AML compliance under Tranche 2: A guide for lawyers and legal practitioners
Australia’s AML/CTF laws are expanding. From 1 July 2026, legal professionals - including solicitors and law firms - will face new requirements around client identity checks, risk assessment and reporting.
These changes fall under ‘Tranche 2’, the latest update to Australia’s Anti-Money Laundering and Counter-Terrorism Financing regime.
If your practice helps clients with equity or debt financing, managing assets, or setting up legal structures like trusts or companies, you’ll likely be included.
Will my firm be impacted?
If your work involves:
- Managing or transferring funds on behalf of clients, including assisting clients with any capital or debt raising activities
- Advising on, or creating, legal structures (e.g. companies, partnerships, trusts)
- Assisting with the buying or selling of businesses
- Acting as an intermediary in high-value transactions
…it’s likely you’ll be subject to AML/CTF obligations.
What AML/CTF obligations will apply to lawyers?
While AUSTRAC’s final guidance is still on the way, here’s a summary of what AML compliance for lawyers will involve:
| Obligation | What it means |
| AUSTRAC enrolment | Register your business with AUSTRAC by July 2026. |
| AML/CTF program | Develop a written, risk-based compliance program and regularly review and audit this. |
| KYC (Know Your Customer) | Conduct checks to verify the identity of clients and companies that you deal with when providing ‘designated services’. |
| Ongoing due diligence | Monitor client activity and reassess risk regularly. Records need to be maintained for at least seven years. |
| Reporting suspicious matters | Report activity that seems unusual or suspicious to AUSTRAC |
| Staff training | Make sure your team understands red flags and reporting steps |
Non-compliance with these new regulations could expose your firm to penalties, audits, or reputational damage. These rules are enforceable, and AUSTRAC has a strong history of holding businesses accountable.
Why are legal services included in Tranche 2?
Lawyers often engage in high-risk activities, such as moving large sums of money, setting up complex structures or acting as intermediaries. Tranche 2 is designed to close loopholes that have made the legal sector vulnerable to misuse by criminals.
Importantly, legal professional privilege will still be protected. The new laws won’t require you to disclose privileged information, but you are expected to verify clients and report suspicious activity.
How does easyAML help law firms stay compliant?
Whether you're a sole practitioner or a busy firm, juggling compliance with your regular duties can feel overwhelming. easyAML is designed to reduce that load, without sacrificing accuracy or control.
1. Onboarding made simple
- Real-world templates tailored for legal workflows
- Guidance through enrolment and risk assessment
- Friendly, local support that speaks your language
2. Smarter identity checks
- Secure digital verification for individuals and companies
- Facial matching, biometric checks and source-of-funds prompts
- KYB tools for identifying business owners and directors
3. Compliance that runs quietly in the background
- Smart risk scoring based on your client profiles
- Ongoing monitoring of behaviour and risk
- Audit-ready reporting to satisfy AUSTRAC
Life has been much easier for both me and my clients. Verifying is quicker, even in tricky cases. Support is always responsive, and the service is second to none.
Salib Settlements
FAQs: AML compliance for lawyers and legal practitioners
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Will all lawyers be affected by Tranche 2?
Not necessarily. However, most property, commercial and private client firms will fall within scope. If your services intersect with client money, structures or transactions, you’re likely affected. If you’re unsure if your business falls under this umbrella, have a chat with us.
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Will I have to report privileged information under AML rules?
No. Legal professional privilege remains protected. Tranche 2 reforms do not override your duty to client confidentiality. You’ll only need to report activity that falls outside the scope of legal advice, for example, suspicious transactions involving funds or property. The legislation respects core legal principles while still meeting AUSTRAC’s objectives.
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Do I need to start my AML compliance now?
Yes — even though the deadline is July 2026, getting AML-ready takes time. Firms typically spend 3–6 months setting up their program, training staff and installing systems. Starting now means less pressure later. easyAML delivers expert guidance at every step, helping you skip last-minute panic.
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What happens if I don’t comply with AML requirements?
AUSTRAC enforces civil fines, pursues criminal charges, and can publicly disclose your firm’s name. Even minor oversights, like failing to report suspicious activity, can result in enforcement action. Failing to comply damages your professional reputation and puts clients at greater risk. With easyAML, you’ll decrease legal risk while maintaining your practice’s integrity and trust.
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How can I ensure my staff are AML-compliant?
If you’re a lawyer subject to Tranche 2, you must provide regular training to your team. This helps them spot red flags, follow internal compliance procedures and understand reporting obligations. easyAML’s software offers tailored training modules designed specifically to support legal professionals, keeping your staff confident and compliant.
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What kind of reporting will my firm need to do under Tranche 2?
Under Tranche 2, your firm will be required to submit Suspicious Matter Reports (SMRs) whenever you identify unusual or suspicious activity. Detailed records must be maintained for at least seven year. You might also need to file Threshold Transaction Reports (TTRs) and International Funds Transfer Instructions (IFTIs) depending on your transactions to ensure full compliance.
Stay prepared, not overwhelmed
The new rules are coming, but you don’t need to figure it all out alone.
Join our AML readiness list for legal-specific updates, tools and step-by-step guidance to help you prepare with clarity and confidence.