Tranche 2 refers to the second phase of Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) regulatory reforms.
The Anti-Money Laundering and Counter-Terrorism Financing Amendment Act (AML/CTF Act or AML/CTF Reforms) extends AML/CTF regulatory obligations to new class of entities that provide 'designated services'. Designated services captures non-financial businesses and professions (DNFBPs) such as lawyers, accountants, real estate agents, dealers in precious stones, metals and products, and trust and company service providers including any DNFBPs providing a “designated service” with a geographical connection to Australia (Tranche 2 entities).
The goal is to align Australia with international standards set by the Financial Action Task Force (FATF), close regulatory gaps, and combat financial crime more effectively.
The AML/CTF act increases the number of regulated entities to approximately 100,000 entities under AUSTRAC.
Why now?
The changes are aligned with global efforts to regulate higher-risk sectors, which are typically categorized under DNFBPs. The FATF recommends that countries regulate financial institutions and DNFBPs – these entities should be obliged to identify, assess, and take appropriate risk-based mitigation measures to manage money laundering risk.
Tranche 1 entities required to comply with AML/CTF regulations include banks, credit unions, remittance providers, casinos, and digital currency business. Australia’s reforms extend AML/CTF regulations to virtual assets service providers from March 31, 2026 and Tranche 2 Entities from July 1, 2026.
Preparing for Tranche 2 AML/CTF compliance
For businesses captured by AML/CTF Reforms, they will need to perform initial and ongoing customer due diligence and enhanced due diligence for any potential high-risk customers and implement AML controls as part of an ongoing risk-based program for compliance. The Tranche 2 obligations in Australia start on July 1, 2026.
Get in touch with us today to see how Moody’s can support your Tranche 2 compliance obligations.
Enroll with AUSTRAC by:
a) April 28, 2026 if your business provides any of the newly regulated virtual asset services, with these new laws taking effect on March 31, 2026 or
b) July 29, 2026 if you provide other newly regulated designated services, with these new laws taking effect on July 1, 2026.
Assess money laundering and terrorism financing risk, and develop and maintain a tailored program to manage your business’s AML/CTF compliance.
Appoint a compliance officer to oversee AML/CTF risks.
Conduct initial customer due diligence before providing services.
Conduct ongoing customer due diligence, and enhanced customer due diligence for high-risk customers (such as politically exposed persons).
Report certain transactions and suspicious activities to AUSTRAC. Reportable transactions include those over a certain monetary threshold; international transfers; information about carrying or shipping physical currency; and any suspicious transactions or interactions.
Keep and securely store records of customer information showing the business’ AML/CTF activity.
Submit compliance reports if requested.
If you are or think you will be a business impacted by AML/CTF Reforms and regulated by AUSTRAC, start preparing early. Reach out to us today to learn more about how Moody's solutions can support a tailored compliance program for your business.
In these sectors, lawyers, accountants, and trust and company service providers involved in certain legal arrangements are subject to AML/CTF obligations.
An example of the services covered include acting on a customer’s behalf in a transaction or assisting in planning or executing a transaction to buy, sell, or transfer a body corporate or legal arrangement.
Sector-specific risks
Real estate professionals, including agents and developers, and conveyancers are subject to AML/CTF obligations for services that relate to selling, purchasing, and the transfer of real estate.
The services covered include seller’s and buyer’s agent services, property developers and other businesses who sell house and land packages, and conveyancers or lawyers who plan, execute, or give effect to the transfer of real estate from one person to another.
Sector-specific risks
Dealers in precious stones and metals with transactions that meet the following threshold will be subject to the AML/CTF obligations:
Services involving A$10,000 or more in physical currency or visual assets, including a combination, when buying or selling precious metals, stones, or products.
It can be through a single transaction or multiple transactions that are linked or appear to be linked.
Sector-specific risks
For an extensive list of the industries and services that will be newly regulated by AUSTRAC, refer to this page for the most updated information.
Refer to AUSTRAC’s AML/CTF Reform page for the most updated information on key dates and implementation timelines.
Digitally transform your customer due diligence processes and AML programs. Automate data collection, data analysis, and decision-making to streamline your team’s workload. Our AI-enabled intelligent screening solution focuses on reducing false positives so your team can focus on real risks.
Integrate global datasets to provide a more holistic picture of risk for your business. Maintain up-to-date records and conduct ongoing monitoring for a perpetual approach, equipping you with more information to promptly mitigate new risks that emerge.
Tranche 2 companies are gearing up for the July 1, 2026 date that the AML/CTF obligations kick in. It’s essential to begin preparing for the new regulations early and understand how to implement a risk-based approach to compliance for your business. Read more in our latest blog below.
This episode of the Risk Reframed podcast provides an overview of the Tranche 2 regulations. Our host, Alex Pillow, speaks with compliance leaders to understand the key challenges and opportunities arising from these reforms, and how other regulators have implemented similar requirements for corporates.
Guests:
Jeremy Moller, risk advisory lawyer at Norton Rose Fulbright and Qing Liu, Senior Director of Compliance & Third Party Risk in Australia at Moody’s
What newly regulated entities need to know about the reforms, from impact to implementation
For businesses new to the regulations, the checklist below can serve as a starting point for your compliance program. For more details on sector-specific reforms guidance, refer to AUSTRAC’s page.
When adopting a risk-based approach, organizations can identify and define low, medium, and high-risk activity in line with your overall risk appetite, and prioritize mitigating higher priority risks. Consider augmenting your customer due diligence and onboarding processes with technology that helps streamline compliance workflows. Our digital onboarding solution aims to reduce the manual work needed by automating AML and KYC activities through integrated data checks, customized workflows, and AI-enabled screening. This can help with more efficient resource allocation in leaner compliance teams.
Using Moody’s digital onboarding solution, businesses can tailor compliance workflows based on your risk policies. Customize your end-to-end workflows with integrated data checks, build dynamic risk profiles, and manage the client’s lifecycle – starting from onboarding, to ongoing monitoring, to off-boarding.
Moody’s Maxsight™ is designed to help your organization’s journey towards unified risk management. You can start with a single use case, such as digital onboarding, and expand into different areas as your function scales.
Disclaimer: This content is for informational purposes only and does not constitute legal, financial, compliance or other professional advice. Please consult with a qualified professional for specific legal, financial, compliance, or other professional advice. For more terms and conditions pertaining to Moody’s products and services, refer to the disclaimer on Moody’s website.
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