What the Tranche 2 Reforms Mean for Your Business and How to Meet Your Obligations With Confidence
Australia’s Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) landscape is undergoing its most significant transformation in nearly two decades. If your business operates in any of the sectors newly captured by these reforms, spanning professional services, real estate, financial dealings, and a range of other designated sectors, 2026 brings new legal obligations around how you screen your people, know your customers, and manage financial crime risk. Below, we break down the key obligations, who is affected, and the practical steps your organisation can take to get ahead of the deadlines.
According to the Australian Institute of Criminology, serious and organised crime costs Australia up to $68.7 billion annually [2] and these reforms are designed to close the gaps that have allowed financial crime to flourish in sectors that, until now, have operated largely outside the AML/CTF framework [3].
Which Sectors Fall Under the Tranche 2 Regulations?
Australia’s AML/CTF framework has traditionally applied to banks, credit unions, casinos, remittance providers, and other financial institutions — what are known as Tranche 1 entities. The Tranche 2 reforms extend that regulatory reach significantly into new sectors. From 1 July 2026, the following businesses will become reporting entities under AUSTRAC [1]:
- Lawyers and conveyancers involved in property or business transactions
- Accountants providing certain financial or corporate services
- Real estate professionals — including real estate agents, buyer’s agents, and property developers
- Dealers in precious metals, gems, and jewellery
- Trust and company service providers
In addition, virtual asset service providers offering newly regulated services will come under AUSTRAC regulation slightly earlier, from 31 March 2026.
The expansion marks a significant increase in the number of businesses subject to AML/CTF regulation, and if your organisation falls into one of these categories, early preparation is advised.
What Are Your New Obligations?
As a reporting entity under the AML/CTF Act, your obligations are both practical and ongoing. Regulated businesses must [1][4]:
- Enrol and register with AUSTRAC — enrolment opens 31 March 2026, with a deadline of 29 July 2026 for most Tranche 2 entities
- Identify and assess their money laundering, terrorism financing, and proliferation financing risks
- Develop and maintain AML/CTF policies, procedures, systems, and controls tailored to those risks
- Appoint a compliance officer to oversee AML/CTF responsibilities — the officer must be an Australian resident and satisfy AUSTRAC’s fit and proper requirements, and must be notified to AUSTRAC by 29 July 2026
- Conduct personnel due diligence and provide AML/CTF training to staff
- Conduct customer due diligence, both at onboarding and on an ongoing basis
- Report certain transactions and suspicious activity to AUSTRAC
- Maintain accurate records for at least seven years
By 1 July 2026, newly regulated entities should be enrolled, have an AML/CTF programme in place, and have a clear implementation plan documented and underway [4].
Employee Screening: A Critical Component of AML/CTF Compliance
Under the reformed AML/CTF framework, regulated businesses are required to conduct both initial and ongoing personnel due diligence (PDD) on any person employed or engaged to perform AML/CTF functions [4]. This includes governance roles such as senior managers, the AML/CTF compliance officer, and governing body members, as well as operational roles involved in customer due diligence, transaction monitoring, or suspicious matter reporting [5].
AUSTRAC expects organisations to [4]:
- Assess skills, knowledge and expertise — verifying that individuals have the capability to perform their AML/CTF responsibilities, and addressing any identified gaps through training or supervision
- Conduct integrity assessments — including background checks, police checks, sanctions and adverse media screening, and bankruptcy checks where appropriate to the ML/TF risks of the role
- Screen prospective employees prior to appointment, including: identity verification; confirmation of employment history and qualifications through original or certified documents, written references or referee reports; and character and background checks to confirm past conduct. Where relevant, organisations should also confirm whether another government agency has authorised the person to perform functions that may intersect with their AML/CTF duties
- Conduct ongoing reassessment — the frequency and scope of which must be proportionate to the person’s role and associated ML/TF risks. This may include periodic self-attestation, updated police checks, and trigger-based reviews where an employee’s circumstances change
Organisations must maintain a documented audit trail of all personnel due diligence decisions and actions, including records of integrity assessments and reassessments [4].
