Top five tips to prepare for AML reforms

The AML Amendment Act will be incorporated in the Anti-Money Laundering and Counter-Terrorism Financing Act 2006.  

These reforms herald the biggest AML change in Australia in nearly two decades. This latest change will require lawyers who provide certain services to implement measures to detect, deter and report money laundering and terrorism financing activities to the AML/CTF regulator, AUSTRAC.  

Not all lawyers will be captured by the reforms.  Obligations for captured lawyers (known as ‘reporting entities’) commence in July 2026 but those lawyers can enrol with AUSTRAC from 31 March 2026.  

Given the complexity of the AML/CTF regime, preparations should commence now.   

In this article, we set out five top tips for lawyers looking to prepare for AML/CTF obligations.  

Familiarise yourself with designated services  

A lawyer providing certain services (known as ‘designated services’) will be captured by the AML/CTF reforms. 

Designated services are defined in section 6, Table 6 of the AML Amendment Act.  The services relevant for lawyers are summarised in our previous article, ‘An AML update for practitioners – Law Society Journal. 

AUSTRAC is currently consulting on the draft AML/CTF Rules and Guidance material.  Once finalised, we are hopeful that AUSTRAC Guidance, in particular, will provide useful information for lawyers making an assessment about whether the services they provide will be captured.  

Practical tips – for the moment  

1. Review Table 6 of the AML Amendment Act.  
2. Use AUSTRAC’s tool Check if you’ll be regulated | AUSTRAC to see if you will be captured.   
3. Consider AUSTRAC’s current guidance at  New industries and services to be regulated | AUSTRAC which provides a handy summary of businesses that are impacted.  

Familiarise yourself with key obligations and concepts  

A reporting entity will have certain obligations under the AML Amendment Act including:   

• Enrol with AUSTRAC – register your practice via AUSTRAC online,  
• AML/CTF program – develop and maintain an AML/CTF program comprising an AML/CTF Risk Assessment and AML/CTF Policies,  
• Conduct customer due diligence –conduct initial, enhanced (as necessary) and ongoing customer due diligence of customers/clients,  
• Reporting –make certain reports to AUSTRAC including threshold transactions and suspicious matters reports, and  
• Record Keeping – keep certain records relating to client due diligence and AML/CTF program for a period of seven years for audit and compliance checks. 

Practical tips  

1. Be the first to know! Register with AUSTRAC to receive updates or have in place a process to keep up with materials as they are released.  
2. Familiarise yourself with concepts such as ML/TF Risk Assessments, AML/CTF Programs, and customer identification by accessing the existing AUSTRAC on-demand training available at elearn.austrac.gov.au. While these were developed for Tranche 1 entities, they contain useful background relevant for Tranche 2 entities.  
3. Consider guidance provided by international policy bodies such as the Financial Action Task Force (also known as ‘FATF’) which can be accessed at www.fatf-gafi.org/en/home.html. FATF sets the global standards of AML, CTF and proliferation financing.  

Prepare for a Risk Assessment  

Conducting a risk assessment will be the cornerstone of your AML/CTF compliance framework.  This is required as part of your AML/CTF program.   

When working out money laundering, terrorism financing and proliferation financing risk, start with the four key elements:  

• the types of customers you have, including politically exposed persons,  
• the type of designated services you will provide from July 2026,  
• how you provide services (for example, face-to-face or online), and  
• what foreign countries you operate in or do business in, including where your clients and counterparties are based.  

Practical tips  

1. Start with your existing risk management frameworks – consider whether this will be sufficient to commence your AML/CTF risk assessment.    
2. Document your workings/roadmaps as you go along.  
3. Get in the habit of keeping the assessment dynamic, for example, by setting up review mechanisms based on emerging risk; AUSTRAC alerts; or where there is a significant change to your customers, the way you provide services, the types of designated services you provide, or the countries you operate in.   

Start training your team now  

Law firm staff will need to understand AML/CTF obligations and their role in AML/CTF compliance.  This includes front-line staff all the way up to senior management.  It could include non-legal staff who assist with day-to-day activities.  

Among other things, training should cover areas including general AML/CTF risk awareness, red flags, how to identify and report suspicious matters, and typologies about how a lawyer’s services may be wittingly or unwittingly used by money launderers or to fund terrorism.  

Practical tips  

1. Pick a key person or champion who will stay updated on AUSTRAC’s evolving guidance and industry specific guidance.  
2. Draft or access AML/CTF training.  There are many complimentary resources which cover off on key obligations at a high level and which can be a helpful resource.  For example resources from the NSW Law Society at  AML and CTF Hub | The Law Society of NSW and the Law Council of Australia at  lawcouncil.au/resources/policies-and-guidelines/national-legal-profession-anti-money-laundering—counter-terrorism-financing-guidance to name a few.  And remember to get in the habit of keeping records of training for compliance and audit purposes.  
3. Consider joining AML-based industry associations and forums to keep up to date as requirements unfold.  

Consider your IT needs and leverage solutions  

AML technology can streamline compliance, removing some of the time pressures that small businesses may face when implementing a new regime.   However, it is not without risk. You could, for example, find yourself being locked in a solution that is not fit for purpose.  Some solutions can be costly and provide you with features that your practice doesn’t require.  

When looking for solutions, consider what it offers including know-your-customer software, transaction monitoring systems, training and record keeping platforms.  

Practical tips  

1. Consider whether you need to invest in technology or whether you can utilize and/or update existing frameworks in your practice.  
2. Consider whether a provider who charges per use (rather than a fixed subscription) may be more relevant for your practice.  That way you only pay for what you need and have the option of easily disbursing those fees.  
3. As part of your due diligence, ask if the provider understands the local regulatory requirements; investigate if the tool is suitable for a provider of legal services; consider whether the solution will be compatible with your existing systems; ask whether it can handle compliance updates; and consider, if necessary, how that system interfaces with AUSTRAC Online.  

And just a reminder … 

• As set out in our previous article An AML update for practitioners – Law Society Journal, the Law Society AML Hub contains a complimentary, self-paced, interactive e-learning resource  which covers how lawyers can strengthen their practice against ML/TF risks. There are two parts to this course – Part A and Part B.  While this course was created before the Bill was passed, it still provides useful background.  
• The Law Society also offers two complimentary webinars, featuring panel discussions on AML/CTF. The webinars cover the effect of the Australian AML/CTF reforms on solicitors and provide an overview of AML/CTF obligations for solicitors and the experience in other jurisdictions. 
• Additionally, the Law Society has assisted the Law Council of Australia in creating a comprehensive suite of written guidance material for practitioners on AML/CTF. 
• The Law Society’s Professional Support Unit (PSU) provides free and confidential guidance to all solicitors regarding their obligations under the Legal Profession Uniform Law in the areas of costs, ethics and regulatory compliance. 
• Enquiries regarding AML can be made to PSU by telephone, email, or in person. Please contact aml@lawsociety.com.au or (02) 9926 0249. 
• For the latest information, as well as access to AML/CTF resources and information, go to the Law Society’s designated AML/CTF hub. 

Carol Prasad is a Professional Support Solicitor (AML) at the Law Society of NSW.  She is an experienced banking and financial services lawyer with experience gained at a number of Australia’s premier financial institutions, leading law firms and a Big 4 accounting firm.  Her background includes experience in Anti-Money Laundering and Counter-Terrorism Financing, sanctions, consumer credit, privacy and alternative dispute resolution.  She brings with her over 15 years’ experience.