Tranche 2 Reforms
What is Tranche 2 of the AML/CTF reform?
The Act currently targets the financial sector and other businesses that involve large transfers of cash – the gambling sector, remittance or money-transfer services, bullion dealers and more. A list of designated services – including taking deposits, payroll services and currency exchange – is included in the Act, and any business that provides one or more of these services must comply with the regulations. Some financial institutions are also required to report transactions over a certain threshold, along with any suspicious activity.
On 29 November 2024, the AML/CTF Amendment Bill (Tranche 2) has passed the House of Representatives and will be enacted. This means that those who operate in the real estate, law, and accounting sectors need to start looking at how this will affect them too, and get their processes in place, ready to go.
Now that AML/CFT obligations are likely to apply to a broader range of organisations, more business owners will need to adjust their processes and put systems in place to ensure compliance. Adhering to the rules isn’t just a legal requirement, it’s also an important way to prevent criminal activity – and protect your business reputation.
What will Tranche 2 look like in Australia?
Businesses that are affected by the Act must register with AUSTRAC (Australian Transaction Records and Analysis Centre), the government agency responsible for deterring financial crime.
Once your business is registered, you are a ‘reporting entity’ and need to keep up with your obligations under the Act. This means:
- Carrying out risk assessments
- Developing a written AML/CTF program to manage compliance.
- Appointing a compliance officer.
- Collecting and verifying key client details before providing services – often referred to as ‘know your customer’ (KYC) information. This can mean taking verified copies of documents or using a credit-reporting body (CRB) to find and verify details.
- Reporting certain types of transaction – those over a certain monetary threshold, international transfers, information about carrying or shipping physical currency and any suspicious transactions or interactions.
- Keeping and securely storing records showing your AML/CTF activity.
- Submitting compliance reports if requested.
- Paying an industry levy if your business earns over a certain threshold.
Education and guidance by AUSTRAC
Guidance and educational materials are being developed to support both current reporting entities and Tranche 2 entities to implement effective AML/CTF measures.
AUSTRAC will provide further guidance in 2025, including:
- the scope of the new regulated services.
- core obligations and how they can be practically implemented.
- AUSTRAC is also developing AML/CTF starter program kits for small businesses in Tranche 2 sectors. The kits aim to increase the effectiveness of AML/CTF programs and will provide an AML/CTF program for a typical low complexity small businesses. They will reflect sector-wide money laundering, terrorism financing and proliferation financing risk and industry practice.
- AUSTRAC advises that guidance is being developed in close consultation with industry associations and peak bodies and will be released for public consultation in mid-2025.
Reform-related guidance currently available:
Key dates related to the reforms:
2024/25
- 29 November 2024: Passage of the AML/CTF Amendment Bill
- 10 December 2024: AML/CTF Amendment Act receives Royal Assent
- November 2024 to May 2025: Consultation on AML/CTF Rules
- 11 December 2024 to 14 February 2025 – First exposure draft consultation on AML/CTF Rules
- 7 January 2025: Repeal of Financial Transaction Reports Act 1988
- 31 March 2025: Commencement of changes to the tipping off offence
- July to August 2025: Public consultation on draft core guidance
- July 2025: Finalisation of AML/CTF Rules
- September 2025: Finalisation of core guidance
2026
- January 2026: Finalisation of tranche 2 sector-specific guidance
- 31 March 2026: Changes to obligations for current reporting entities and virtual assets service providers
- 1 July 2026: AML/CTF obligations commence for tranche 2 entities
- 2026: Ongoing enhancements to the sector-specific guidance for current reporting entities in partnership with industry
- Post 2026: International value transfer service reporting will commence under transitional arrangements (previously referred to as ‘international funds transfer instruction’ reporting).
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Industry guides to navigating Tranche 2 reforms
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Tranche 2 resources
Roadmap to Compliance
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In alliance with leading industry experts and AMLCOs across New Zealand and the UK, we’re launching a free educational series to help law firms, real estate agents and accounting firms navigate the new Tranche 2 AML/CTF regulations.