AML Tranche 2 Obligations of Accountants in 2026

Which Accounting Services Are Caught

The designated-services test follows the work performed, including preparatory steps that directly advance a covered transaction or entity formation. The 2024 amendments inserted the professional-services list in Table 6 of section 6 of the AML/CTF Act. AUSTRAC’s professional-services guidance explains how that list applies.

These services are supplied in the course of business. Item 7 includes a nominee director arrangement, with exceptions for specified court-appointed fiduciaries. Ordinary administrative agency work alone does not establish that role.

Bookkeeping, tax return preparation and general advice are not automatically designated services. Their label does not exempt work that meets a Table 6 item. General tax advice about a possible company sale differs from acting on instructions to advance that sale.

Routine bookkeeping payments under fixed client instructions can fall outside item 3. AUSTRAC explains a further exemption for payments reasonably incidental to non-designated services. That exemption requires the business to provide no other designated service beyond item 3. Check the practice’s full service range, including address services, before relying on it.

When Obligations Start

The professional-services reforms apply in 2026, with commencement and enrolment governed by AUSTRAC’s published requirements. Check AUSTRAC’s commencement and enrolment notice for the exact calendar boundaries that apply to newly regulated practices. Use its enrolment guidance when starting a designated service later.

An enrolment deadline does not postpone the underlying compliance duties. Put the program and required customer checks in place before providing the designated service. Ordinary professional-services enrolment is also different from the separate registration required for certain remittance and virtual-asset businesses.

What a Practice Must Put in Place

A regulated accounting practice must enrol, appoint an AML/CTF compliance officer and operate a written program tailored to its services and risks. AUSTRAC’s obligations guide covers governance and the controls the practice needs.

Use the following sequence when accepting covered work:

1. Map the engagement to the designated-service item and identify the customer of that service. Record the scope decision in the file.
2. Complete enrolment and assign governance responsibilities. Give the compliance officer authority and resources to oversee day-to-day compliance.
3. Document the money laundering, terrorism financing and proliferation financing risk assessment. Set policies for customer checks, monitoring, escalation and reporting. Obtain the required senior-manager approval.
4. Conduct initial customer due diligence (CDD), including identifying and verifying the customer and relevant beneficial owners. A beneficial owner is the individual who ultimately owns or controls the customer. For company creation, the designated customers include beneficial owners and directors. For express-trust creation, they include the trustee, settlor and beneficiaries as well as the instructing person.
5. Train the personnel who apply the program and maintain ongoing CDD. Update the risk assessment and controls as the practice or client relationship changes.
6. Keep records sufficient to show compliance and reconstruct transactions. Protect sensitive records and limit access to authorised personnel.

AUSTRAC’s accounting program starter kit helps suitable small practices build and maintain their program. Its suitability criteria include 15 or fewer personnel and limits on high-risk clients and service delivery. Read those criteria before using the kit as your practice’s starting point.

Check the Client’s Source of Funds

Source-of-funds checks establish how the client obtained the money used in the transaction. Apply verification appropriate to the client’s risk under AUSTRAC’s source-of-funds guidance.

In a hypothetical engagement, a client asks you to form a company and discretionary trust funded by a property sale. Match the sale proceeds to the settlement documents and the receiving bank statement. Follow any transfers into the account funding the new structure. A deposit labelled ‘transfer’ establishes movement between accounts, but leaves the original source unanswered.

If a third party supplies part of the money, record that person’s role and request evidence of the original transaction. Keep the client’s explanation, source documents and the questions still open. Record the risk decision and any escalation to the compliance officer. A bank statement showing a cash deposit does not establish how the cash was earned.

Where required source-of-funds information cannot be established during initial CDD, AUSTRAC says you must not provide the designated service. In other circumstances, document any decision to continue and the controls applied. Consider an SMR if the facts establish reasonable grounds for suspicion. Our source-of-funds and source-of-wealth guide explains the distinction between the transaction’s funding and the client’s wider wealth.

FinTrace saves accountants hours of statement conversion and review when the funding trail spans many accounts. The service turns supplied PDFs into a searchable ledger and a readable findings report, with suspicious transactions clearly flagged. Every finding cites the source PDF filename and page, giving the accountant direct access to the supporting evidence.

Keep the Records for the Correct Period

Seven-year record keeping has different start points for different records. AUSTRAC’s record-keeping guidance explains the retention rules under sections 107, 108, 111 and 116 of the Act.

Keep CDD records for seven years after the business relationship ends or the occasional transaction is completed. General transaction records run from creation, while customer-provided transaction documents run from receipt. Keep program records until seven years after they cease to be relevant to demonstrating compliance. Set the retention trigger in the file instead of deleting every document seven years after onboarding.

Reporting and Tipping Off

An accounting practice must lodge a suspicious matter report (SMR) when the statutory test of suspicion on reasonable grounds is met. Proof of an offence is not required. The suspicion can concern criminal activity or a person’s identity, including a prospective customer.

AUSTRAC’s SMR guidance requires reporting within 24 hours for terrorism-financing suspicions. For other suspicions, the usual deadline is three business days after the day the suspicion is formed. Record when that happened and escalate promptly. The SMR lodging guide covers submission mechanics.

A threshold transaction report (TTR) concerns a designated service involving a transfer of physical currency of $10,000 or more in Australian dollars. AUSTRAC’s TTR guidance explains the separate duty. An electronic bank transfer alone does not trigger a TTR merely because it exceeds that amount. Suspicion can require an SMR at any amount.

A partner must not tell a client that an SMR has been made where disclosure would, or could reasonably be expected to, prejudice an investigation. Section 123 covers information about both submitted reports and triggered reporting requirements. AUSTRAC’s tipping-off guidance explains why warning the client can let them hide activity or change their behaviour.

Reasonable questions about unusual transactions are not, by themselves, tipping off. Keep reporting information restricted and plan client communications with the compliance officer. Explain the information needed for due diligence without revealing protected reporting information.

Professional Body Support

CA ANZ, CPA Australia and the Institute of Public Accountants (IPA) provide practical resources alongside AUSTRAC’s rules. Their materials help translate obligations into accounting workflows. The Act and Rules remain the legal requirements, and member guidance cannot override them.

CA ANZ’s AML resources include support guides on reporting-entity status, client work and escalation. CPA Australia’s AML/CTF resources include education and links to AUSTRAC materials. The IPA resource hub has a designated-services guide and a workbook for preparing a practice.

Use the Australian resources for Australian engagements. A practice working with lawyers can also read the tranche 2 guide for law firms to understand their related duties. Before accepting the company-and-trust engagement, record the designated-service decision and confirm who completes CDD before formation work begins.