Overview of the AML/CTF Amendment Act

The Amendment Act establishes new designated services, which will trigger AML/CTF obligations for certain businesses. This includes certain services provided by:

• real estate professionals
• dealers in precious metals and precious stones
• professional service providers such as lawyers, conveyancers, accountants, and trust and company service providers.

These reforms regulate services that are recognised domestically and globally as high-risk for money laundering exploitation.

As legal practitioners will be brought into the AML/CTF regime from 2026, the Amendment Act also clarifies the treatment of legal professional privilege under the AML/CTF Act. The Amendment Act will preserve the core intention of the doctrine of legal professional privilege, and ensure that reporting entities who handle client information can comply with their obligations.

Implementation and commencement

New AML/CTF obligations under the Amendment Act will not apply until 1 July 2026 for tranche two entities that provide new designated services. These entities will be able to enrol with AUSTRAC from 31 March 2026.

This will allow time for newly regulated entities to understand and prepare for their new AML/CTF obligations. AUSTRAC will develop guidance and educational materials that will support newly regulated entities in implementing effective AML/CTF measures within their businesses.

The Amendment Act updates the AML/CTF regime to harden the rapidly growing virtual asset sector against exploitation by criminals.

The Amendment Act will extend regulation to additional virtual asset-related services to appropriately address the sector’s risk. In addition to the existing designated service, which covers exchanges between virtual assets and fiat currency, the Amendment Act will add the following designated service into the AML/CTF Act:

• exchanges between one or more other forms of virtual assets
• transfers of virtual assets on behalf of a customer
• safekeeping or administration of virtual assets
• participation in and provision of financial services related to an issuer’s offer and/or sale of a virtual asset.

A new definition of ‘virtual asset’ has been inserted in the AML/CTF Act to replace the previous definition and terminology of ‘digital currency’, to provide clarity and ensure additional asset types such as stablecoins and non fungible tokens (NFTs) are captured.

Implementation and commencement

• Changes for the virtual assets sector will commence on 31 March 2026.

AUSTRAC will develop guidance and educational materials to support reporting entities transition to the new AML/CTF regime.

The Amendment Act also contains measures that are relevant to all reporting entities who provide financial designated services, including financial institutions and banks, virtual asset service providers and remittance service providers.

Value transfer obligations and International Value Transfer Service reporting

The Amendment Act streamlines the various existing concepts of funds transfer and a designated remittance arrangement into a single value transfer chain. This will facilitate the passage of key information about the transfer, regardless of technology used. The Amendment Act also includes an updated concept of International Value Transfer Service (IVTS) reports, which replaces current International Funds Transfer Instruction (IFTI) reports.

Obligations for value transfer services will commence on 31 March 2026.

IVTS obligations will not commence until a later time. Transitional rules will preserve the existing requirements for IFTI reports for a period of time to allow for reporting entities and AUSTRAC to implement necessary technical systems changes.

Bearer negotiable instruments

The Amendment Act repeals the current definition of a ‘bearer negotiable instrument’ and replaces it with a new definition that is aligned to the FATF definition.

The new definition will not capture instruments that are ‘non-bearer’ or ‘non-negotiable’ for the cross-border movement reporting requirements. This responds to industry concerns that the current definition is unclear and too broad, and will reduce the regulatory burden of reporting unnecessary movements.

These changes will commence on 1 July 2026.

The Amendment Act will update the existing requirement for an AML/CTF program. The changes require reporting entities to undertake appropriate measures that focus on identifying, assessing and mitigating money laundering, terrorism financing and proliferation financing risk. This replaces the current ‘check-box’ compliance approach of simply having an AML/CTF program.

The revised AML/CTF program obligation includes:

• an overarching risk assessment to consider the money laundering, terrorism financing and proliferation financing risks the reporting entity may reasonably face
• proportionate risk mitigation measures to respond to the risk assessment
• a new simplified reporting group concept to allow reporting entities to manage and mitigate common risks more efficiently
• the roles and responsibilities of a reporting entity’s governing body and AML/CTF compliance officer
• simplified obligations for Australian companies operating overseas through a foreign branch or subsidiary of an Australian reporting entity.

These reforms will commence on 31 March 2026.

Customer due diligence (CDD) requires reporting entities to:

• identify, and verify the identity of, their customer and certain associated persons
• understand the money laundering, terrorism financing and proliferation financing risks associated with providing designated services to the customer, and take steps to mitigate these risks.