Key Dates to Have on Your Radar
- 31 March 2026 — New obligations commence for existing reporting entities; AUSTRAC enrolment opens for Tranche 2 businesses [1]
- 1 July 2026 — AML/CTF obligations commence for all Tranche 2 entities [1]
- 29 July 2026 — Deadline for Tranche 2 entities to enrol with AUSTRAC and nominate their compliance officer [4]
With enrolment, risk assessment, policy development, and workforce screening programmes all requiring time to implement effectively, organisations are strongly encouraged to begin preparations well ahead of the July 2026 commencement date.
Managing Your AML/CTF Employee Due Diligence Programme with Kinatico Compliance
Kinatico Compliance is a people compliance management platform that brings together workforce verification, credential management, audit trails, custom activity deployment, and reporting into a single, synchronised system. For organisations building out their personnel due diligence programmes in response to the Tranche 2 reforms, the platform’s Premium subscription offers capabilities that directly support ongoing compliance requirements, including:
- AML monitoring — automated monthly checks against anti-money laundering, counter terrorist financing and politically exposed persons databases, with alerts issued to administrators on a monthly basis if a change is detected in records identified
- Recurring Police Checks – enables seamless police checks with the ability to rescreen for criminal records on a regular cadence, in line with the personnel due diligence requirement to regularly reassess key roles
- Audit trail and record keeping — a secure audit trail providing proof of compliance activity and adherence to requirements under AML/CTF legislation, supporting AUSTRAC’s requirement to maintain documented evidence of personnel due diligence
- Custom activity builder — allowing organisations to deploy tailored activities for employees to complete, such as policy acknowledgements, AML/CTF risk awareness training or annual declarations regarding changes in circumstances, supporting workforce education and ongoing assessment obligations under the reformed framework
- Dashboard reporting — real-time visibility of your organisation’s compliance status, enabling administrators to identify and respond to risks promptly and get ahead of regulatory action
- Mobile-first workforce experience — assigned activities and compliance requirements are delivered directly to employees through Kinatico Compliance’s companion mobile app, enabling your people to complete their obligations simply and efficiently from any location
For organisations currently managing compliance across multiple disconnected tools or spreadsheets, Kinatico Compliance offers a consolidated solution that reduces administrative burden while strengthening oversight and audit readiness.
Meeting Your Obligations with Confidence
The commencement of Tranche 2 obligations on 1 July 2026 marks a fundamental shift in Australia’s AML/CTF landscape, bringing thousands of businesses under formal regulatory oversight for the first time. From enrolling with AUSTRAC and developing a compliant AML/CTF programme, to implementing robust personnel due diligence and ongoing rescreening processes, the obligations are both broad and time-sensitive [1][4][5].
AUSTRAC has committed to supporting newly regulated entities through guidance, sector-specific resources, and starter programs [3]. For the personnel due diligence and workforce screening components of your compliance program, Kinatico Compliance offers solutions designed to help your organisation meet its obligations with confidence. Kinatico Compliance is designed for organisations seeking to manage the full people compliance lifecycle, from initial screening and ongoing monitoring, through to audit trails, custom activity deployment, and real-time compliance reporting, within a single platform.
References
- AUSTRAC. AML/CTF Reform Overview. https://www.austrac.gov.au/amlctf-reform
- Australian Institute of Criminology. Estimating the Costs of Serious and Organised Crime in Australia, 2022–23. https://www.aic.gov.au/media-centre/news/cost-serious-and-organised-crime-hitting-home-more-ever
- AUSTRAC. Preparing for Changes if You’re Newly Regulated. https://www.austrac.gov.au/amlctf-reform/preparing-changes-if-youre-newly-regulated
- AUSTRAC. Regulatory Expectations and Priorities 2025–26. https://www.austrac.gov.au/amlctf-reform/austrac-regulatory-expectations-and-priorities-2025-26
- AUSTRAC. Personnel Due Diligence (Reform). https://www.austrac.gov.au/amlctf-reform/reforms-guidance/amlctf-program-reform/personnel-due-diligence-and-training-reform/personnel-due-diligence-reform
- CVCheck. Employment Background Screening. https://cvcheck.com/
- CVCheck. Anti-Money Laundering Check. https://cvcheck.com/checks/anti-money-laundering/
- CVCheck. Financial, Business & Credit History Checks. https://cvcheck.com/credit-check/
