Overview of Australian AML/CTF Regulatory Regime

The first AML/CTF Act was passed in December 2006 and was phased in over two years. The regulation targeted financial institutions and gambling service providers, mandate these entities to implement risk-based measures to detect, manage and mitigate financial crime risks. Financial institutions and gambling service providers are also known as Tranche 1 reporting entities under the AML/CTF regulation.

On 29 November 2024, the Australian Parliament passed the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2024 (Cth), marking the most significant reforms to Australia’s AML/CTF regime in over 18 years. This legislative update is commonly referred to as the AML/CTF Reform.

Key Statistics:

80,000+

The revised legislation is expected to introduce more than 80,000 new reporting entities, in addition to the approximately 17,500 existing Tranche 1 entities operating across the financial services, gaming, and bullion dealing sectors.

The regulated population, to scale

Areas are drawn to scale: the new entities alone are about 4.6 times the existing population.

Key Objectives of the AML/CTF Reform

Expansion to New Industries

The Reform extends AML/CTF obligations to new sectors that are recognised, both domestically and internationally, as vulnerable to criminal exploitation and money laundering. Under the revised legislation, certain services offered by the following professionals will be classified as Designated Services:

  1. Real estate professionals
  2. Legal professionals
  3. Accounting professionals
  4. Trust and company service providers (TCSPs)
  5. Dealers in precious metals and stones (DPMS)

These sectors are collectively referred to as Tranche 2 entities.

Modernisation and Simplification

The Reform also aims to simplify and modernise the existing AML/CTF framework to enhance its effectiveness in today’s dynamic risk environment. This includes updates to accommodate technological advancements and to better align Australia’s regulatory requirements with international standards.

All Tranche 2 entities providing designated services will be required to enrol with AUSTRAC and begin complying with the updated AML/CTF Act and Rules by 1 July 2026.

How the money moves

The routes criminals use through each sector, step by step.

Illicit funds in

  1. 1Cash for deposits and settlements
  2. 2Shell company or complex structure hides the owner
  3. 3High-value property bought
  4. 4Rapid resale (“property flipping”)
  5. 5Proceeds enter the system as “clean money”Funds look clean

Industry-Specific Money Laundering Risks