In 2026, a number of significant changes will be made to Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) regime. These changes serve two key purposes:
To simplify and modernise the current regime, which is widely acknowledged to be unnecessarily complex
To ensure that Australia continues to meet the international standards set by the Financial Action Task Force (FATF), which it would otherwise be at serious risk of falling short of
All current reporting entities will be required to comply with the changes from 31 March 2026. This includes all businesses that are currently regulated by AUSTRAC, including financial advisers, fund managers, non-cash payment providers, cryptocurrency exchanges and casinos.
All ‘tranche two entities’ will be required to comply with the changes from 1 July 2026. This includes businesses that have not previously been regulated by AUSTRAC, but will soon be regulated by AUSTRAC, including law firms, accounting firms, real estate agencies, trust and company service providers, and precious metals and stones dealers.
In principle, the changes shift the emphasis of the regime away from prescriptive requirements (e.g. you must do ABC) and towards outcome-focused obligations (e.g. you must achieve XYZ).
This will allow reporting entities to tailor their processes and procedures to the unique characteristics of their business and the level of ML/TF risk that they actually face.
In practical terms, the changes materially alter the requirements that apply to ML/TF Risk Assessments and AML/CTF Programs, the role of the Board and the AML/CTF Compliance Officer, and the framework for Customer Due Diligence (KYC).
Next steps for reporting entities
To respond to these changes, current reporting entities have two options:
Retain their existing AML/CTF Program and update it to comply with the new AML/CTF Act and AML/CTF Rules. Whilst updates will need to be made, the extent of those updates will depend on how compliant a program currently is and how well it is currently working
Prepare a new AML/CTF Program that aligns with the characteristics of the business and its level of ML/TF risk
Regardless of which option a reporting entity chooses, it is an opportunity to take advantage of the increased flexibility under the new regime to tailor or customise their program to their business. For example:
Simplify any processes that are complicated
Remove any requirements that are unnecessary or burdensome
Design workflows that align with and are complementary to their onboarding procedures, their technology solutions, and any requirements imposed by third parties (e.g. banks or product providers)
Where to now?
The prudent 4-step response for all current reporting entities should be:
1. To review their current AML/CTF Program
2. To consider the options of updating their current AML/CTF Program or preparing a new program
3. To take steps to implement the updated/new AML/CTF Program as soon as possible
4. To initiate training of relevant staff so that they are adequately trained on the processes and procedures in the updated/new AML/CTF Program and are ready to implement them from 31 March 2026
If you have any questions about the upcoming changes, or require any assistance preparing for those changes, please get in touch with Cowell Clarke’s Financial Services and AML/CTF team at Compliance@CowellClarke.com.au.
This publication has been prepared for general guidance on matters of interest only and does not constitute professional legal advice. You should not act upon the information contained in this publication without obtaining specific professional legal advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication and to the extent permitted by law, Cowell Clarke does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting or refraining to act in relation on the information contained in this publication or for any decision based on it.
