Closing the gaps: Commencement of the AML/CTF Reforms is imminent
At a glance
The most significant overhaul and expansion of the AML/CTF regime in two decades is arriving now. The reforms to the Anti-Money Laundering and Counter-Terrorism Financing Act (AML/CTF Act) take effect for existing reporting entities from 31 March 2026 and from 1 July 2026 for newly regulated "Tranche 2" entities.
As the timeline for compliance narrows, organisations are now grappling with practical implementation of the new requirements.
Since our last insight - AML/CTF: Navigate your compliance journey, AUSTRAC has released an update on transitional rules, a series of program starter kits for newly regulated reporting entities and exposure draft amendments to the Anti-Money Laundering and Counter-Terrorism Financing Rules 2025 (AML/CTF Rules). These updates aim to provide greater clarity on implementation timelines, customer due diligence transitions and practical tools for newly regulated entities navigating their obligations for the first time.
We cover what this means for organisations as they prepare for compliance, and some practical steps that can be taken from now.
Key dates
Roadmap: how we got here (at a glance)
- December 2024: The Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024 (Cth) receives Royal Assent.
- August 2025: The Anti-Money Laundering and Counter-Terrorism Financing Rules 2025 (Cth) are released and tabled in Parliament.
- October 2025: Core guidance is released by AUSTRAC.
- January 2026: AUSTRAC provides an update stating it is working with the Department of Home Affairs to finalise an exposure draft of the transitional rules. On 30 January, Program starter kits are also released by AUSTRAC.
- February 2026: AUSTRAC releases Exposure Draft Anti-Money Laundering and Counter-Terrorism Financing (2025 Rules) Amendment Rules 2026 for consultation. The consultation period ends on 20 February 2026.
Looking ahead (at a glance)
- 31 March 2026: AML/CTF obligations begin for existing reporting entities. Enrolment opens for Tranche 2 entities.
- 1 July 2026: AML/CTF obligations begin for Tranche 2 entities.
Proposed transitional rules
AUSTRAC has announced that, in consultation with the Department of Home Affairs, it will release proposed transitional rules to support the smooth implementation of the AML/CTF reforms. These include the following:
- Three-year transitional period for initial CDD
From 31 March 2026 to 30 March 2029, existing reporting entities (including existing digital currency exchange providers) can choose to either continue using existing applicable customer identification procedures or transition to the reformed initial CDD requirements within this period. This will not apply to ongoing CDD or other reporting obligations;
- Extended period for AML/CTF compliance officer notification
Existing reporting entities will have until 30 May 2026 and newly regulated reporting entities will have until 29 July 2026 to notify AUSTRAC of the identity of their AML/CTF Compliance Officers;
- Staggered independent evaluation deadlines
For newly regulated businesses, the earliest date for their first independent evaluation will be 1 July 2029 with further deadlines staggered at 6-month intervals from that date;
- Registration roll-over
Existing digital currency exchange providers, registered remittance network providers, remittance affiliates and independent remittance dealers would not be required to re-register.
- Deferred obligations for virtual asset service providers
Obligations for new virtual asset providers will be deferred until 1 July 2026 in line with Tranche 2 reforms.
- Deferred international value transfer service reporting
The international value transfer service reporting obligations will also be deferred until 2029.
AUSTRAC's Program starter kits
AUSTRAC's Program Starter Kits have been designed specifically for small businesses in newly regulated Tranche 2 sectors, including real estate professionals, lawyers, accountants and dealers in precious metals and stones to support industry preparedness. Each kit contains 4 core components:
- A risk assessment;
- an AML/CTF policy;
- AML/CTF processes; and
- operational forms to record information and demonstrate compliance.
These kits have been endorsed by AUSTRAC as customisable for small businesses to meet compliance obligations, manage risks and reduce time and cost. In AUSTRAC's media release, AUSTRAC CEO Brendan Thomas states:
'AUSTRAC's program starter kits mark the first time that an anti-money laundering regulator anywhere in the world has provided this level of practical support to business'
'We have developed these kits in close collaboration with industry peak bodies and small businesses across the newly regulated sectors'
Proposed updates to the new AML/CTF Rules
On 9 February 2026, AUSTRAC released exposure draft amendments to the AML/CTF Rules. These amendments are intended to operationalise the AML/CTF Act and AML/CTF Rules, correct identified issues and recast the reporting group framework. Some of these amendments include:
- introducing an 'opt-out' reporting group model where related entities in a corporate group will form a reporting group by default, unless a reporting entity declines in writing;
- extending the timeframe to delay verification of KYC information that is previously verified by another party in a real estate transaction from 15 days to 28 days;
- updating information required for enrolment and registration applications; and
- clarifying the operation of CDD provisions, including an additional requirement to monitor for prohibited hate group offences as part of monitoring for unusual transactions and behaviours.
What this means for your business
Existing reporting entities and newly regulated reporting entities will need to ensure that they have considered the impacts of AUSTRAC's latest updates in their preparations for AML/CTF compliance. By 31 March 2026 for existing reporting entities, and by 1 July 2026 for newly regulated reporting entities, these organisations should have:
- assessed the new designated services that may be provided;
- undertaken or refreshed their enterprise-wide money laundering, terrorism financing and proliferation financing (ML/TF/PF) risk assessments;
- created or updated their AML/CTF program to meet the new requirements, having regard to the appropriateness of AUSTRAC's program starter kits;
- considered and implemented governance structures, including the formation of "reporting groups" (if applicable) having regard to the proposed amendments to the AML/CTF Rules;
- provided staff training on AML/CTF obligations;
- established updated CDD procedures and considered the impact of transitional rules, particularly for existing reporting entities;
- assessed the appropriateness and suitability of their AML/CTF Compliance Officer under updated requirements; and
- established transition plans and documented implementation progress.
Our perspective
Businesses now have a clearer window to implement structural changes to governance, risk management, customer due diligence, reporting and monitoring processes. Whether your organisation is an existing reporting entity or will be newly regulated, early preparation is essential to minimise regulatory and operational risk.
What you should do now
Steps that businesses can undertake now include:
- ensuring AML/CTF processes respond to their risk assessment of their business, and are documented and included in their Program;
- developing and socialising a modernised AML/CTF program with appropriate stakeholders;
- educating and training staff on AML/CTF obligations under the new regime;
- building and testing capability through resources and investing in systems for compliance with AML/CTF obligations;
- establishing governance structures, escalation channels and AML/CTF responsibilities; and
- monitoring for updates from AUSTRAC including the finalisation of the transitional rules and updates to the AML/CTF Rules.
Contact our team
MinterEllison's legal and consulting expertise can assist organisations to understand their AML/CTF obligations, risks and approach to compliance.
Contact our MinterEllison legal and consulting team who can help you navigate this journey.
