AMLCTF - the Biggest Change for Lawyers in a Generation

Western Australian lawyers in private practice are on the brink of the most significant regulatory shake-up in a generation.

From 1 July 2026, many legal practitioners—especially those in commercial, property, and private client work—will be pulled into the Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) regime.  This regime represents a profound shift in how lawyers will need to manage risk, client relationships, and internal compliance systems.

Australia is finally implementing what’s known as “Tranche 2” of the AML/CTF framework. It’s long been on the cards—pushed by the Financial Action Task Force (FATF), the global standard-setter for anti-money laundering—and it affects lawyers, accountants, real estate agents and others.

The changes go to the core of everyday legal practice.

What’s Changing?

From July 2026, entities which provide a designated service will be affected.  In broad terms, designated services include:

• Acting for or assisting someone buying or selling real estate

• Setting up companies, trusts or other structures

• Providing a registered office or business address for someone

• Managing client money or crypto assets

• Helping with equity or debt raisings

• Acting as (or arranging) a nominee director, trustee or shareholder for someone else

There will be carve-outs (especially for litigators and barristers). But the broad effect is clear: many lawyers will face a compliance regime previously reserved for banks and financial advisers.

If you provide a single designated service, you must enrol with AUSTRAC, and be subject to the regime.  You can access the link to the definition of designated services here.

A New Compliance World

The obligations are detailed and ongoing. By 29 July 2026 (at the latest), if you provide a single designated service you must:

• Enrol with AUSTRAC

• Appoint a Compliance Officer

• Conduct a risk assessment of your firm

• Develop an AML/CTF Program tailored to your risks

• Conduct Client Due Diligence (CDD) including ID verification and risk assessment

• Report suspicious matters to AUSTRAC (this is much broader than you might expect)

• Train your people

• Keep records and periodically review your systems

• File an annual report with AUSTRAC

• Be subject to (and pay for) an independent evaluation at least once every 3 years

This isn’t a “set and forget” exercise. AML/CTF obligations evolve. Risk profiles change. Staff must be trained (regularly). Systems must be embedded into the daily operations of your firm.

AUSTRAC has made clear that it expects legal practices to be up and running with compliance programs by the start date. A starter pack will be made available, but there is considerable debate about which firms may use this pack, and it is unlikely to be available until around December 2025.

The Practical Challenge

For many WA law firms—especially small and mid-size practices—this will be a cultural adjustment as much as a technical one.

Lawyers are trained to be advocates, advisers, and negotiators. We’re not compliance officers. Yet the new regime forces us to play both roles. We’ll be expected to interrogate our clients’ identities and activities, assess their risk of money laundering, and report concerns to the authorities—often without informing the client.

This changes the lawyer–client relationship. It introduces new tensions around trust and confidentiality. It requires firms to invest in training, software, policies, and reviewers.   The new administrative burden will be substantial.

We will be required to undertake further investigations in suspicious situations, but few of us have ever been trained in how to investigate anything, let alone situations related to money laundering and counter terrorism financing.

Suspicious Matter Reports

There will be an obligation to make a suspicious matter report to AUSTRAC if a reporting entity suspects on reasonable grounds that the person requesting the designated service is not who they claim to be, or that any information the service provider has concerning the provision of the service may help in the investigation or prosecution  of a person for an offence of a law of the Commonwealth, or of a State or Territory.

It's important to read these provisions closely.  The wording also refers to Proceeds of Crime and taxation offences, but also includes this much broader wording.  It’s hard to imagine how this will work in the sense of identifying offences under any legislation, especially in an age when legal practice is increasingly specialised.  Many practitioners will not know what are offences in different practice areas, especially in other States and Territories.

And What About Legal Professional Privilege?

Legal professional privilege will be preserved—but how that works in practice depends on the detailed rules, which are still in draft. Until those are finalised, we won’t have a complete picture of the risks or the lines lawyers must walk when navigating privilege and reporting obligations.

We’ve Never Seen a Change Like This

For most WA lawyers, this will be the first time a federal regulator outside the legal profession will have such direct oversight of our day-to-day work.

The requirements are the biggest change for private practice lawyers in a generation.

This is a broad summary of the law, and has been condensed for readability.  You must consider the law yourself before making decisions.