Anti-Money Laundering frequently asked questions

Practitioners will be subject to the AML/CTF regime if they provide (by assisting in the planning or execution of) a ‘designated service’. A designated service is listed under table 6 of s 6(5B) of the Act and includes:

1. Buying, selling, or transferring real estate.
2. Assisting in the planning or execution of the creating or restructuring of a body corporate or legal arrangement.
3. Receiving, holding or controlling someone’s money, accounts, securities, virtual assets, or other property to help them plan or execute a transaction.
4. A body corporate or legal arrangement raising money, either by equity or debt financing.
5. Selling or transferring a shelf company.
6. Buying, selling, or transferring a body corporate or legal arrangement.
7. Acting as or arranging for someone to act in certain positions of a body corporate or legal arrangement eg: director, secretary, attorney, partner, trustee, nominee.
8. Acting as, or arranging for someone to act as, a nominee shareholder of a body corporate or legal arrangement.
9. Providing an address that serves as the registered office or main business location for a body corporate or legal arrangement.

A “legal arrangement” can mean a trust, partnership, joint venture, unincorporated association, or similar structure — including certain foreign ones.

Whether you are regulated will depend on the designated service that you provide not the type of legal practice that you engage in.

Professional services (Reform) | AUSTRAC 

A number of services have been identified as not being a designated service. Please note that this is not a definitive list.

Real estate (item 1)

• The buying, selling, or transferring of real estate, body corporate, or a legal arrangement pursuant to a court or tribunal order.
• Transfers by operation of law eg: transfers by survivorship.
• Short term leases of less than 30 years or less.
• Minor interests such as easements, restrictive convenants.
• Mortgagee interests.
• Dwellings not attached to the land eg: mobile homes, caravans, some retirement villages where the resident owns the dwelling but not the land.
• Town agent services.

Advisory or legal dispute resolution services (items 2, 4)

• General advice work that ‘influences’ a client’s decision rather than ‘directly advancing’ a transaction eg: general advice on financing options including equity and debt financing but this advice does not directly advance the organising, planning or executing of a specific financing transaction.
• Historical analysis on whether a past transaction was lawful or valid.
• Dispute resolution services that do not ‘advance’ a transaction and only relate to determining legal questions on matters that have already occurred eg: litigation and mediation services, drafting consent orders to settle litigation, representing clients on criminal charges, personal injury matters.

Trust account payments (item 3)

• Money held in your trust account for the payment of legal fees or disbursements including counsel fees.
• Money being held or managed to be received or payable under an order of a court or tribunal.
• Payments to or from a government body (eg: ATO), insurer, court/tribunal, or public international organisation.

Wills and estates

• Drafting of a will and subsequent creation of a testamentary trust.
• Obtaining grants of probate or letters of administration.
• Preparing a power of attorney for a natural person.

Restructuring of a body corporate or legal arrangement unrelated to legal form (item 6):

• Organisational staffing profile changes.
• Restructuring IT systems.
• Advice on restructuring a body corporate’s internal governance or business operations to avoid insolvency.

• Practitioners should go through the definition of professional ‘designated services’ in Table 6 of s6(5B) of the AML/CTF Act and assess why they believe they will not be providing such a service as from 1 July 2026.
• Document this assessment with an explanation as to why you believe that you will fall outside the scope of these services and date this internal record.
• Ensure that you educate and communicate this policy to all your staff (not just the solicitors) to ensure that no one within your practice inadvertently provides a designated service – scope creep is a major issue for those practices that believe that they are out of the AML/CTF regime. If you provide one designated service, you will be required to enrol with AUSTRAC and ensure that you are compliant with the regime. 
• You may wish to consider some process in the onboarding of your clients that flags this issue for your staff. Remember that all new staff will need to be informed of this policy going forward.
• For those practitioners who manage a trust account, please remember that you cannot allow your client to use your trust account as a defacto bank account even if you are not providing a designated service. If you do so, you may find yourself providing a designated service under item 3 of table 6.
• Revisit your position and policy regularly, at least annually if your practice is static in size and services but if you decide to merge or introduce new legal services, you must assess whether you will then fall within the regime at that time. Once again, you should document your review and if necessary, update.
• Subscribe to updates | AUSTRAC – this keeps you up to date of any future AML/CTF changes which could impact your practice at a later date.
• Remember that even if you are not caught by the AML/CTF regime, you will still have ongoing professional, ethical and trust accounting obligations and statutory duties such as the Criminal Code Act 1995 (Cth) eg: dealing with proceeds of crime.

When verifying a client’s identification document, you should:

• compare the identity documents against the information provided in the client’s onboarding form
• identify any inconsistencies between documents or between the documents and the onboarding form
• be reasonably satisfied that the document is genuine
• if the document contains a signature, ensure that the signature is consistent with the client’s
• compare the photographic ID directly against the client’s physical appearance
• sight the original document and ensure that it is current
• record the unique identifier (eg: passport or licence number), date of expiry, issue or production.

• Documents that appear forged or altered.
• Identity documents in an unexpected format.
• The client being reluctant or vague when asked to prove their identity.
• Identification that uses common identifiers shared by multiple unrelated people.
• Technology Risks: be aware of the potential use of artificial intelligence or deepfakes to generate fraudulent ID.

Practices may outsource functions relating to their compliance for a range of reasons, such as accessing specialist knowledge and expertise, and managing the cost of compliance. 

Outsourcing means entering into an arrangement with a third party to carry out certain AML/CTF functions on your behalf. Depending on the services you provide, you may outsource on a one-time basis (for example, to have someone deliver your AML/CTF training) or on an ongoing basis (for example, to carry out customer due diligence).  

Remember, if you outsource your AML/CTF functions, you remain responsible for complying with your obligations under the AML/CTF Act and Rules. Generally, your business will remain legally liable for any breach of obligations, even under outsourcing arrangements.

Reporting entities can be exempt from their AML/CTF compliance in certain circumstances:

• As set out under the AML/CTF Act
• By making an application to create an exemption through the Anti-Money Laundering and Counter-Terrorism Financing (Class Exemptions and other Matters) Rules 2007 (the Exemption Rules)
• Applying to AUSTRAC to have an exemption or modification granted specifically to them.

There are certain professional services that are exempt and practitioners can see that list: Exemptions from AML/CTF obligations | AUSTRAC and in the Exemption Rules.

Nb: certain designated services that may be provided by Legal Aid or Community Legal Centres are exempt – see Chapter 9 of the Exemption Rules.

AUSTRAC have stated that they regulate ‘businesses that provide services to an external customer who is a separate legal person to the business’. In-house Counsel that provide legal advice to their employer will not be providing a designated service to an external customer. This does not mean that their employer may not necessarily be a reporting entity under the AML/CTF regime.