AML/CTF Obligations of Tranche 2 Businesses in Australia

AML/CTF Obligations of Tranche 2 Businesses in Australia

With the passage of the Anti-Money Laundering and Countering-Terrorism Financing (AML/CTF) Amendment Act, 2024, Tranche 2 businesses or entities, like real estate professionals, dealers in precious stones, metals, and products, lawyers, conveyancers, accountants, trust and company service providers, will be required to perform certain AML/CTF obligations starting 1^st July 2026. In this infographic, we discuss the AML/CTF Obligations of Tranche 2 Businesses in Australia.

1. Enrollment with the Australian Transaction Reports and Analysis Centre (AUSTRAC)

Entities providing designated services are required to enroll with AUSTRAC within 28 days of providing the designated service. The Tranche 2 businesses that are set to be regulated under the Anti-Money Laundering and Countering-Terrorism Financing (AML/CTF) Amendment Act 2024 will be required to enroll with AUSTRAC by 29 July 2026 by furnishing certain basic information about their business to AUSTRAC.

2. Developing and Maintaining an AML/CTF Program

Tranche 2 businesses shall be required to develop and maintain an AML/CTF Program that is specific to their business. This includes conducting a Money Laundering/Terrorism Financing or Proliferation Financing (ML/TF/PF) Risk Assessment, developing AML/CTF policies, procedures, systems, and controls for mitigating the business risks, and getting the AML/CTF program approved by senior manager of the business.

Tranche Two entities shall also be required to document their AML/CTF program, update the same based on significant changes to the business, and conduct independent evaluations of the AML/CTF at least once in three years.

3. Performing Initial and Ongoing Customer Due Diligence (CDD)

Tranche 2 businesses will be obligated to perform initial CDD to identify and mitigate ML/TF/PF risks from the very beginning of a business relationship with the customer. At the same time, Tranche 2 entities will also be obligated to conduct ongoing CDD for managing and monitoring ML/TF/PF risks during the course of the business relationship with the customer.

The decision to apply Enhanced CDD or Simplified CDD is made by the Tranche Two entity, depending on the customer’s ML/TF/PF risk profile.

4. Regulatory Reporting

Starting July 2026, Tranche Two businesses shall be subjected to Regulatory Reporting obligations such as:

• Filing a Suspicious Matter Report (SMR) in case a suspicion arises regarding the identity of the customer or the matter being associated with any criminal activity or proceeds of crime
• Submitting Threshold Transaction Report (TTR) for every individual physical currency transaction equal to or above A$10,000
• Filing International Value Transfer Service Reports (IVTS) for each international transfer of value transaction
• Reporting Cross Border Movement when carrying any physical currency or bearer negotiable instruments that are payable to the bearer in or out of Australia, where the value of such currency or bearer negotiable instruments is greater than or equal to A$10,000
• Submitting an Annual Compliance Report summarising how the Tranche 2 entity has met its AML/CTF obligations in the previous year.

5. Record Making and Record-Keeping

Tranche 2 entities shall be obligated to keep a record of their AML/CTF program, customer due diligence practices, transaction records, staff training sessions, audit results, and any other information that may be relevant to the business for a minimum period of 7 years for the purpose of providing evidence of their due diligence measures, risk management practices, and compliance with their AML/CTF obligations.

AML Australia’s Compliance Services for Tranche 2 Entities

At AML Australia, we understand that Tranche Two entities may not be completely aware of their AML/CTF obligations. Therefore, our comprehensive compliance services for Tranche 2 entities in Australia ensure that the newly regulated Tranche 2 businesses do not miss out on even a single regulatory obligation. Here’s what our comprehensive AML compliance services cover:

• ML/TF Risk Assessment
• AML Program Documentation
• Managed KYC and CDD
• AML Regulatory Reporting
• AML Software Selection
• In-House AML Compliance Department Setup
• AML Training
• AML Health Check