The Amendment Act will establish an improved, outcomes-based framework for the CDD requirements under the AML/CTF Act. In particular, the measures in the Amendment Act seek to:

• reframe and clarify the core requirements for reporting entities to carry out initial and ongoing CDD
• clarify when enhanced CDD must be applied
• streamline the circumstances when simplified CDD may be applied.

Schedule 2 will commence on 31 March 2026.

Customer due diligence exemption for assisting the investigation of certain offences

The Amendment Act will move and reframe the exemption for assisting the investigation of certain offences currently at Chapter 75 of the AML/CTF Rules into the AML/CTF Act. The Amendment Act also replaces the concept of ‘Chapter 75 exemptions’ with ‘keep open notices’.

A ‘keep open notice’ allows a reporting entity to refrain from undertaking certain CDD obligations if they reasonably believe it could alert the customer to the existence of a criminal investigation. A keep open notice does not compel a reporting entity to continue to provide a designated service to a customer.

A law enforcement agency will no longer need to seek the exemption from AUSTRAC. Instead, the agency could issue a keep open notice directly to a reporting entity, if the legislative preconditions are met. This streamlines the process by removing the largely administrative, intermediary role currently performed by AUSTRAC.

AUSTRAC will retain a role in overseeing the issue of notices by agencies, but without delaying the investigation of serious criminal activity.

These changes will commence on 31 March 2026.

Changes to the customer due diligence exemption for gaming and gambling sector

The Amendment Act will move the exemption currently at Chapter 10 of the AML/CTF Rules into the AML/CTF Act and lower the CDD exemption threshold for gambling service providers. This includes casinos, on-course bookmakers, totalisator agency boards and gaming machine operators when providing certain gambling services to customers. The exemption threshold for undertaking CDD obligations will be lowered from less than $10,000 to less than $5,000.

The current threshold is significantly higher than the requirements of the Financial Action Task Force (FATF) and needed to be reduced. The FATF's designated threshold is USD/EUR3,000, which is roughly equivalent to $5,000 in Australian dollars (depending on the exchange rate).

The new threshold strikes the appropriate balance between aligning with the threshold set by the FATF, addressing the risks of the sector and minimising regulatory burden.

The $5,000 threshold would also aligns with current electronic gaming machine requirements for payouts outlined in New South Wales and Queensland state legislation. Aligning with pre-existing regulation is anticipated to minimise the regulatory impact for gambling service providers.

The change to the threshold commences 31 March 2026.

Schedule 5 of the Amendment Act reforms the previous prohibition against reporting entities ‘tipping off’ their customer about the formation of a suspicion relating to their behaviour. The new offence focuses on preventing the disclosure of information where it would, or could, reasonably prejudice an investigation. The new framework is intended to provide greater flexibility for reporting entities seeking to disclose information for legitimate purposes, including sharing information within reporting groups to effectively identify, mitigate and manage their collective risks.

This element of schedule 5 will commence on 31 March 2025.

The Financial Transaction Reports Act 1988 (FTR Act) was repealed on 7 February 2025 by the Amendment Act. As a result, cash dealers captured by the FTR Act have been deregulated, including solicitors, motor vehicle dealers, sellers of traveller’s cheques, and offshore online remitters.

The repeal has streamlined and simplified AML/CTF regulation and means that there is now a single source of obligations for industry in the AML/CTF Act and its corresponding rules and regulations.

While solicitors have been deregulated under the FTR Act following its repeal, the new designated services introduced in Schedule 3 of the Amendment Act means some solicitors that provide designated services will be regulated under the AML/CTF Act.

The Amendment Act introduces new, and amends existing, information gathering powers to ensure AUSTRAC can effectively fulfil its dual role of AML/CTF regulator and Australia’s Financial Intelligence Unit (FIU). These include:

• a new examination power, to enable AUSTRAC to obtain relevant information needed to make enforcement decisions and obtain evidence to be used in AML/CTF court proceedings
• a new notice to produce power, to allow AUSTRAC to request information or documents and support the AUSTRAC CEO to carry out FIU functions under the AML/CTF Act
• a new ‘authorisation to produce’ to ensure that co-operative entities are not exposed to undue legal risk by virtue of voluntary cooperation with AUSTRAC, including through the Fintel Alliance.

These powers respond to challenges identified from AUSTRAC’s operational experience across intelligence, regulatory and enforcement functions. It will enable AUSTRAC to better fulfil its role as Australia’s AML/CTF regulator and Financial Intelligence Unit. The new examination function will also align AUSTRAC’s powers with other financial regulators such as Australian Securities and Investments Commission.

Critically, the Amendment Act also includes appropriate limitations and safeguards to ensure that the new powers are used appropriately.