With the commencement of Tranche 2 obligations under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (AML/CTF Act) now just six weeks away, Australian legal practices are entering the final phase of preparation for what AUSTRAC has described as the most significant expansion of the regime in two decades. From 1 July 2026, lawyers providing certain "designated services" will become reporting entities, joining banks, casinos and remittance providers under direct AUSTRAC supervision.

The countdown comes against the backdrop of an enrolment window that opened on 31 March 2026 and runs through 29 July 2026. AUSTRAC estimates the reforms will bring between 80,000 and 90,000 new reporting entities into the regime which is a dramatic scaling-up of regulated population that will reshape how compliance teams across the legal, accounting, real estate and dealers-in-precious-metals sectors operate.

What "designated services" actually means for lawyers

Not every legal service triggers Tranche 2 obligations. The AML/CTF Act applies where a practitioner provides one or more services listed in Table 6 of the Act. In practice, the most common trigger points for solicitors include: assisting with the purchase or sale of real property; managing client money or accounts; creating or restructuring companies or trusts; acting as, or arranging, a nominee shareholder or director; and providing a registered office address.

The Law Society of NSW has published an "Am I captured?" tool to help practitioners assess whether their work falls within scope, and AUSTRAC's sector-specific guidance, which was finalised in December 2025 following targeted consultation in October and November 2025. This sets out the principles for interpreting designated services. The test is service-based, not firm-based: a practice that does mostly litigation may still be captured for the conveyancing or trust work it occasionally takes on.

AUSTRAC's Starter Kits: a first-of-their-kind support package

In February 2026, AUSTRAC released a suite of Program Starter Kits to help newly regulated populations build their AML/CTF programmes. The Legal Profession Program Starter Kit and the separate Conveyancing Starter Kit are the two most relevant for lawyers, with mixed practices that handle real property work required to complete a risk assessment under both.

The Starter Kits are aimed at small, low-complexity legal practices with 15 or fewer personnel that do not regularly handle high-risk clients or sophisticated cross-border transactions. Larger or higher-risk firms can use the Kit as a foundation but cannot rely on it alone to meet AUSTRAC's regulatory expectations. The materials are structured around a layered process: a risk assessment covering services, client types, jurisdictions and delivery channels; a policy document setting out what the practice will do and when; and detailed processes for day-to-day implementation, including customer due diligence, source-of-funds enquiries and ongoing monitoring.

Crucially, AUSTRAC has been clear that the Starter Kits are not a one-size-fits-all template. Practices must customise the materials to their own operations and have the resulting programme approved by senior management or, for sole practitioners, the principal practitioner, before 1 July 2026.

The compliance officer requirement

A frequently underestimated element of the regime is the requirement to appoint an AML/CTF compliance officer at management level. The officer must have sufficient seniority and independence to oversee the programme, and firms will need to document the appointment as part of their Part A programme. For small practices, this often falls to the principal or a senior partner; for mid-sized firms, the question of whether to embed the role within risk and compliance or build a stand-alone function is one of the more substantive cultural and structural decisions to make in the lead-up to July.

Implications for firms still on the back foot

For practices that have not yet engaged with the reforms, the remaining six weeks are tight but workable, particularly for firms that fit the Starter Kit profile. The recommended sequence is to confirm whether designated services are being provided, enrol with AUSTRAC, customise the risk assessment, finalise policies and processes, appoint a compliance officer, and complete staff training before 1 July. Larger and more complex practices should expect a longer build, with bespoke risk assessments and proportionate controls layered on top of the Kit's foundations.

Legl works with Australian law firms on the operational side of these obligations, covering the full range of process requirements from client identification and verification to ongoing monitoring and audit trails. But the regulatory expectation is unambiguous: the AML/CTF programme is owned by the firm, and technology supports the obligation rather than transferring it.

Key takeaways for compliance officers

Confirm whether your firm provides one or more designated services under Table 6 of the AML/CTF Act before assuming you are out of scope.

Enrol with AUSTRAC during the 31 March – 29 July 2026 window; do not wait until the commencement date to begin.

Use AUSTRAC's Legal Profession Program Starter Kit as a starting point if you meet the eligibility criteria, but customise it to your practice.

Appoint your AML/CTF compliance officer at management level and document the delegation of responsibility in your Part A programme.

If you provide conveyancing alongside other legal work, complete separate risk assessments under both the Legal Profession and Conveyancing Starter Kits.

Join opportunities to learn more about building an AML/CTF programme, including Legl's co-hosted webinar series with Verlata.

Looking ahead

The first months following 1 July 2026 will be telling. AUSTRAC has signalled it intends to take a supportive posture toward newly regulated entities while expectations bed in, but the regulator has also been explicit that supervisory tolerance is not the same as immunity from enforcement. Practitioners should expect AUSTRAC's published regulatory expectations and priorities for 2025–26 to be refreshed for the 2026–27 cycle in the coming months, and should watch closely for the first guidance updates and any thematic reviews that emerge from early enrolment data.