Australia's largest expansion of anti-money laundering regulation in nearly two decades is now live — and the first hard deadline for law firms lands in a matter of days. Since 1 July 2026, legal practitioners providing certain "designated services" have been reporting entities under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth), following the commencement of the Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024 (Cth). Firms that are captured must now enrol with the Australian Transaction Reports and Analysis Centre (AUSTRAC) by 29 July 2026.

These are the long-anticipated "Tranche 2" reforms, which extend Australia's AML/CTF regime beyond banks and financial institutions to so-called gatekeeper professions: lawyers, accountants, conveyancers, real estate agents, and dealers in precious metals and stones. AUSTRAC estimates around 80,000 newly regulated businesses are affected, the biggest single widening of the compliance perimeter since the regime began in 2006.

What has actually changed

For the first time, a law firm's exposure to money-laundering risk is a matter of federal regulatory obligation rather than professional guidance alone. Where a firm provides a designated service — broadly, activities such as assisting with the buying and selling of real estate, managing client money, or helping to create or restructure companies and trusts — it must meet the full suite of AML/CTF duties.

That means enrolling with AUSTRAC, appointing an AML/CTF compliance officer at management level, and building an AML/CTF programme in two parts: Part A, the risk-based policies and procedures for identifying and managing the firm's money-laundering and terrorism-financing risks; and Part B, the customer due diligence (CDD) procedures for identifying and verifying clients and beneficial owners before a designated service is provided. Firms must also screen for sanctions and politically exposed persons (PEPs), lodge suspicious matter reports (SMRs) and threshold transaction reports, and keep relevant records for seven years.

Lawyers are not accountants — and privilege matters

AUSTRAC has been clear that the obligations do not fall on every practitioner in the same way. Because legal work is often transactional, lawyers will typically engage with their obligations on a matter-by-matter basis — triggered by specific work such as a conveyance or an entity structuring — rather than through the continuous monitoring relationships more common in accountancy.

The reforms also grapple directly with legal professional privilege, long the central concern of the profession. The Amendment Act is designed to preserve the core intention of the privilege doctrine while ensuring that firms handling client information can still comply with their reporting duties. In practice, firms will need clear internal processes for distinguishing privileged material from information that can and must be reported — a line that will require careful judgement on individual matters.

An industry still asking for more time

The commencement has not been without friction. In a submission dated 27 January 2026, the Law Council of Australia reiterated "serious concerns" about the ability of Tranche 2 entities to be ready by 1 July 2026, recommending that commencement for legal practitioners be delayed to 1 July 2027. Failing that, it urged AUSTRAC to adopt a transitional compliance period of at least 24 months focused on education and assistance rather than enforcement. The Law Council also pressed for legislative clarity on the meaning of "customer" and on the scope of the professional designated services set out in Table 6 of section 6 of the Act.

AUSTRAC, for its part, has signalled a pragmatic early posture, publishing sector-specific guidance for lawyers, conveyancers, accountants, real estate agents and jewellers, along with "starter" programme kits aimed at small, low-complexity practices. But the regulator's guidance does not move the statutory deadline: enrolment, which opened on 31 March 2026, still closes on 29 July 2026, and the underlying obligations are already in force.

Key takeaways for compliance officers

• Confirm whether you are captured. Map your matters against the designated services in Table 6, section 6 of the AML/CTF Act. If you provide any, you are a reporting entity.
• Enrol by 29 July 2026. Enrolment with AUSTRAC is the immediate, non-negotiable deadline — separate from having a mature programme in place.
• Stand up a two-part programme. Part A (risk assessment and governance) and Part B (customer due diligence) are both required, and CDD must occur before a designated service is provided.
• Name a management-level compliance officer. The role must sit at management level and own ongoing compliance.
• Do not assume enforcement leniency. Despite the Law Council's push for a transitional period, the statutory obligations apply now; document your good-faith compliance efforts.

Tools that manage client onboarding, identity verification and risk assessment in one workflow — Legl among them — can reduce the operational burden of Part B CDD, but the governance and judgement calls remain the firm's own.

Looking ahead

The next fortnight will test how many of the 80,000 newly regulated businesses meet the enrolment deadline, and how AUSTRAC responds to those who do not. Watch for further sector guidance, any signal on the regulator's early enforcement appetite, and whether the government engages with the Law Council's calls for a formal transitional period. For law firms, the message is straightforward: the regime is no longer coming — it is here.

Sources

• AUSTRAC — Newly regulated businesses: get ready for the reforms
• AUSTRAC — Professional designated services
• Law Council of Australia — Proposed 2026 amendments to the AML/CTF Act (submission, 27 January 2026)
• Law Society of NSW — Understanding designated services: when legal services trigger Tranche 2 AML/CTF obligations
• MinterEllison — AUSTRAC key guidance released on 2026 AML/CTF reforms
• Department of Home Affairs — Overview of the AML/CTF Amendment Act

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