The Australian government has implemented significant reforms to its Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) regime. These reforms aim to: i) simplify compliance obligations for businesses; ii) modernise the regime to address evolving technologies and risks; and iii) extend its scope to include higher-risk services offered by real estate, lawyers, accountants, and trust & company service providers – commonly referred to as ‘Tranche 2’ entities. Read more about the new Astralian AML/CTF rules

Real estate is a well-documented channel for laundering money both internationally and within Australia. Additionally, criminals often exploit unwitting professional service providers for their specialist skills, advice, technical expertise, or knowledge to facilitate money laundering schemes.

Alarmingly, the last international Financial Action Task Force (FATF) review found Australia to be 0% compliant with key recommendations related to the regulation of these high-risk sectors, one of only a handful of countries rated as non-compliant. The reforms are therefore crucial for closing these regulatory loopholes and strengthening the overall integrity of Australia’s financial system, reputation and economic stability.

Under these regulations, Tranche 2 entities must implement the following measures by 1 July 2026:

• Enrol (and register where required) with AUSTRAC if providing designated services.
• Develop, maintain, and comply with an AML/CTF programme that identifies, mitigates, and manages money laundering/terrorism financing (ML/TF) risks associated with their services.
• Verify customers’ identities, assess associated ML/TF risks before providing designated services, and conduct ongoing customer due diligence (CDD).
• Report certain transactions and suspicious matters.
• Make and retain certain records and ensure they are available to law enforcement, and have data protection policies, systems and controls in place for collecting and handling personal information.

While the reforms aim to close regulatory loopholes, they also present challenges, particularly for smaller businesses that may face a disproportionate cost burden and operational uncertainties. The Australian Government’s Office of Impact Analysis (OIA) reported in 2024 that the total regulatory cost to businesses could reach AU$13.9 billion over ten years, with consumers facing an additional AU$209 million in costs over the same period. 

The real estate sector is expected to bear the brunt of these costs, with an estimated AU$5,892 billion over a decade. The same report breaks down estimated costs by sector as follows:

Sector	Upfront	Ongoing	Total
Real Estate	989	4,903	5,892
Accounting Services	562	3,120	3,682
Legal Services	429	2,454	2,883
Trust & company services	191	945	1,136

Regulatory Costs by Sector (10-Year NPV in AUD Millions)

Many Tranche-2 businesses operate small teams, and the costs raise concerns about the potential impact on competition and access to services in these sectors. Despite the substantial implementation costs, the Australian government projects quantifiable benefits of up to AU$13.1 billion over 10 years, with additional unquantifiable benefits expected to represent an even higher value. 

Proactive preparation is essential for businesses navigating these changes. The key challenge will be achieving a proportionate balance between implementing robust AML/CTF measures and maintaining competitiveness.Reach out to us to assess readiness and develop an implementation plan, ensuring seamless adaptation to Australia’s new AML/CTF rules.

Use AUSTRAC’s online tool to check if you’ll be regulated, here.

Register now for our upcoming AML/CTF webinar. Contact us here to secure your spot.

Mark de Araujo is a Principal at ParagonFortis, a consultancy based in Sydney, Australia specialising  in Risk and Compliance solutions. We provide strategic insights and solutions to help organizations navigate the complex landscape of risk management and regulatory compliance.