AML Tranche 2: Practical Steps Law Firms Can Take Now

The countdown is on for the implementation of Australia’s long-anticipated Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) reforms. With the passing of the AML/CTF Amendment Act 2024, legal professionals who provide certain designated services are preparing to navigate a fundamental shift in how their services are regulated. 

For the first time, law firms will come under the AML/CTF regime, aligning Australia with international standards and addressing long-standing vulnerabilities in the financial system. While the changes are significant, legal practices that act early can ensure a smooth and effective transition to compliance.


Passed by Parliament on 29 November 2024, the AML/CTF Amendment Act introduces several measures to modernize and strengthen Australia's AML/CTF framework. Crucially, it extends obligations to a wider range of “gatekeeper” professions — including lawyers, accountants, real estate professionals, and dealers in precious metals and stones — as part of the long-awaited Tranche 2 reforms.

From 1 July 2026, law firms that provide designated services — such as managing client funds, forming companies or trusts, or advising on property, M&A, equity or debt financing and corporate restructuring transactions — will be subject to obligations such as: 

• Enrolling with AUSTRAC 
• Developing and maintaining an AML/CTF program 
• Conducting client due diligence (CDD) 
• Reporting certain transactions and suspicious matters 
• Keeping adequate records
• With AML/CTF rules expected to be finalised in August 2025 and enrolment opening 31 March 2026, now is the ideal time for law firms to begin preparing.

Drawing on insights from the recent LexisNexis® Risk Solutions webinar, AML Tranche 2 Compliance: Preparing the Legal Sector for Change, here are five practical steps legal practices can take to start building a compliant foundation:

1. Establish an Internal AML/CTF Taskforce

Preparing for AML/CTF compliance involves significant cross-functional effort. Law firms should identify a taskforce that includes leaders from risk and compliance, operations, IT, and key legal practice areas. This group should oversee readiness efforts, coordinate decision-making, and champion awareness throughout the business.

2. Map Out Designated Services Within the Firm

Not every legal service will be captured under the AML/CTF regime — but many common activities will. Firms should carefully review their service offerings to determine which ones fall within the scope of the new requirements (as set out in table 6 of Part 3, Schedule 3 of the AML/CTF Amendment Act).

Clear visibility of these services will be critical for applying customer due diligence at the right time.

3. Embed AML Obligations into Existing Workflows

Rather than creating entirely new systems, law firms should identify opportunities to incorporate AML/CTF checks into their current client onboarding and matter intake processes.

For example: 

• ID verification aligned with existing client due diligence 
  
• Document retention aligned with legal archiving protocols

4. Commence a Firm-Wide Risk Assessment

AML/CTF compliance is built around a risk-based approach, tailored to the firm’s specific exposure. Legal practices should begin collecting information about their client profiles, service types, delivery methods, and geographic reach. This risk data will underpin the firm’s AML/CTF Program

5. Conduct a Gap Analysis and Plan Remediation

With draft rules now available, firms have a clear opportunity to assess their current capabilities against future requirements. This may include evaluating:

• ID verification tools 
  
• Internal reporting mechanisms 
  
• Training programs for staff 
• Policies and procedures around high-risk clients 

A structured gap analysis allows time to plan and implement the required changes before compliance becomes mandatory.


While the legal profession is new to the AML/CTF regime, the obligations are not unfamiliar to other regulated sectors. Early preparation will reduce disruption and help legal practices adopt best-in-class standards from day one. 

At LexisNexis® Risk Solutions, we are working with firms of all sizes to help them understand the evolving requirements and implement the right processes, tools, and safeguards. 

Explore the broader context of Tranche 2 reform and hear practical advice from AML experts.

For more details on the legislative changes and implementation timelines, visit AUSTRAC’s AML/CTF Reform Hub. 

LexisNexis® Risk Solutions – Supporting the legal sector with trusted compliance solutions.