Preparing For AUSTRAC Tranche 2 AML/CFT (Pre-March 31st)
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Likely Captured Law Firms Under AU Tranche 2 AML
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Category
Likely Captured Under AU Tranche 2?
Law firms with trust accounts
✅ Yes – Handling client funds is a key AML risk
Conveyancing / Property Lawyers
✅ Yes – Involves high-value transactions
Corporate / Business Lawyers
✅ Yes – If assisting with company formation, trust setup, or structuring
Estate Planning & Trust Lawyers
✅ Yes – If managing trusts, acting as trustee, or handling client assets
Litigation & Dispute Resolution Lawyers
✅ Yes – If managing client funds or settlements
Family Lawyers
✅ Yes – If handling property settlements or financial arrangements
Criminal Lawyers
❌ No – Generally not handling client funds in transactions
Employment Lawyers
❌ No – Typically does not involve financial transactions
In-house Counsel
❌ No – Does not provide services to the public
Barristers
❌ No – Do not handle client funds
Government Lawyers
❌ No – Work for the government, not private clients
Global Comparison of AML/CTF Regulations for Law Firms
This table compares AML/CTF obligations for law firms across Australia (Tranche 2 - 2026), New Zealand, UK (England & Scotland), Ireland, and South Africa.
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Aspect
Australia (Tranche 2 - 2026)
New Zealand
UK (England & Scotland)
Ireland
South Africa
Law Firms Covered?
✅ Yes (from July 1, 2026)
✅ Yes
✅ Yes (since 2007, expanded in 2017)
✅ Yes (since 2010)
✅ Yes (since 2001)
Customer Due Diligence (CDD)?
✅ Yes (from July 1, 2026)
✅ Yes
✅ Yes
✅ Yes
✅ Yes
Enhanced Due Diligence (EDD) for PEPs?
✅ Yes
✅ Yes
✅ Yes
✅ Yes
✅ Yes
Ongoing Monitoring of Clients?
✅ Yes
✅ Yes
✅ Yes
✅ Yes
✅ Yes
Suspicious Activity Reports (SARs)?
✅ Yes (to AUSTRAC)
✅ Yes (to FIU)
✅ Yes (to NCA)
✅ Yes (to FIU)
✅ Yes (to FIC)
Threshold Transaction Reports (TTRs)?
✅ Yes ($10,000+)
❌ No
❌ No
❌ No
✅ Yes (R25,000+)
Independent Audits?
✅ Yes (from 2026)
✅ Yes
✅ Yes
✅ Yes
✅ Yes
Risk-Based AML Programs?
✅ Yes
✅ Yes
✅ Yes
✅ Yes
✅ Yes
Pre-Existing Clients Require CDD?
✅ Yes (from July 1, 2026, risk-based)
✅ Yes (risk-based)
✅ Yes (risk-based)
✅ Yes (risk-based)
✅ Yes (risk-based)
Regulator
AUSTRAC
DIA
SRA / LSRA / Law Society of Scotland
Law Society of Ireland
FIC (Financial Intelligence Centre)
Date of Coverage for Law Firms?
From July 1, 2026
Since 2018
Since 2007 (Strengthened in 2017)
Since 2010
Since 2001
Key Takeaways:
-
UK & Ireland: Have had Tranche 2-style laws for over a decade, with AML obligations embedded in legal practice rules.
-
New Zealand: Implemented AML/CTF for law firms in 2018, under Phase 2 of its AML Act.
-
South Africa: Has regulated law firms since 2001, with strict FIC oversight.
-
Australia: Catching up in 2026—law firms must enrol by July 29, 2026 and comply with full obligations from July 1, 2026.
Most law firms handling client funds and financial transactions are expected to be captured under AU Tranche 2 AML obligations. This includes firms engaged in conveyancing, trust management, and other high-risk legal services.
UK & Ireland: Have had Tranche 2-style laws for over a decade, with AML obligations embedded in legal practice rules.
New Zealand: Implemented AML/CTF for law firms in 2018, under Phase 2 of its AML Act.
South Africa: Has regulated law firms since 2001, with strict FIC oversight.
Australia: Catching up in 2026—law firms must enrol by July 29, 2026 and comply with full obligations from July 1, 2026.
Most law firms handling client funds and financial transactions are expected to be captured under AU Tranche 2 AML obligations. This includes firms engaged in conveyancing, trust management, and other high-risk legal services.
Final exemptions will be clarified in mid-2025, along with AUSTRAC’s official guidance on compliance requirements.
ARNECC vs Tranche 2
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Requirement
ARNECC VOI*
Tranche 2 CDD
Primary Focus
Verification of Identity (VOI) for property transactions
Customer Due Diligence (CDD) for AML/CTF compliance
Regulatory Body
ARNECC (state-based)
AUSTRAC (federal)
Primary Verification Method
Face-to-face with a legally authorized Identity Agent*
Remote or face-to-face, using risk-based measures
Remote Verification
Allowed* if face-to-face is not possible due to remoteness
Always permitted with risk mitigation
Who It Applies To
Lawyers, conveyancers, mortgagees involved in property transactions
Lawyers, accountants, real estate agents, and other designated professions under Tranche 2 AML
Identity Documents Required
Set categories based on Model Participation Rules (MPR)
Risk-based approach, identity must be verified per AML/CTF standards
* ARNECC VOI permits remote verification in cases where face-to-face is not possible, provided additional steps are taken to verify identity.
Step 1.
1. Establish an AML/CTF program
-
ML/TF/PF risk assessment
e.g. the type of work you conduct and the types of clients you deal with -
AML/CTF policies
ML/TF/PF risk assessment
e.g. the type of work you conduct and the types of clients you deal with
AML/CTF policies
2. Appoint an AML/CTF Compliance Office
Usually an employee within your firm.
Caveats To Consider
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Services
Should the Same Vendor Do It?
Establishing AML/CTF Compliance Program & Staff Training
✅ Yes, same vendor allowed
AML/CTF Independent Audit & Compliance Program Setup
❌ No, independence required
AML/CTF Independent Audit & Staff Training
❌ No, independence required
Enrol in AUSTRAC
If you are providing other newly regulated designated services, the new laws commence on 1 July 2026, and you must enrol by 29 July 2026.
Summary of Key Dates
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Date
Requirement
March 31, 2026
Risk assessment & AML/CTF compliance policy must be completed.
July 1, 2026
Tranche 2 AML/CTF obligations fully in effect & enforced by AUSTRAC.