Will law firms actually be captured by AML/CTF Tranche 2 - and when?
For years, Australian law firms have heard rumblings about anti-money laundering (AML) and counter-terrorism financing (CTF) rules extending to the legal profession. With the passing of the Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024 (Cth) (Act), those rules are finally here.
Known as “Tranche 2” entities, law firms will soon be subject to the expanded AML/CTF regime. The Act captures firms of all sizes, from sole practitioners handling conveyancing to large commercial practices with trust accounts, with core obligations for law firms and conveyancers commencing on 1 July 2026.
If your firm offers certain professional services — such as handling client money for transactions, setting up companies or trusts, or managing legal arrangements — it is likely your firm will be caught. The main question is whether your firm provides “designated services” or not. “Designated services” are defined broadly and include creating or managing legal persons, providing registered office services, acting as trustee or company officer, or handling client money in a transaction. That covers much of everyday practice.
If your firm only does pure litigation or criminal defence work without touching client money or structures, your firm may be outside scope. But if your firm runs a trust account, act in property settlements, or incorporate entities — your firm is almost certainly in.
Early preparation will make the process more manageable. One year may sound like plenty of time, but firms that delay will struggle. Key steps now:
Assess and map your firm’s services against the “designated services” list (see our article here).
Engage leadership early. AML/CTF obligations carry personal liability for partners and directors, with large penalties for non-compliance.
Plan your timeline. Work backwards from July 2026 to allow for risk assessment, training, drafting policies, and testing systems.
This is not a compliance box-ticking exercise. It is a cultural shift that changes how law firms handle client intake, money, and risk assessment. The sooner your firm starts planning, the smoother the transition.
We are well placed to assist you with all of these requirements – register for a webinar or give our AML/CTF team a call.
Paul Gray
Principal
T 03 5225 5231 | M 0414 195 886
E pgray@ha.legal
Hugo Le Clerc
Senior Associate
T: 03 5225 5213 | M: 0438 089 334
E: hleclerc@ha.legal
