The new obligations have been live for five days, and one question has come up more than any other: what about the clients we already act for? A suburban accounting practice might carry 800 returning clients. A conveyancer's file cabinet goes back fifteen years. Nobody onboarded any of those people with AML/CTF customer due diligence, because until this week there was no such obligation.
Two answers are doing the rounds. The first says you must re-onboard everyone, so start working through the book alphabetically. The second says relax, you have until 30 March 2029. AUSTRAC's guidance supports neither. (AUSTRAC, transitioning existing customers)
The actual rule is more useful than either version, and it is worth getting exactly right, because it determines how much work July really contains.
The short answer
If you were in an ongoing business relationship with a client on 1 July 2026, and that relationship involved only Tranche 2 designated services, the client is a pre-commencement customer. You can keep providing designated services to them without completing initial CDD, and there is no deadline by which you must. The exemption ends only when one of two trigger events occurs.
No blanket re-onboarding. No 2029 countdown. But also, as we cover below, not nothing.
Who counts as a pre-commencement customer
The definition has two parts, and both matter. On 1 July 2026 you must have been:
- In a business relationship with the client, not just holding their file. A one-off matter that closed in 2024 is not a business relationship. A client you act for each year is.
- Providing only Tranche 2 designated services: professional services (table 6 of section 6 of the Act), real estate services (table 5), or dealing in precious metals and stones at $10,000 or more (table 2).
Occasional transactions do not qualify. If someone walks in after 1 July for a one-off designated service, they are a new customer and get initial CDD before you act, even if you served them once years ago.
The two triggers that end the exemption
A pre-commencement customer keeps that status until you complete initial CDD on them. You must complete initial CDD, before providing the next designated service, if either of these happens:
- A suspicious matter reporting obligation arises in relation to the client. If you form a suspicion, the SMR and the CDD both follow. (What an SMR involves)
- A significant change in the nature and purpose of the business relationship results in the client's ML/TF risk being medium or high. AUSTRAC's example is a client requesting a new service in a way that departs from the existing relationship. It does not matter what their risk rating was before the change.
That second trigger is the one that will fire most often in practice. The long-standing bookkeeping client who suddenly asks you to set up three companies with an offshore shareholder is no longer the relationship you assessed. Trigger, initial CDD, then act.
Once you complete initial CDD for any reason, the client permanently stops being a pre-commencement customer and the normal regime applies.
What you still owe on the legacy book
"No deadline" is not "no obligation". Ongoing CDD applies to pre-commencement customers from day one:
- Monitor for unusual transactions and behaviours that could give rise to an SMR obligation.
- Keep KYC information reviewed, updated and reverified at a frequency appropriate to the client's risk, and whenever you doubt what you hold is adequate or accurate.
- Watch for significant changes in the nature and purpose of the relationship that would push risk to medium or high.
In other words, the obligation on your existing book is monitoring, not paperwork archaeology. You need to be positioned to notice when a legacy client changes shape, which means the book has to be risk-rated and inside your monitoring process, even though nobody is being re-onboarded.
So where does 30 March 2029 come from?
The date is real. It just belongs to someone else. The transitional rules give existing reporting entities, the banks, casinos and bullion dealers regulated before the reform, a three year window from 31 March 2026 to 30 March 2029 to move to the reformed initial CDD requirements. The same date ends the option to lodge SMRs and TTRs on the old forms. (AUSTRAC, transitional rules update)
Neither of those is a deadline for Tranche 2 firms to complete CDD on existing clients. Earlier versions of some of our own industry guides repeated the 2029 framing, and we have corrected them; AUSTRAC's December 2025 guidance on transitioning existing customers is the authoritative statement, and trigger-based is the rule.
If you bought the client book
One more case the rules handle explicitly: clients who came to you through buying a practice or a transfer of assets. They are transferred pre-commencement customers and the same exemption applies, but only if you received the seller's transaction records and CDD records for them. No records, no exemption: initial CDD before the next designated service. If you are acquiring a practice from here on, the AML/CTF records are now part of what you are buying.
The playbook for this month
- Split the book. Ongoing relationships as at 1 July are pre-commencement. Closed files and one-off past clients are not, and come back as new customers.
- Risk-rate the legacy book. You cannot spot a change to medium or high risk if nothing was rated to begin with.
- Write the position into your program. Your CDD policy should state how you treat pre-commencement customers and what your trigger process is.
- Train the front line. The people who take the "can you also just set up a company for my cousin" call are your trigger detection system. (Training requirements)
- Full initial CDD for every new client, before the service, no exceptions.
Where AML Mate fits
AML Mate is built for exactly this shape of obligation: import your client book, risk-rate it in bulk, and let dated PEP and sanctions screening plus ongoing monitoring do the watching, so a trigger event surfaces instead of slipping past. When a trigger does fire, the same client record runs full CDD with verification, and everything lands in the seven year evidence trail. Not sure how much of this applies to your firm? The free compliance check answers it in two minutes, no login. Then start a 14-day free trial and get the legacy book sorted this week.