From 1 July 2026, the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth), as amended by the Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024 (Cth), extends its reach to a class of professionals who have not previously been reporting entities, such as lawyers, accountants, conveyancers, real estate professionals, trust and company service providers and dealers in precious stones and metals.
These are the “Tranche 2” entities. The reform is widely covered as a compliance project for the affected professions. The shift it produces for individual clients — particularly individuals already under investigation, or close to it — has been less widely explained. That is the focus of this article.
The Reform in One Paragraph
The Tranche 2 reforms bring designated non-financial businesses and professions into Australia’s anti-money laundering framework. Affected entities must enrol with AUSTRAC (enrolment opened 31 March 2026), implement an AML/CTF program, conduct customer due diligence, monitor for suspicious activity, and submit reports to AUSTRAC where threshold or suspicious-matter criteria are triggered. The new obligations commence on 1 July 2026.
That is the architecture. The consequence for individuals is more direct.
Why It Matters Legally — for the Individual
Australia’s existing AML/CTF regime already required banks, casinos, remittance providers, and digital currency exchanges to report to AUSTRAC.
Tranche 2 extends that reporting infrastructure into the rooms where ordinary financial decisions happen — conveyancing, deceased estate administration, business sales, company structures, trust formation, high-value cash transactions. For individuals, three legal shifts follow.
First, professional silence is partly replaced by professional reporting. Lawyers, accountants, and others affected will be obliged in defined circumstances to report suspicious matters to AUSTRAC.
Legal professional privilege is preserved in important respects — communications for the dominant purpose of legal advice remain privileged — but the architecture of reporting nevertheless changes the information environment around a transaction. Privilege does not extend to facilitating a crime; nor does it cover the underlying transactional facts that AML reporting captures.
Second, the trail becomes more visible to law enforcement. AUSTRAC intelligence feeds into the operations of the Australian Federal Police, the Criminal Assets Confiscation Taskforce, ASIC, state crime commissions, and state police fraud squads. The volume of intelligence reaching those agencies will increase. Investigations may begin from sources that were previously not feeding into the national intelligence picture.
Third, the definition of “suspicious” sits squarely in the professional’s judgment. A suspicious matter report does not require certainty of wrongdoing. It requires a reasonable basis for suspicion — and the reporting entity, not the client, makes that call. The client may not know the report has been made.
Who This Affects — and How
The reform is most directly relevant to four categories of people.
Those already under investigation. If you are the subject of an existing investigation by the AFP, a state police fraud squad, ASIC, or the CDPP, the Tranche 2 environment changes the surrounding intelligence picture. Records held by professionals you have dealt with in the past — including beneficial ownership data, trust arrangements, source-of-funds material — will, going forward, be held inside an AML compliance environment.
Those engaged in transactions that look unusual in volume, structure, or geography. Large cash deposits routed through professional services, complex trust structures, multi-jurisdictional movement of funds, and unexplained source of wealth are precisely the patterns AML/CTF reporting is designed to identify. Whether such a pattern in fact reflects criminality is a separate question. Whether it produces a report is not.
Those facing proceeds of crime or unexplained wealth proceedings. Civil proceeds of crime action under the Proceeds of Crime Act 2002 (Cth) does not require a criminal conviction. It uses the civil standard of proof. The intelligence flowing from Tranche 2 reporting will feed this regime, not just the criminal regime.
Those advising or holding office on behalf of others. Directors, trustees, attorneys under powers of attorney, and nominees often interact with the very designated services Tranche 2 now captures. Personal exposure to AML processes — including being identified as a beneficial owner or a customer — increases.
The White-Collar Dimension
The Tranche 2 expansion sits inside a broader shift in Australian white-collar crime enforcement that has been visible across recent years: doubled civil and criminal penalties for cartel and ACL contraventions under the Treasury Laws Amendment (Doubling Penalties for ACCC Enforcement) Bill 2026; the highest individual cartel penalty in Australian history ($1 million on Qteq’s Simon Ashton in March 2026; and the steady use of unexplained wealth and pecuniary penalty orders by the Commonwealth.
For an individual approached by investigators — or who learns through a third party that questions are being asked — the practical implication is that the time between a transaction and the moment law enforcement has visibility on it is shortening.
What to Watch Next
Indicators are worth following over the next twelve months.
AUSTRAC enforcement against Tranche 2 entities. Civil penalty proceedings, registration cancellations, or other enforcement against newly captured firms will define the practical compliance bar.
Use of Tranche 2 intelligence in criminal proceedings. How prosecutors and proceeds of crime authorities deploy AML-derived evidence will set the precedent for future investigations.
Litigation around legal professional privilege. Boundary cases — particularly around customer due diligence files, communications with lawyers about transactional structures, and the dominant purpose test — are likely.
FAQ
Q: Does legal professional privilege still protect my communications with my lawyer after 1 July 2026?
A: Communications for the dominant purpose of legal advice remain privileged. Privilege does not extend to facilitating a crime, and does not cover underlying transactional facts that AML reporting captures.
Q: Will I be told if a suspicious matter report is made about my matter?
A: As a general matter, tipping-off provisions under the AML/CTF Act 2006 (Cth) restrict disclosure that a report has been made. A client may not be informed.
Q: Does Tranche 2 apply only to large transactions?
A: No. The framework operates by reference to designated services and to the criteria for threshold and suspicious matter reporting. Suspicion is not defined by transaction size alone; pattern, structure, and explanation all matter.
Q: I am already under investigation. Should I be doing anything differently from 1 July?
A: Yes. Specialist criminal and proceeds of crime advice is more important than ever during a live investigation, and decisions about engaging professional services should be made with that advice in mind.
Conclusion
Tranche 2 is being framed publicly as a compliance reform. For people under investigation — and for people for whom an investigation is foreseeable — it is also an information reform. The visibility of professional service transactions to AUSTRAC, and through AUSTRAC to law enforcement and proceeds of crime authorities, is materially greater from 1 July 2026 than it was the day before. That change calls for proper strategic advice now, not after a report has been made.
If you are under investigation, the subject of contact from the AFP, ASIC, or state police, or facing the prospect of asset restraint, contact Jones + Associates for confidential specialist advice. We leave no stone unturned.