What the AUSTRAC changes mean for accountants

From 1 July 2026, certain services commonly provided by accountants will be regulated under Australia’s Anti‑Money Laundering and Counter‑Terrorism Financing (AML/CTF) regime for the first time. These changes —which apply to ‘Tranche 2’ entities — are administered by Australia's AML/CTF regulator AUSTRAC and will introduce new compliance obligations for accountants that provide designated services.  

This article explains when accountants are captured as Tranche 2 entities and what the AML/CTF obligations look like in practice — in simple, practical terms.

Why accountants are being required to comply with the AML/CTF regime

The AML/CTF reforms are designed to align Australia’s AML/CTF framework with international standards set by the Financial Action Task Force (FATF).

AUSTRAC has identified a number of services often provided by accountants , such as managing client funds, setting up entities, and assisting with complex transactions, that can be misused for money laundering, terrorism financing and proliferation financing (ML/TF) purposes, if not properly monitored.

Importantly, not all accounting work is regulated — only specific “designated services” trigger AML/CTF obligations.

When does an accountant become a “reporting entity”?

You will be considered a “reporting entity” if your firm provides designated services, such as:

• Assisting with the creation, restructuring, transfer or sale of companies or trusts
• Managing or controlling client money or assets
• Assisting with the sale or transfer of a shelf company
• Assisting with equity or debt financing
• Appointing a person, or acting as a director, secretary, power of attorney, partner in a partnership, trustee of an express trust, or nominee shareholder of a company or trust (or any equivalent position)
• Providing a registered office or business address for a company or trust
• Handling client money, accounts, securities, virtual assets or other property

If your firm provides one or more of these designated services, your firm must enrol with AUSTRAC and comply with its AML/CTF obligations. Enrolment must occur by 29 July 2026.

Routine accounting and tax compliance activities, including the preparation of tax returns and financial statements and the provision of tax advice, are not considered designated services for the purposes of the AML/CTF reforms.

What the AML/CTF process looks like for accountants

Once captured, accountants must implement a risk‑based AML/CTF program that reflects the size, nature, and complexity of their practice and sets out the business’ risk assessment, and it’s AML/CTF processes and policies for identifying and mitigating ML/TF risks in the business.

In practice, this means:

1. Conduct due diligence on its customers (CDD)

Accountants will need to:

• Verify client identity (including beneficial owners)
• Understand the purpose and nature of the engagement
• Assess ML/TF risk at onboarding

2. Ongoing monitoring

Because accountants often have long‑term client relationships, AUSTRAC expects:

• Ongoing monitoring of client activity
• Reviews when a client’s structure, behaviour, or transactions change

3. Reporting obligations

If something doesn’t make sense — for instance if a client provides inconsistent instructions, has unexplained sources of funds, or is using unusual corporate or trust structures — accountants may be required to submit a Suspicious Matter Report (SMR) to AUSTRAC.  Clients must not be told or ‘tipped off’ that a report has been lodged.

How AML/CTF affects day‑to‑day accounting work

For many accounting firms, AML/CTF will:

• Add compliance steps at onboarding
• Require better documentation of advice and decisions
• Change how trust and company services are delivered
• Increase scrutiny of complex or high‑risk clients

AUSTRAC has confirmed that smaller practices can adopt simpler, proportionate controls, as long as risks are properly assessed and documented.

Key takeaway for accountants

• AML/CTF is not about policing clients — it’s about understanding risk and protecting your firm.
• If you help clients with any of the designated services listed above, AML/CTF will become a core part of your professional responsibilities from 1 July 2026.
• In practice, accountants will likely face more extensive ongoing AML/CTF monitoring obligations due to the long-term nature of their client relationships and the designated services that they provide.
• Lawyers will more commonly engage with their AML/CTF obligations on a matter‑by‑matter basis, focused on specific transactions (such as property transfers or entity structuring), with the added complexity of legal professional privilege.

Same law, same obligations — different day‑to‑day impact.