Australia’s Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) regime is undergoing its most significant expansion since it was first introduced. These reforms will directly affect law firms and many of their clients, particularly those involved in property, trusts, companies, and financial transactions.
Below, we outline what is changing, when it takes effect, and what it means for our clients.
1. What changes are happening from 1 July 2026
The Federal Government has expanded the AML/CTF regime to include legal services and several other professional service providers that were previously outside the system.
Until now, AML/CTF laws have generally applied to banks, financial institutions and certain high-risk businesses. Under the reforms, law firms will become “reporting entities” when they provide certain services, such as:
- Managing client money or trust accounts;
- Creating or structuring companies, trusts or partnerships;
- Acting as nominee directors or shareholders; and
- Assisting with large financial or asset-based transactions.
2. What is the purpose of the reforms?
These AML/CTF reforms are designed to reduce the risk that professional services (such as law firms) are used to conceal proceeds of crime, move illicit funds, or facilitate terrorism financing.
These changes represent a cultural shift for the legal profession, but they are also an opportunity to strengthen trust, transparency and integrity in legal services.
Importantly, these reforms do not necessarily relate to everyday legal advice, but rather to services involving movement, control, or structuring of money or assets.
3. What do clients need to be aware of?
From a client perspective, the most noticeable change will be additional identification and verification requirements from 1 July 2026.
Clients can expect that when engaging legal services relating to property, companies, trusts or financial transactions, they may be asked to:
- Provide photo identification (such as a passport or driver’s licence);
- Confirm their source of funds or wealth;
- Answer questions about the purpose and nature of a transaction.
- Provide updated information if circumstances change during the matter.
These steps are now a legal obligation for law firms and not a matter of discretion. While this may feel unfamiliar, the aim is to ensure that legitimate transactions can proceed smoothly while preventing criminal misuse of the legal system.
These checks help to ensure that services aren’t misused for illegal activities. The verification process is a standard legal requirement, not a reflection on you or your transaction.
All information collected is handled confidentially and in accordance with privacy laws.
All client information and data is stored safely and securely on our electronic practice management system, which is designed to maintain strict confidentiality and protect against unauthorised access. The system remains protected at all times, ensuring that your information is secure.
Your data will not be used for marketing, sold, or shared beyond what the law requires for AML/CTF compliance.
For clients, the key takeaway is that extra questions and identification requests are now a legal requirement, not an indication of mistrust.
These changes are particularly relevant to clients who:
- Are buying or selling real estate;
- Make significant cash payments to our office (in excess of $10,000).
4. Who is AUSTRAC?
AUSTRAC stands for the Australian Transaction Reports and Analysis Centre. It is an Australian Government agency that plays a key role as Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) regulator.
AUSTRAC’s job is to protect Australia’s financial system from criminal abuse, including money laundering, terrorism financing, organised crime and serious financial fraud.
If you have questions about how the reforms may affect your matter, our team is happy to explain what is required and guide you through the process.