Australia’s anti money laundering and counterterrorism financing (AML/CTF) laws are expanding. From 1 July 2026, reforms known as “Tranche 2” will apply to a broader range of professional services, including accountants, lawyers and real estate agents.
While these changes are regulatory in nature, the most visible impact for clients will be an increase in Know Your Customer (KYC) and identity verification requirements when engaging certain services.
Why is this changing?
Professional services can, in some circumstances, be misused to hide the movement of money or obscure ownership and control of assets. The Tranche 2 reforms are designed to reduce these risks and align Australia with international standards by requiring service providers to take reasonable steps to understand who they are dealing with and why.
Which services can trigger AML/CTF checks?
AML/CTF obligations do not apply to every interaction. They are triggered only when a ‘designated service’ is provided. Across accountants, lawyers and real estate professionals, designated services can include, for example:
- acting in the sale, purchase or transfer of real property
- creating, managing or administering companies, trusts or other legal structures
- acting as an intermediary in certain financial or transactional arrangements
- services that involve handling, controlling or directing client funds
- assisting with ownership, control or structuring of entities or assets
Not all services fall within scope, and requirements are applied on a riskbased and proportionate basis.
What is KYC and what might clients be asked for?
KYC refers to steps taken to verify a client’s identity and understand the nature of the engagement. Depending on the service, clients may be asked to:
- provide identity documents
- confirm beneficial owners or controllers of an entity
- explain the purpose of a transaction or structure
These checks are common in banking and financial services and are now being applied more consistently across professional services.
What this means for clients
These changes are not about suspicion or inconvenience, but about safeguarding legitimate business and maintaining trust in Australia’s financial system. Where KYC information is required, it will be requested clearly, handled securely, and limited to what is reasonably necessary.
The Tranche 2 reforms commence from 1 July 2026, and we will continue to keep clients informed as the changes take effect.
If you have questions about KYC or how these reforms may affect your engagements, please contact us.
