From Unregulated to Regulated: Meet the Tranche 2 Entities

This infographic explains about the Tranche 2 entities, which are regulated under the AML/CTF Amendment Bill 2024 passed by the Parliament of Australia on 29th November 2024, which then received the Royal Assent on 10th December 2024 and became the AML/CFT Amendment Act 2024 (Amendment Act). These Tranche 2 entities are required to comply with the key changes under the new laws by implementing them into their AML/CTF compliance mechanisms.

These new laws have reformed Australia’s AML/CFT mechanism to ensure efficiency and effectiveness in identification and disruption of money laundering as well as terrorist financing, to make sure that the Australian laws concerning Anti Money Laundering meet international standards set by the Financial Action Task Force, the watchdog over all the financial crimes occurring internationally.

Changes under the New Regime

The following are the changes made in the Australian Anti-Money Laundering regime by the AML/CTF Amendment Act 2024: 

• Bringing High-Risk Industries under the AML/CTF Umbrella 

• Effect of AML/CTF Amendment Act 2024 on Existing Reporting Entities 

• Repeal of the Financial Transactions Reports Act, 1998

Bringing High-Risk Industries under the AML/CTF Umbrella 

The AML/CTF Amendment Act 2024 is an effort to restructure the framework under Australian Law to deal with financial crimes. One of the most important changes under the new law is that entities previously operating outside AUSTRAC’s regulation are now included. These sectors are often used as channels to move around illicit money and funds. For the formation of a more controlled mechanism, the government is extending several obligations to the entities that provide high-risk services.  

Starting July 1st, 2026, the following professions (Tranche 2 entities) will come under the AML/CTF regime: 

• Real Estate Agents and Property Professionals  

• Dealers in High Value Goods like precious stones, metals and products 

• Lawyers 

• Conveyancers 

• Accountants 

• Trust or Company Service Providers

These Tranche II entities will be required to develop and follow the AML/CFT programs, including verifying the identity of clients, monitoring transactions and reporting anything suspicious. In addition to this, the law has also been expanded to include virtual asset services from the current regulation of digital currency to fiat currency exchanges. Starting from 31st March 2026, businesses offering additional services will be regulated too. 

These reforms aim to fill various regulatory gaps, especially where criminals have exploited professional services to move illegal funds without being noticed.

Effect of AML/CTF Amendment Act 2024 on Existing Reporting Entities 

The new law doesn’t affect just the newcomers. There are a few important updates for the existing reporting entities as well. These include: 

• A clear definition and update obligations around value transfers, along with a redefined understanding of bearer negotiable instruments. 

• Updated rules regarding AML/CFT compliance programs and customer due diligence, meaning that businesses must take a fresh look at how they collect, verify and monitor customer information. 

Additionally, this law updated the “tipping off” offence, which prevents businesses from revealing to customers that a suspicious matter report (SMR) has been filed against them for any kind of suspicious transaction or activity. As of 31st March 2025, the revised rules look into whether the disclosure could reasonably be expected to affect an investigation. It could affect or prejudice an investigation if the information: 

• gets to a person who might be involved in a criminal activity 

• gets back to someone they are involved or associated with 

• is released in the public domain. 

This change introduces a broader and more cautious interpretation, which means that employees and compliance teams must be extra careful while handling any sensitive information.  

Repeal of the Financial Transactions Reports Act, 1998 

The Financial Transactions Reports Act 1998 was officially repealed on 7th January 2025. Businesses which were affected by the same include: 

• solicitors who were reporting only under the FTR Act 

• businesses dealing in traveler’s cheques 

• motor vehicle dealers who acted as insurance providers or intermediaries 

• online remittance businesses that operate without a fixed place of business in Australia 

From now on, these businesses will no longer be required to report under the old framework. However, that doesn’t imply that their responsibilities vanished altogether. Businesses are still expected to keep records of past transactions and maintain confidentiality regarding reports submitted previously. AUSTRAC also holds the authority to request information about older reports as needed.

Conclusion 

The AML/CFT Amendment Act, 2024 marks a significant shift in how Australia deals with financial crime prevention. By widening the regulations to include high-risk service providers, i.e. Tranche 2 entities, and updating the responsibilities for those already reporting, the government is clearly indicating that stronger oversight will be the new norm in existence. 

For many businesses, these changes might feel a little unfamiliar, but with a clear understanding of what’s expected, compliance can be built into day-to-day operations.