AUSTRAC Tranche 2: What Australian Businesses Need to Know

1/9/2026

Australia's Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) regime is expanding. The long-anticipated Tranche 2 reforms will bring new obligations to industries that have previously been outside the regulatory framework. If you work in real estate, legal services, accounting, or trust and company services, this affects you.

What Is Tranche 2?

Australia's AML/CTF Act was originally passed in 2006, covering financial institutions, gambling services, and bullion dealers (Tranche 1). Tranche 2 extends these obligations to designated non-financial businesses and professions (DNFBPs):

  • Real estate agents — involved in buying, selling, or leasing property
  • Lawyers and conveyancers — providing financial or property-related services
  • Accountants — providing financial advice, tax services, or company formation
  • Trust and company service providers — creating or managing legal entities
  • Dealers in precious stones and metals — above specified thresholds

Why It Matters

Money laundering through Australian real estate has been well-documented. Industry reports estimate that billions of dollars in illicit funds flow through Australian property each year. The current gap in regulation means that many professionals who facilitate these transactions have no legal obligation to identify or report suspicious activity.

Tranche 2 closes that gap.

Key Obligations

Once Tranche 2 is in effect, covered businesses will need to:

1. Customer Due Diligence (CDD)

Verify the identity of your clients before providing services. This includes:

  • Collecting and verifying identification documents
  • Identifying beneficial owners of companies and trusts
  • Understanding the purpose and nature of the business relationship
  • Ongoing monitoring of the relationship

2. Risk Assessment

Conduct and maintain a risk assessment that identifies:

  • The money laundering and terrorism financing risks your business faces
  • The types of customers, services, and jurisdictions that present higher risk
  • The controls you have in place to mitigate those risks

3. AML/CTF Program

Develop and maintain a written AML/CTF program that covers:

  • Customer identification and verification procedures
  • Ongoing customer due diligence
  • Transaction monitoring
  • Record keeping requirements
  • Staff training and awareness
  • Reporting obligations

4. Suspicious Matter Reporting

Report suspicious matters to AUSTRAC when you have reasonable grounds to suspect that a transaction or activity may be related to money laundering or terrorism financing.

5. Record Keeping

Maintain records of:

  • Customer identification information (7 years after relationship ends)
  • Transaction records (7 years after the transaction)
  • AML/CTF program documentation

Timeline

The Australian Government has committed to implementing Tranche 2, with legislation expected to be finalised in the coming period. Businesses should start preparing now, as the compliance requirements are substantial and will take time to implement properly.

The Cost of Non-Compliance

AUSTRAC has significant enforcement powers:

  • Civil penalties of up to $22.2 million per contravention for corporations
  • Criminal penalties for serious and systemic failures
  • Enforceable undertakings
  • Remedial directions
  • Infringement notices

Beyond regulatory penalties, non-compliance creates reputational risk and potential exposure to facilitating criminal activity.

How to Prepare

Start With a Gap Analysis

Assess your current processes against the expected Tranche 2 requirements:

  • Do you verify client identity for all engagements?
  • Do you collect beneficial ownership information?
  • Do you have a documented risk assessment?
  • Do you train staff on AML/CTF obligations?
  • Do you have a process for identifying and reporting suspicious activity?

Build Your AML/CTF Program

A compliant program doesn't need to be overwhelming. Start with the fundamentals:

  1. Document your risk assessment — understand where your risks are
  2. Define your CDD procedures — who, what, when, and how
  3. Set up record keeping — organised, secure, and accessible
  4. Train your team — everyone needs to understand their obligations
  5. Establish reporting processes — clear escalation paths for suspicious matters

Consider Technology

Manual compliance is time-consuming and error-prone. Purpose-built compliance platforms can automate:

  • Identity verification and document checks
  • Risk scoring and ongoing monitoring
  • Record keeping and audit trails
  • Regulatory reporting

This is exactly why we built Verifia — to make AML/CTF compliance manageable for businesses that are new to these obligations.

How Verifia Helps

Verifia is purpose-built for AUSTRAC Tranche 2 compliance. It provides:

  • Automated KYC verification — verify client identity in minutes, not days
  • Risk scoring — real-time risk assessment based on configurable rules
  • Ongoing monitoring — continuous screening against sanctions and PEP lists
  • Audit-ready records — complete documentation trail for every verification
  • Regulatory reporting — streamlined suspicious matter reporting
  • Staff training resources — built-in guidance and compliance checklists

Whether you're a real estate agency, law firm, or accounting practice, Verifia provides the tools you need to meet your obligations without disrupting your business.

Learn more about Verifia | Visit Verifia

Further Reading