Tranche 2 AML/CTF reforms: A case study in building compliance from scratch

From 1 March 2026, thousands of Australian businesses will face new compliance obligations under the Tranche 2 AML/CTF reforms. Professions including lawyers, accountants, conveyancers, real estate agents, jewellers, and trust & corporate service providers (TCSPs) will formally become reporting entities under AUSTRAC’s oversight.

In this blog, we walk through a detailed case study of a fictional but realistic business, showing how a multidisciplinary practice prepares for Tranche 2. The aim is simple: to demonstrate the practical challenges and the steps every firm must take to stay compliant and protect its reputation.

Case study: Harbour Professional Services

Profile:

• Mid-sized professional services practice.
• 50 staff across three offices.
• Provides legal, accounting, property settlement, and structuring services.
• Revenue: $15 million annually.

Challenge:

Until now, Harbour was not captured under Tranche 1 AML/CTF laws. With Tranche 2, it must design and implement an AML/CTF framework from scratch — a challenge facing thousands of firms nationwide.

**Harbour Professional Services is a fictional company to illustrate case study

The risk landscape before Tranche 2

Without formal AML obligations, Harbour regularly handled:

• Property settlements with overseas buyers.
• Trust formations for family wealth planning.
• Tax minimisation structures involving offshore entities.

Key risks:

• Lack of beneficial ownership transparency.
• Multiple high-value cash deposits.
• Difficulty verifying international clients.

Reality check: Before Tranche 2, Harbour’s activities sat largely outside AUSTRAC’s oversight. The reforms close this regulatory gap.

New Tranche 2 obligations

From March 2026 (registration) and July 2026 (go-live):

• Harbour becomes a reporting entity.
• It must implement a written, risk-based AML/CTF Program.
• Obligations include:
  
  
  • Customer Due Diligence (CDD).
  • Enhanced Due Diligence (EDD) for high-risk matters.
  • Reporting (SMRs, TTRs, IFTIs).
  • 7-year record-keeping.
  • Independent AML/CTF reviews.

Note: AUSTRAC can audit at any time — “paper compliance” will not be enough.

Harbour’s transition journey

Step 1: Risk assessment

• Reviewed client base, services, channels, and geographies.
• Identified risks: overseas clients, PEPs, trusts, offshore structures.

Step 2: AML/CTF program

• Appointed a Compliance Officer.
• Documented governance, CDD, reporting, and monitoring procedures.
• Embedded escalation workflows.

Step 3: Staff training

• Delivered role-specific AML/CTF training to staff.
• Partners/Board briefed on accountability.

Step 4: Systems & technology

• Deployed digital ID verification.
• Introduced transaction monitoring alerts.

Built an internal reporting log for AUSTRAC filings.

A realistic case scenario

May 2026: A new overseas client approaches Harbour.

• Wants to establish a discretionary trust.
• Plans to purchase a $4m commercial property in Sydney.
• Intends to fund settlement through a mix of offshore transfers and local accounts.

CDD findings:

• Trustee = nominee director.
• Appointer = overseas, based in high-risk jurisdiction.
• Beneficiaries = vague (“family members”).

EDD applied:

• Requested trust deed, ABN, and funding documents.
• Conducted sanctions/PEP screening — adverse media flagged.
• Escalated to the Compliance Officer and Board.

Outcome:

• SMR filed due to lack of transparency.
• Engagement declined to protect the business.

Lessons learned

1. Gatekeeper risk is real – Tranche 2 professions often sit at the entry point of ML/TF flows.
2. Documentation is critical – audit trails protect firms during AUSTRAC reviews.
3. EDD is non-negotiable – saying “no” is sometimes the best compliance decision.

Culture drives compliance – frontline staff must feel safe escalating red flags.

Best practice for Tranche 2 entities

• Register with AUSTRAC by 1 March 2026.
• Appoint a Compliance Officer with authority.
• Develop a risk-based AML/CTF Program tailored to services.
• Train all staff regularly — role-specific and ongoing.
• Leverage technology for Verification of Identity (VOI), PEPs / Sanctions monitoring, and reporting.

Keep detailed records for 7 years.

How easyAML can help

At easyAML, we specialise in preparing businesses for the new Tranche 2 AML/CTF obligations. Our solutions are designed to make compliance simpler, faster, and cost-effective — whether you’re a sole practitioner or a multi-office firm.

Here’s how we support you:

• AML/CTF programs & templates → Customisable, regulator-ready documents aligned with AUSTRAC requirements.
• Training modules → Self-paced e-learning tailored to Tranche 2 sectors (real estate, conveyancing, law, accounting, TCSPs, jewellers).
• Reporting workflows → Simplified processes for SMRs, TTRs, and IFTIs with built-in audit trails.
• Compliance-by-design → Practical solutions that integrate into your business operations so compliance doesn’t slow you down.

With easyAML, you don’t just tick boxes — you build a compliance culture that protects your business, your clients, and Australia’s financial system.

Conclusion

Tranche 2 reforms are not optional — they are a regulatory reality that will reshape the way professional services operate in Australia.

For Harbour Professional Services, the journey required time, investment, and cultural change. The payoff? A resilient compliance framework, reduced exposure to financial crime, and protection from AUSTRAC penalties.

For every business, Tranche 2 is both a challenge and an opportunity: to build trust, transparency, and long-term sustainability.

“Harbour Professional Services” is a fictional company created for this case study. While the entity itself is not real, the scenarios and examples presented are based on real-world business situations

Be well prepared

At easyAML, we help Tranche 2 businesses navigate compliance with training, AML program templates, risk assessment tools, and AUSTRAC reporting workflows.

Take your next step today:

• Join our exclusive webinars → Learn directly from compliance experts.
• Use our Pricing Calculator → Instantly generate a tailored quote for your AML Program.

Be prepared well before March 2026 registration and July 2026 go-live.