AML Tranche 2 for lawyers and conveyancers: the compliance checklist

Are lawyers and conveyancers captured?

Lawyers and conveyancers are among the five sectors brought into the AML/CTF regime by Tranche 2 from 1 July 2026. This expansion of the regime means firms providing legal services will be subject to new obligations. Firms can use the AML Tranche 2 scope checker to assist with determining their obligations.

The designated services that bring a firm into the regime include assisting with real-estate transactions, forming or restructuring companies and trusts, managing client trust accounts, and managing client money or assets. It is important to recognise that providing only one of these designated services is sufficient to trigger AML/CTF obligations.

To clarify, a firm does not need to provide all designated services to be captured.

Legal professional privilege

The Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) reforms recognise the existence of legal professional privilege. Lawyers and conveyancers are not required to disclose information protected by privilege when fulfilling their AML reporting obligations.

Compliance with AML/CTF obligations must be managed in a way that does not compromise existing protections afforded by legal professional privilege. Firms should establish and maintain clear internal procedures to accurately identify information that falls within the scope of privilege.

These procedures should assist in distinguishing between information that is subject to privilege and that which is not, when determining whether and what to report.

• Documenting the rationale for privilege claims is recommended.

Key dates and program

The Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Tranche 2 program requires lawyers and conveyancers to establish a comprehensive AML/CTF program. This includes developing both a Part A and Part B program, and appointing a designated Compliance Officer. Failure to meet these requirements will result in non-compliance.

Enrolment with AUSTRAC is mandatory for Tranche 2 entities. The enrolment period for the first wave opens on 31 March 2026 and closes on 29 July 2026. Obligations under the program will commence on 1 July 2026. Further information on the enrolment process can be found in the AUSTRAC enrolment guide.

Entities that fail to enrol within the specified timeframe may face civil penalties. The maximum civil penalty for late enrolment is currently $19,800 per day.

CDD, monitoring and reporting

Lawyers and conveyancers must undertake customer due diligence (CDD) to verify customer identity. This includes identifying beneficial owners – those holding at least 25% ownership or control – and politically exposed persons before providing a designated service. Firms should utilise tools such as the beneficial owner identifier to assist in this process.

Ongoing monitoring is also a compliance requirement. Should suspicious activity be recognised, a Suspicious Matter Report must be filed within 24 hours. Threshold Transaction Reports are required for cash transactions of $10,000 or more, and these must be filed within 10 business days.

It is critical to understand that tipping off a client regarding the filing of either a Suspicious Matter Report or a Threshold Transaction Report constitutes a separate criminal offence.