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⚠️ AUSTRAC Tranche 2 Deadline: 1 July 2026
All accounting firms providing designated services must be enrolled with AUSTRAC and have an AML/CTF program in place. Non-compliance penalties: up to $2.22 million for body corporates.
AUSTRAC Compliance
Last updated: 1 June 2026 · Effective: 1 June 2026
1. Overview — AML/CTF Act & Tranche 2
The Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (AML/CTF Act) establishes Australia's regulatory framework for preventing money laundering and terrorism financing. From 1 July 2026, the AML/CTF regime expands under Tranche 2 to capture designated services provided by the accounting profession for the first time.
The following services provided by accounting and bookkeeping firms will become regulated activities under Tranche 2:
- Creating a trust or company for a client (including trust deeds and company incorporations).
- Managing client funds or assets (including trust account operations).
- Providing a registered office or business address service.
- Acting as a nominee director, nominee shareholder or trustee.
- Providing any service that involves handling or controlling client money (excluding payment of tax or BAS obligations).
Important: Standard tax agent and BAS agent services (preparing and lodging returns, providing tax advice) are not designated services under Tranche 2. However, if your firm provides company incorporation, trust establishment or client money management services, you are captured.
2. Your Obligations as an Accounting Firm
If your firm provides designated services, you must:
- Enrol with AUSTRAC — Register your firm as a reporting entity. Enrolment is free and must be completed online via the AUSTRAC website.
- Appoint an AML/CTF Compliance Officer — A designated person responsible for your firm's compliance program.
- Adopt an AML/CTF Program — A written program outlining how your firm identifies, mitigates and manages money laundering and terrorism financing risks.
- Conduct Customer Due Diligence (CDD) — Verify the identity of all clients before providing a designated service.
- Submit Reports — Report suspicious matters, threshold transactions and international funds transfer instructions to AUSTRAC.
- Keep Records — Maintain records of CDD, transactions and compliance activities for 7 years.
3. How OZFirmIQ Supports Your Compliance
OZFirmIQ includes features designed to help your firm meet AUSTRAC compliance obligations efficiently:
🔒 Client Onboarding Bot
Automated KYC/ID verification via Frankie One integration. ABR ABN validation, entity document collection, beneficial ownership identification.
📋 Document Pipeline
Centralised collection and storage of CDD documents. Version tracking, expiry monitoring and automated chase cadences for overdue documents.
📅 Compliance Calendar
AUSTRAC milestone tracking alongside ATO compliance dates. Urgency color-coding and early warning alerts for reporting deadlines.
📆 Audit Log
Tamper-evident audit trail of all client interactions, document access and compliance actions. Full reporting for AUSTRAC record-keeping obligations.
4. Customer Due Diligence (CDD)
Under the AML/CTF Act, your firm must verify the identity of clients before providing a designated service. CDD requirements include:
- Individual Clients: Certified copy of passport or driver's licence, plus proof of residential address (e.g. utility bill).
- Company Clients: Certificate of Registration, ASIC company search, identify all directors and beneficial owners (25% or more ownership).
- Trust Clients: Trust deed, identify all trustees, appointors and beneficiaries.
- Ongoing CDD: Monitor transactions and update client information regularly. Enhanced CDD required for high-risk clients or politically exposed persons (PEPs).
OZFirmIQ's Client Onboarding Bot guides your clients through this process, collects documents digitally and stores verification records in compliance with record-keeping requirements.
5. Reporting Obligations
If your firm is registered as a reporting entity with AUSTRAC, you must report:
- Suspicious Matter Reports (SMRs) — Within 24 hours if you suspect a transaction involves money laundering, terrorism financing or proceeds of crime.
- Threshold Transaction Reports (TTRs) — Cash transactions of AUD $10,000 or more (or foreign currency equivalent) must be reported within 10 business days.
- International Funds Transfer Instructions (IFTIs) — Electronic funds transfers into or out of Australia must be reported.
6. Record-Keeping Requirements
The AML/CTF Act requires reporting entities to retain:
- CDD records — 7 years after the end of the business relationship.
- Transaction records — 7 years after the transaction was completed.
- AML/CTF program and compliance records — 7 years.
- SMR, TTR and IFTI records — 7 years.
OZFirmIQ retains all CDD documents, transaction records and compliance audit logs in encrypted Australian-hosted storage. Data retention policies are configurable to align with your firm's AML/CTF program.
7. Non-Compliance Penalties
The AML/CTF Act carries significant penalties for non-compliance:
- Body corporates: Up to $2.22 million per contravention (222,000 penalty units at current value).
- Individuals: Up to $444,000 per contravention and/or 2 years imprisonment.
- Civil penalty orders: Unlimited amounts at the court's discretion.
- Remedial directions: AUSTRAC can direct you to take specific compliance actions.
These penalties apply from 1 July 2026 for Tranche 2 obligations.
8. Resources & Further Information
Disclaimer: This page provides general information about AUSTRAC compliance obligations. It does not constitute legal advice. OZFirmIQ recommends that you seek independent legal advice to ensure your firm's AML/CTF program meets your specific obligations under the AML/CTF Act.