the ethical friction the new regime creates. Rule 8, on client instructions, would be amended to make explicit that a solicitor must be satisfied that instructions are lawful and proper before and throughout the retainer. Rule 13, on termination of the retainer, would gain a definition of "just cause" covering situations where continuing to act would breach ethical duties — or where the tipping-off prohibition prevents the solicitor from explaining why they are ceasing to act.

The ACT Law Society Council endorsed the changes in principle in April 2026, and consultations in the ACT and Queensland closed on 1 June 2026, with most jurisdictions moving in parallel to have the amendments in place by 1 July. For firms, this resolves a real-world dilemma: how to exit a retainer when a suspicious matter report has been filed and the tipping-off offence prevents candour with the client. If a firm keeps a contemporaneous record of when and why a suspicion arose, of the kind Legl maintains, it can later substantiate a "just cause" termination if the decision is questioned.

Support for smaller practices

The Law Society of New South Wales has released an AML/CTF implementation guide for sole and small practices, which steps through AUSTRAC's legal profession program starter kit and the conveyancing starter kit and is being recommended nationally, not just to NSW practitioners. Paired with AUSTRAC's sector-specific guidance for lawyers published earlier in 2026, smaller firms now have a genuinely workable path to compliance without engaging external consultants. Platforms such as Legl can support the operational layer — client due diligence, risk assessment and audit-ready record-keeping — but the design of the firm's programme remains the compliance officer's responsibility.

Key Takeaways

  • Tranche 2 obligations commence 1 July 2026; firms providing designated services must be enrolled with AUSTRAC by 29 July 2026 — but waiting until after commencement to enrol leaves the firm unable to preview reporting forms.
  • Preview and train on the new TTR and SMR forms in AUSTRAC Online now; new Tranche 2 entities will use them from day one with no transitional window.
  • Track the ASCR amendments to Rules 8 and 13 in your jurisdiction — they change how firms must handle client instructions and retainer termination where AML/CTF duties bite.
  • Review the Law Society of NSW implementation guide even if you practise outside NSW; it is the most practical walkthrough of the AUSTRAC starter kits published to date.
  • Reread AUSTRAC's May 2026 Statement of Expectations and benchmark your programme against the regulator's stated FY27 posture.

Looking Ahead

The next four weeks are the last clear runway before the regime goes live. Watch for the final ASCR amendments to be formally adopted across jurisdictions before 1 July, AUSTRAC's first communications to newly enrolled entities, and the 29 July 2026 enrolment deadline. After commencement, attention will shift quickly from preparation to practice — and the firms that have rehearsed their reporting workflows in June will be the ones not improvising in July.

Sources

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