The introduction of Tranche 2 reforms marks a significant shift in Australia's anti-money laundering and counter-terrorism financing (AML/CTF) landscape. Among other things, these reforms will extend AML/CTF obligations to new “Tranche 2 entities” such as accounting firms providing certain “designated services” from 1 July 2026. Here is what accounting firms need to know to stay compliant.
Table of contents
- Why Tranche 2?
- Does my accounting firm need to comply?
- What does my accounting firm need to do?
- Challenges and opportunities
- Leveraging technology for managing new AML/CTF obligations
- Further resources
Why Tranche 2?
The AML/CTF regime was established under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (the Act) and is administered by the Australian Transaction Reports and Analysis Centre (AUSTRAC). The primary goal of Tranche 2 reforms is to strengthen Australia's ability to combat financial crime by, among other things, including certain professional service firms that have significant control over client finances to the AML/CTF regime. Accountants, with their access to sensitive financial information and ability to facilitate transactions, are prime targets for money launderers. By regulating these firms providing “designated services”, the government aims to deter, detect, and disrupt money laundering and terrorism financing activities.
Does my accounting firm need to comply?
Broadly speaking, service providers will have AML/CTF obligations if they provide designated services within the meaning provided in the Act. The Tranche 2 reforms will introduce new designated services so that professional service firms such as accounting firms will be captured from 1 July 2026 if they provide any of the following services:
- assisting with the sale or purchase of entities or real estate
- managing client funds and related assets
- assisting with equity or debt financing
- selling or transferring shelf companies
- assisting in the creation or restructuring of entities such as companies or trusts
- acting as a director, secretary, power of attorney or trustee or nominee shareholder
- providing a registered office or business address.
If your firm provides any of the above services, you should act now to prepare for AML/CTF compliance. You can use this AUSTRAC tool to check if you will be regulated. While entities may enrol with AUSTRAC as reporting entities as early as 31 March 2026, reporting obligations apply to Tranche 2 entities from 1 July 2026.
What does my accounting firm need to do?
- Enrol and register with AUSTRAC: Firms providing designated services must enrol and register with AUSTRAC. This step is crucial for regulatory oversight and compliance.
- Develop an AML/CTF program: Firms need to create a risk-based AML/CTF program tailored to their specific services and client base. This program should outline procedures for identifying, mitigating, and managing money laundering and terrorism financing risks. It must be subject to appropriate governance arrangements. This includes oversight by a governing board or senior management, and the appointment of a fit and proper person as a compliance (or responsible) officer to oversee day-to-day implementation. Alternatively, a sole trader could take on these responsibilities themselves.
- Customer due diligence: Firms must verify the identity of their clients and understand the nature of their business relationships. This involves collecting and maintaining detailed client information.
- Ongoing monitoring and reporting: Continuous monitoring of client activities is essential to detect suspicious transactions. Firms must report any suspicious activities to AUSTRAC promptly.
- Record-keeping: Maintaining comprehensive records of all transactions, client information and AML/CTF activities is mandatory. These records must be kept for at least 7 years to provide evidence of your compliance with AML/CTF obligations.
Challenges and opportunities
Implementing these steps can be challenging, especially for smaller firms having limited resources and facing time pressures. Balancing client confidentiality with compliance requirements, identifying beneficial ownership, and managing cross-border transactions are some of the key hurdles. However, these challenges also present opportunities to enhance compliance frameworks and professional integrity.
Leveraging technology for managing new AML/CTF obligations
Having a solution in place to enable your firm to instantly perform client verification checks, support ongoing monitoring of client activities, reporting to AUSTRAC and record-keeping to legal timelines is critical to support the additional workload that AML/CTF obligations will bring.
CCH iFirm – an award-winning practice management and tax compliance software suite – will offer a new AML solution which can help firms do just that. To get notified when the product becomes available for your firm, sign up for updates below.
Further resources
Stay up-to-date with the latest Tax News on CCH iKnowConnect, which is also available directly within the CCH iFirm platform via the CCH iFirm Tax News & Research application.
You can also visit the AUSTRAC website for information on recent AML/CTF reforms.
