AML/CTF for lawyers: Does Tranche 2 apply to your legal practice?

From 1 July 2026, Australia's AML/CTF Tranche 2 reforms will bring many legal practitioners within the scope of anti-money laundering and counter-terrorism financing obligations for the first time. For some lawyers, for example, those practising exclusively in conveyancing, it is generally clear that their services fall within the scope of the new regulations. However, firms offering a broader range of legal services may find it more difficult to determine which activities fall under the new requirements.

One of the biggest misconceptions surrounding Tranche 2 is that AML/CTF obligations apply to all lawyers. They don't. Instead, the legislation focuses on specific activities and services that are considered higher risk from a money laundering perspective. This means two firms with the same practice area may have very different obligations depending on the work they actually perform.

If you're a lawyer wondering whether AML/CTF applies to your practice, this guide will help you understand where the lines are being drawn and what you should be doing now to prepare.

What is AML/CTF Tranche 2?

Australia's anti-money laundering and counter-terrorism financing (AML/CTF) regime has historically applied to banks, financial institutions, casinos and other businesses involved in moving money (referred to as Tranche 1 businesses). From 1 July 2026, the regime expands to include a range of professional service providers, including certain legal services.

The purpose of the reforms is to prevent criminals from using legitimate businesses and professional advisers to conceal the origin of funds, move assets or obscure beneficial ownership.

Do all lawyers need to comply?

No. This is perhaps the most important thing for lawyers to understand. AML/CTF obligations are tied to specific designated services. One firm may have no AML/CTF obligations at all, due to the nature of the work they undertake. Meanwhile, another firm could be captured because they assist with company restructures, trust formation or business acquisitions.

Put simply: AUSTRAC's focus is on what you do in practice.

Legal services most likely to fall within scope

Property transactions are often the most obvious example. Lawyers involved in buying, selling or transferring real estate will generally be familiar with discussions around Tranche 2 by now. But outside property law, there are many other areas where legal practitioners will be captured.

Corporate and commercial transactions

Lawyers who assist with or execute transactions such as the following are likely to fall within scope of the Tranche 2 regulations:

• Business sales and acquisitions
• Share sales and unit trust transfers
• Corporate restructures
• Mergers and acquisitions

Importantly, there is a distinction between advising on a transaction and actively implementing it. In most cases, execution activities trigger AML/CTF obligations, rather than purely advisory work.

Trust and company formation

If your firm undertakes in any of the following activities, you are likely to be captured by the new reforms: 

• Establishing companies
• Creating trusts
• Restructuring legal arrangements
• Providing structuring advice that is implemented through legal documentation

These services are specifically recognised internationally as being vulnerable to misuse by criminals seeking to conceal ownership structures or move assets.

Financing transactions

Many commercial lawyers assist clients with:

• Loan documentation
• Equity raising
• Debt financing
• Investment transactions

Where a lawyer is helping execute or coordinate these transactions, AML/CTF obligations may arise.

Trust account and client money activities

Another area that often surprises lawyers relates to the handling of client funds. Receiving, holding, controlling or transferring client funds as part of certain transactions may bring activities within scope, even where the underlying matter is not property-related.

Importantly, just because you operate a trust account does not require Tranche 2 compliance, if you are not providing any designated services. As an example, a firm may operate a trust account to hold funds for prepayment of its services in routine traffic law cases. In this case, the service is not a designated service and as such, compliance with the new requirements is not necessary.

Legal services that may remain outside scope

Not every legal service is captured. Many lawyers working in areas such as the following, may find that large portions of their work remain outside the AML/CTF framework:

• Litigation
• Employment law
• Family law
• Criminal law
• Personal injury
• Migration
• Intellectual property

Similarly, purely advisory work is often treated differently from transactional work. For example, advising a client on potential company structures is generally different from actually creating those structures and lodging the necessary documentation. The distinction can be nuanced, which is why many firms are currently reviewing their service offerings in detail.

You don't need all of your services to be captured by Tranche 2. If your firm provides even one designated service, AML/CTF obligations will still apply to that part of your practice. 

What happens if your firm is captured?

If your firm provides designated services after 1 July 2026, AML/CTF compliance becomes an ongoing operational requirement. This typically includes:

• Enrolling with AUSTRAC
• Conducting a risk assessment and developing and maintaining an AML/CTF Program
• Appointing an AML/CTF Compliance Officer
• Conducting customer due diligence, including verifying beneficial ownership
• Training staff
• Conducting ongoing monitoring and maintaining records
• Managing suspicious matter and other reporting obligations

These requirements represent a significant shift for many legal practices that have not previously operated within a regulated AML framework.

The challenge for non-property lawyers

One of the reasons non-property lawyers are finding Tranche 2 difficult to navigate is that many existing resources focus heavily on conveyancing and real estate transactions. But the reforms extend far beyond property. Commercial, corporate, taxation, trust and business advisory work can all potentially fall within scope depending on the activities being performed.

For many firms, the biggest challenge is not compliance itself. It's determining whether they need to comply in the first place.

That is why now is the time to review:

• The services your firm provides
• How those services are delivered
• Whether you actively implement transactions

Download our free lawyer guide

If you're still unsure whether AML/CTF Tranche 2 applies to your practice, we've created a practical guide specifically for lawyers. This guide breaks down:

• Which legal services are likely to be designated services (and which activities are generally outside scope)
• Examples across different practice areas
• The key compliance obligations that apply if you are captured

Importantly, it focuses on what lawyers actually do in practice, rather than broad legal categories.

Download your free copy of AML/CTF Tranche 2 for Lawyers: Are You Required to Comply? and get clarity on where your firm stands before the July 2026 deadline.

The real question: What services do you provide?

For non-property lawyers, Tranche 2 is not something to dismiss simply because you don't conduct conveyancing. The reforms are activity-based, not title-based. Many firms that consider themselves advisory practices may still find parts of their service offering fall within scope. And the firms that will be best positioned in July 2026 are not necessarily the ones with the most sophisticated compliance systems today. They're the ones taking the time now to understand their obligations, review their services and determine whether AML/CTF applies to their business.

The sooner you gain clarity, the easier compliance becomes.

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