A comprehensive guide to AML compliance for accounting firms under Australia’s Tranche 2 reforms.
Australia’s Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) reforms, commonly referred to as the Tranche 2 reforms, will introduce regulatory obligations for certain professional service providers that have historically been outside the AML regulatory framework.
Accounting firms are among the sectors expected to be affected where they provide services that may facilitate financial transactions, corporate structures, or asset transfers.
From 1 July 2026, accounting firms providing certain designated services may become reporting entities under the AML/CTF Act and will be required to implement systems designed to identify and manage money laundering and terrorism financing risks.
Businesses that fall within the scope of the reforms will be able to enrol with AUSTRAC from 31 March 2026, with AML compliance obligations commencing from 1 July 2026.
Further information on the reforms is available from AUSTRAC.
Accounting professionals frequently assist businesses and individuals with corporate structures, financial arrangements, and business transactions.
While these services are essential to legitimate economic activity, they can also be misused by criminals seeking to disguise the origin of illicit funds or obscure the identity of individuals controlling assets.
International AML standards developed by the Financial Action Task Force (FATF) recommend that professional service providers involved in financial structuring or corporate services implement safeguards to reduce the risk of financial crime.
The Tranche 2 reforms are intended to ensure that accounting firms providing these services operate within a structured AML compliance framework.
Not all accounting services will fall within the AML/CTF regime.
Routine services such as:
are generally expected to remain outside the scope of the AML reforms.
However, certain advisory or corporate services may be considered designated services under the AML/CTF Act.
Examples may include:
Where accounting firms provide these types of services, they may need to implement AML compliance measures.
Accounting firms may encounter several types of financial crime risks due to the nature of their advisory and corporate services.
Understanding these risks is an important part of the AML compliance framework.
Complex Corporate Structures
Corporate structures involving multiple companies or trusts may be used to conceal beneficial ownership.
For example, a company may be owned by another company in a different jurisdiction, making it difficult to identify the ultimate controlling individual.
Accountants assisting with corporate structuring may encounter situations where the purpose of the structure is unclear or unnecessarily complex.
Use of Shell Companies
Shell companies are entities that have little or no operational activity but are used to hold assets or conduct financial transactions.
Criminals may establish shell companies to move funds through the financial system while concealing their identity.
Accounting professionals involved in company formation services should be aware of the potential risks associated with shell companies.
Cross-Border Corporate Structures
Businesses operating across multiple jurisdictions may present additional financial crime risks.
Jurisdictions with weak regulatory oversight or high levels of corruption may be used to obscure financial transactions.
Accountants advising on international business structures should consider the AML risks associated with cross-border arrangements.
Misuse of Professional Advice
Professional advice provided by accountants may be misused by individuals seeking to structure financial transactions in ways that obscure the origin of funds.
For example, criminals may seek advice on structuring transactions or ownership arrangements that disguise beneficial ownership.
While most clients operate legitimately, accounting firms should remain alert to unusual or suspicious requests.
Accounting firms that provide designated services may be required to implement a range of AML compliance measures.
These measures are designed to ensure businesses can identify and manage financial crime risks.
AUSTRAC Enrolment
Accounting firms providing designated services must enrol with AUSTRAC as reporting entities.
Enrolment allows AUSTRAC to supervise compliance and provide guidance to regulated businesses.
ML/TF Risk Assessment
Accounting firms must conduct a Money Laundering and Terrorism Financing (ML/TF) risk assessment.
This assessment considers risks associated with:
The risk assessment forms the foundation of the firm’s AML compliance framework.
AML/CTF Compliance Program
Accounting firms must develop and maintain an AML/CTF compliance program outlining the policies and procedures used to manage financial crime risks.
The program typically includes:
AML Compliance Lifecycle for Accounting Firms
Risk Assessment
↓
AML Compliance Program
↓
Customer Due Diligence
↓
Transaction Monitoring
↓
Suspicious Matter Reporting
↓
Ongoing Compliance Review
This lifecycle reflects the risk-based approach used in the AML/CTF regulatory framework.
Customer Due Diligence for Accounting Firms
Customer Due Diligence (CDD), also known as Know Your Customer (KYC), is a key requirement of AML compliance.
CDD procedures help ensure that accounting firms understand the identity of their clients and the nature of the services being provided.
CDD may involve:
CDD should generally be completed before providing a designated service.
AUSTRAC guidance on customer due diligence:
Customer Due Diligence (CDD)
Beneficial Ownership Identification
Where a client is a company or trust, accounting firms may need to determine the individuals who ultimately control or benefit from the entity.
Beneficial ownership identification may involve identifying:
Understanding beneficial ownership helps prevent misuse of corporate structures to conceal financial crime.
Monitoring Client Relationships and Transactions
AML compliance requires ongoing monitoring of client relationships and transactions.
Monitoring helps businesses identify unusual patterns that may indicate suspicious activity.
Examples of potential red flags include:
When such indicators arise, accounting firms should conduct additional review.
Suspicious Matter Reporting
Where a business forms a suspicion that a transaction may involve money laundering or terrorism financing, it may be required to submit a Suspicious Matter Report (SMR) to AUSTRAC.
SMRs provide valuable intelligence used by law enforcement agencies to detect and disrupt criminal activity.
Further information on reporting obligations is available here:
Reporting
Preparing for the Tranche 2 reforms requires accounting firms to review their services and internal processes.
Steps may include:
Early preparation can help ensure firms are ready to meet regulatory expectations when the reforms take effect.
Bravishi Advisory works with professional service firms to translate regulatory obligations into structured operational frameworks.
Our approach focuses on helping organisations understand the AML regulatory framework and implement practical compliance systems that integrate with existing governance processes.
This may include:
The objective is to support businesses in implementing compliance systems that are both effective and operationally practical.
If your accounting firm provides services that may fall within the scope of the Tranche 2 reforms, understanding the new regulatory requirements is an important first step.
Bravishi Advisory can assist you in assessing how the reforms apply to your firm and developing a structured approach to AML compliance.
If you would like to understand more about the Tranche 2 reforms or discuss your firm’s requirements, please feel free to contact us.
