What Tranche 2 AML Reforms Mean for Australian Businesses

Tranche 2 AML reforms are one of the most significant changes to Australia’s anti-money laundering and counter-terrorism financing regime. From 1 July 2026, a wider group of businesses will need to understand whether their services are captured and what they must do to prepare.

The reforms are especially important for businesses that have not traditionally been regulated under the AML/CTF regime. For many law firms, accounting practices, conveyancers, real estate businesses and dealers in precious metals, stones and products, this may be the first time AML/CTF obligations become part of daily operations.

For affected businesses, preparation should not be limited to reading the legislation. Practical readiness means understanding customer due diligence, client risk assessment, PEP and sanctions screening, business screening, adverse media checks, jurisdiction risk and ongoing monitoring workflows.

Tranche 2 AML readiness should connect captured services, customer due diligence, screening, ongoing monitoring and clear compliance records.

What are Tranche 2 AML Reforms?

Tranche 2 AML reforms refer to the expansion of Australia’s AML/CTF regime to additional sectors and services that may be exposed to money laundering, terrorism financing and other financial crime risks.

The reforms are designed to close gaps in the existing regime by regulating services that can be misused to move, hide or legitimise illicit funds. These services often involve property transactions, company structures, legal arrangements, high-value assets and professional advice.

For newly regulated businesses, the practical impact is clear. AML/CTF compliance becomes part of client onboarding, matter acceptance, customer risk assessment, internal governance and ongoing review.

Why Tranche 2 AML Reforms Matter

Tranche 2 AML reforms matter because criminals often use professional services, property transactions and complex structures to conceal the source, ownership or movement of funds.

A business may not think of itself as part of the financial crime system. However, if it helps create structures, move assets, manage transactions or support high-value purchases, it may be exposed to financial crime risk.

AUSTRAC states that the new laws expand regulation into industries recognised domestically and globally as high risk for criminal exploitation, including real estate professionals, dealers in precious stones, metals and products, lawyers, conveyancers, accountants, trust and company service providers and certain virtual asset services. Read AUSTRAC’s overview of the AML/CTF reforms.

Who May Be Affected by Tranche 2?

The reforms do not automatically capture every business in a sector. Whether obligations apply depends on whether the business provides a designated service with the required connection to Australia.

That means a law firm, accountant, conveyancer, real estate business or precious metals dealer should review the specific services it provides, not just its industry label.

What Newly Regulated Businesses Need to Do

For many businesses, Tranche 2 preparation will require new processes, new staff responsibilities and new technology. The goal is not to build a bank-grade compliance department overnight. The goal is to create proportionate controls that match the business’s risk exposure.

AUSTRAC expects newly regulated businesses to have an AML/CTF program, appoint a compliance officer, train staff and be ready to engage with customers and report suspicious matters by the time obligations start. Read AUSTRAC’s preparation guidance for newly regulated businesses.

In practical terms, this means firms should start by mapping which services may be captured, where risk enters the client journey and what controls are needed before work begins.

Key Tranche 2 AML Obligations to Prepare For

The exact obligations for a business depend on the services it provides and the risk profile of its clients. However, several areas are likely to matter for most newly regulated businesses.

These obligations should be translated into practical workflows. If a partner, accountant, conveyancer, agent or dealer cannot apply the process during a real client matter, the AML/CTF program will not work in practice.

Building a Practical Tranche 2 AML Program

A practical AML/CTF program should be designed around the business’s real services, clients and risks. A small suburban conveyancing firm will not have the same risk profile as a national law firm with cross-border clients.

That is why Tranche 2 readiness should begin with a business-level risk assessment. From there, firms can decide which controls are needed, who owns each step and how the process will be documented.

Technology should support the workflow rather than make it more complex. Screening, identity checks, business verification, beneficial ownership review and monitoring should be easy for staff to apply consistently.

Common Tranche 2 Readiness Problems

Newly regulated businesses may underestimate how much operational change is required. The main issue is not only understanding the law. It is turning obligations into repeatable workflows that staff can use.

Common issues include:

• Assuming the whole sector is either captured or not captured without reviewing designated services.
• Leaving enrolment, program design and staff training too late.
• Screening only the direct client and missing beneficial owners or controllers.
• Using manual checks that are difficult to evidence or repeat consistently.
• Failing to document risk decisions, escalations and suspicious matter review.
• Treating AML/CTF compliance as a one-off onboarding task rather than an ongoing process.

These problems can create avoidable pressure when obligations begin and when firms need to show that controls are being applied.

How Nexiant Supports Tranche 2 Readiness

Nexiant supports Tranche 2 readiness through risk management and fraud prevention solutions that help regulated and newly regulated businesses manage customer, business and transaction risk.

For client onboarding, ID Verification can help verify individual clients, while Business Screening can support KYB, company checks and beneficial ownership review. These workflows are useful for firms that need to understand who they are dealing with before providing a captured service.

For risk assessment and ongoing review, Nexiant can support PEP and Sanctions Screening, Adverse Media Screening, Jurisdictional Risk Checks and Transaction Monitoring. Together, these controls help firms move from basic client checks to a more complete AML/CTF workflow.

Questions to Ask Before Choosing Tranche 2 AML Software

Before selecting Tranche 2 AML software, decision makers should assess whether the platform can support practical workflows, not just individual searches.

Useful questions include:

• Can the platform support individual client verification and business verification?
• Can it screen customers, beneficial owners, directors and controllers?
• Can it check PEP, sanctions and adverse media exposure?
• Can jurisdiction risk be included in customer risk assessment?
• Can staff record decisions, escalations and review outcomes?
• Can workflows be adapted for legal, accounting, real estate, conveyancing or high-value goods services?
• Can the system support ongoing monitoring after onboarding?
• Can the business produce records if asked to explain its AML/CTF controls?

These questions help separate a basic screening tool from a Tranche 2 AML workflow that can support real compliance operations.

Frequently Asked Questions

This article was accurate at the time of publication in January 2026 and is intended for general informational purposes only. It does not constitute legal, regulatory or compliance advice. Organisations should seek qualified professional guidance in relation to their specific obligations.