What is Tranche 2?
“Tranche 2” refers to the second phase of Australia's Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) reforms. The original AML/CTF Act 2006 (Tranche 1) covered financial institutions, gambling services, and bullion dealers. Tranche 2 extends these obligations to professions identified by the Financial Action Task Force (FATF) as “designated non-financial businesses and professions” (DNFBPs).
The Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024 passed Parliament in late 2024. Obligations commenced on 1 July 2026, and the enrolment deadline for businesses already providing designated services was 29 July 2026 — both dates have now passed, so the obligations are in force whether or not you have acted on them.
Who is affected?
Tranche 2 applies to businesses and professionals who provide “designated services” in the following sectors:
- Accountants and tax agents — including BAS agents, bookkeepers, and tax advisors who prepare or advise on financial arrangements, company/trust formation, or manage client money
- Lawyers and conveyancers — when acting in relation to buying/selling real estate, managing client money, creating companies or trusts, or managing assets
- Real estate agents — involved in the buying or selling of real property, including auctioneers and property managers handling sales
- Dealers in precious metals and stones — jewellers, bullion dealers, and anyone trading in precious metals or stones where a transaction involves $10,000 or more
If your business provides any of these services — even occasionally — you are likely a “reporting entity” under the amended Act and must comply.
Key dates
1 July 2026
Obligations commenced
AML/CTF obligations have applied since this date: a written program in place and customer due diligence before you provide a designated service.
29 July 2026
Enrolment deadline (now passed)
Businesses already providing designated services had to enrol by this date. Not enrolled yet? Enrol now — the obligation does not lapse. New providers must apply within 28 days of starting.
What you need to do — 5 steps
1. Determine if you are a reporting entity
Review the list of “designated services” in the amended Act. If your business provides any of these services, you are a reporting entity. AUSTRAC provides a free compliance check tool to help you determine this quickly.
2. Enrol with AUSTRAC
Businesses already providing designated services had to enrol via AUSTRAC Online by 29 July 2026. If you have not enrolled yet, do it now — enrolling late is far better than staying off the roll. If you start providing a designated service, you must apply to enrol within 28 days. Enrolment involves providing your ABN, business details, and identifying which designated services you provide. See our step-by-step registration guide.
3. Develop your AML/CTF program
You must create a written AML/CTF program with two parts: Part A covers your customer identification and verification procedures, risk assessment, ongoing customer due diligence, and transaction monitoring. Part B covers your employee training program. AUSTRAC provides Starter Kits for each industry to help you develop these.
4. Implement customer due diligence
From 1 July 2026, you must verify the identity of every client before providing designated services. This includes collecting government-issued photo ID, screening against sanctions lists and PEP databases, and assessing each client's risk level. Higher-risk clients require Enhanced Due Diligence (EDD).
5. Establish reporting and record-keeping procedures
You must file Suspicious Matter Reports (SMRs) with AUSTRAC within 24 hours of forming a suspicion. Threshold Transaction Reports (TTRs) must be filed for cash transactions of $10,000 or more within 10 business days. All records must be retained for 7 years.
Penalties for non-compliance
AUSTRAC takes enforcement seriously. Penalties include:
- Up to $36.4 million per contravention for companies (100,000 penalty units)
- Up to $7.28 million per contravention for individuals (20,000 penalty units)
- Calculated at $364 per penalty unit (from 1 July 2026); penalties apply per contravention and can stack
- AUSTRAC can issue infringement notices, enforceable undertakings, and remedial directions
Recent high-profile cases include Commonwealth Bank ($700M, 2018), Westpac ($1.3B, 2020), and Crown Resorts ($450M, 2023). Under Tranche 2, AUSTRAC is expected to prioritise new reporting entities in their first audit cycle — beginning as early as Q3 2026.
“But I'm a small business — they won't come after me”
This is the most dangerous assumption a newly regulated business can make. Under Tranche 2, small practices are not an afterthought — they are the focus of the first compliance cycle.
- You are the priority. AUSTRAC's initial attention falls on the new reporting entities: accountants, lawyers, real estate agents, and jewellers — not the banks that have complied for years.
- Small teams are soft targets. With no dedicated compliance team and limited resources, small businesses are the easiest to audit and the most likely to have gaps.
- Penalties stack. At up to $36.4 million per contravention, AUSTRAC can issue multiple penalties at once for related failures.
- Audits begin Q3 2026. The first audit cycle starts roughly 90 days after the 1 July 2026 compliance deadline — there is very little runway.
The good news: AUSTRAC has said it does not expect perfection immediately, but it does expect to see genuine, documented effort to comply. Having a written program and a clear paper trail is what separates a manageable review from an enforcement action.
How AML Mate can help
AML Mate automates the entire Tranche 2 compliance process. Our AI-guided wizard generates your AML/CTF program using AUSTRAC's official Starter Kit templates. Client KYC management, PEP/sanctions screening, SMR/TTR reporting, employee training, and deadline alerts are all built in.
Starting from $49/month for the full platform — a fraction of the $3,000–$10,000 that compliance consultants typically charge.