Anti-Money Laundering / Counter Terrorism Financing

The Anti-Money Laundering and Counter-terrorism Financing Amendment Act 2024 (Cth) received royal assent on 10 December 2024 and brings significant changes to the existing Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (AML/CTF Act). As a result of those changes, solicitors that provide a designated service will be regulated under the new AML/CTF regime.

The obligations for solicitors providing a designated service will broadly commence on 1 July 2026 but practitioners will need to prepare before this date.

References to “the Act” below relate to the Future Law Compilation of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006.

Practitioners need to consider the following:

Whether they provide “designated services” which will determine whether their practice will be caught by the Act.
If your practice does provide such a service, the need to register with AUSTRAC as you will fall within the regime.
The need to document your AML/CTF program which will require a money laundering risk assessment and policy with oversight by a compliance officer.
The obligation to conduct appropriate customer due diligence (CDD).
Reporting obligations.
The need to keep accurate records for a minimum period of 7 years.

Practitioners should consider subscribing to AUSTRAC for updates on AML/CTF reform as they will be providing further information on the changes.

QLS will continue to release updated information as AUSTRAC continues its consultation with industry on supporting regulations, rules and guidance material.

Designated Services

Designated services are defined in Table 6 of section 6 of the Act and include the following:

the sale, buying or transfer of real estate
the sale, buying or transfer of a body corporate or legal arrangement / entities
receiving, holding, controlling or managing a person’s money, accounts, securities, virtual assets or property (eg: operating trust accounts)
certain transactional work including equity and debt financing
sale or transfer of a shelf company
creating or restructuring a body corporate or legal arrangement
acting (or arranging for another person to act) as a director or secretary of a company, power of attorney, partner, trustee etc.
acting (or arranging for another person to act) as a nominee shareholder or
providing a registered office address or principal place of business.

Solicitors should note that the sale, buying or transferring of real estate, a body corporate or legal arrangement pursuant to an order of the court / tribunal will not be subject to the regime. There are other specific carve outs in the legislation.

Register with AUSTRAC

If you provide a designated service, you will need to enrol with AUSTRAC. Practitioners can enrol with AUSTRAC as from 31 March 2026.

AUSTRAC have indicated that enrolment involves providing basic information about your business/ practice ie: its structure, key personnel and contact details. You will also be required to update your details should they change.

AML/CTF program

Solicitors will need to document their AML/CTF program which must be kept up to date and independently evaluated at least once every 3 years. Solicitors must not provide a designated service without first ensuring that they have completed:

their money laundering/ terrorism financing/ proliferations financing (ML/TF/PF) risk assessment and
their policies, incorporating procedures, systems and controls, that appropriately manage and mitigate their practice’s risk with oversight by a compliance officer.

If you are a sole trader, you can take on these responsibilities yourself or engage an external entity.

AUSTRAC is considering a reporting group concept through their Rules which have not been finalised.

The compliance officer must:

be a person employed or engaged by the reporting entity at the management level
have sufficient authority, independence and access to resources and information to ensure they can perform their functions effectively
be a resident of Australia
be a fit and proper person and
any other requirements specified in the AML/CTF Rules.

Customer Due Diligence (CDD)

The AML/CTF regime requires initial CDD, ongoing CDD, enhanced CDD (in certain instances) and simplified CDD in low-risk transactions. The CDD will depend on the risk profile of the client.

Solicitors are already required to conduct appropriate VOI which will assist them in meeting CDD and “know your client” (KYC) obligations.

An initial CDD involves establishing certain information on reasonable grounds before providing them with a designated service. This will include verifying:

the identity of the client
if the customer is not an individual—the identity of any beneficial owners of the customer
whether the client is subject to targeted financial sanctions that may prevent them from dealing with their assets. DFAT publishes a consolidated list of such individual and entities
whether they are a politically exposed person (PEP)
a relative or close associate of a PEP.

Ongoing CDD may include:

monitoring for suspicious activity that may trigger reporting obligations
updating and re-verifying client information as required particularly if doubts arise regarding accuracy
updating risk ratings because of new information obtained through the above.

Enhanced CDD applies to high-risk clients who may be identified because:

your risk-based system identifies the transaction as high risk
they are a foreign politically exposed person (PEP)
they are engaging in suspicious activity which may lead to suspicious matter reporting
a transaction involves a high risk jurisdiction (consider the black and grey lists) or a prescribed foreign country.

Practitioners will not be required to perform an initial or ongoing CDD on a pre-commencement client until they are required to file a suspicious matter report with regard to that client and/or there is a significant change in the nature and purpose of the business relationship which results in the ML/TF/PF risk being assessed as medium or high (s36).

Reporting obligations

Practitioners will need to report on certain transactions:

Suspicious matter reports: When you suspect on reasonable grounds that a person is not who they claim to be or that a matter is linked to criminal activity or proceeds of crime, reporting entities will be required to report within 1-5 days depending on the type of activity (s41). Nb: practitioners who submit such a report cannot disclose any information about that report to the client, where such disclosures would prejudice an investigation or potential investigation (s123).
Threshold transaction reports: For individual physical currency transactions valued at A$10,000 or higher (s43). This has replaced the obligations previously dealt with in the repealed Financial Transactions Reports Act 1988.
International value transfer service reports: For all international transfers of value transactions (s46).
Cross border movement reports: Submit when carrying physical currency or bearer negotiable instruments valued at A$10,000 or higher into or out of Australia.
Annual compliance reports: Submit an annual report summarising how you have met your AML/CTF obligations in the previous year.

Records

Practitioners will also be required to make and maintain accurate and complete records for a minimum period of 7 years. These records will need to include your:

AML/CTF program
customer due diligence
transaction records
staff training sessions
audit results.

Tipping off

Practitioners should be aware that as from 31 March 2025, the Act prohibits disclosing certain information to a client if it would or could reasonably be expected to prejudice an investigation. This is known as ‘tipping off’. AUSTRAC have published further guidance.