Anti‑money laundering and counter‑terrorism financing: What it means for governance professionals

AntiMoney Laundering and CounterTerrorism Financing (AML/CTF) sits at the intersection of financial integrity, public trust and good governance. While the term can sound technical or remote, recent reforms mean these obligations are becoming increasingly relevant for people working across governance, risk and professional services in Australia.

AntiMoney Laundering and CounterTerrorism Financing (AML/CTF) sits at the intersection of financial integrity, public trust and good governance. While the term can sound technical or remote, recent reforms mean these obligations are becoming increasingly relevant for people working across governance, risk and professional services in Australia.

At its core, AML/CTF laws are designed to stop criminals from disguising the origins of illicit funds and to prevent money from being used to finance terrorism. Australia’s framework aligns with international standards set by the Financial Action Task Force (FATF), reflecting that organised crime and terrorism rely on access to legitimate systems, professional services and complex corporate structures. Governance professionals are now firmly within that risk landscape.

How the AML/CTF regime works

Australia’s AML/CTF regime is overseen by AUSTRAC, which monitors compliance and provides guidance to regulated entities. Historically, the regime focused on banks, insurers and other large financial institutions, often referred to as Tranche 1 entities. Many of these organisations already have established compliance functions and mature risk frameworks.

That landscape is changing. Reforms passed in December 2024 significantly expand the scope of the regime. From 31 March 2026, existing reporting entities must comply with updated requirements. From 1 July 2026, a much broader group of professionals will enter the regime as Tranche 2 entities.

Tranche 2 captures many professions closely linked to governance, including accountants, lawyers, real estate agents and professional services providers. For many smaller practices, this will be their first experience operating as a regulated AML/CTF reporting entity.

What activities trigger AML/CTF obligations

Under the reformed framework, AML/CTF obligations are linked to specific designated services, rather than job titles. Nine professional services commonly provided in public practice will fall within scope. These include assisting with buying or selling real estate, transferring companies or legal arrangements, managing client money or assets, structuring equity or debt financing, creating or restructuring corporate entities, acting as a director or company secretary, providing nominee arrangements, and supplying registered office addresses.

For governance professionals, this is particularly significant. Company secretariat services, directorship arrangements and corporate structuring activities often sit at the core of governance work and are now recognised as potential risk points for financial crime if misused.

What compliance looks like in practice

Practices that provide at least one designated service must enrol with AUSTRAC as a reporting entity from 31 March 2026 and be fully compliant by 1 July 2026. Core obligations include maintaining a documented AML/CTF program, appointing a compliance officer, training staff, and identifying and managing AML/CTF risks within the practice.

This does not mean governance professionals are expected to become investigators or law enforcement experts. The focus is on understanding clients, recognising red flags, keeping appropriate records and knowing when and how to report suspicious activity. In practice, AML/CTF becomes another lens through which client acceptance, risk assessment and ethical decisionmaking are viewed. AUSTRAC offers e-learning modules and information on AML/CTF reforms that can help organisations better understand their AML/CTF obligations.

Transitional rules: what the draft relief really means

Recognising the scale of change, the Department of Home Affairs released draft AML/CTF Transitional Rules in February 2026 to support implementation of the reformed framework. Legal analysis from Hall & Wilcox emphasises that these rules provide timing relief, not a lowering of standards.

The most significant feature is a threeyear transition period for initial customer due diligence (CDD) for existing reporting entities, running from 31 March 2026 to 30 March 2029. During this period, entities may either continue using their prereform customer identification procedures or fully adopt the reformed initial CDD framework. Crucially, whichever approach is chosen must be applied consistently across the whole practice. Ongoing CDD obligations are not deferred and apply from commencement.

For governance professionals, this means transitional arrangements should be treated as a tool for orderly implementation, not as a reason to delay governance uplift.

Why this matters for governance

Strong AML/CTF compliance supports the broader objectives of good governance. It reinforces transparency, accountability and ethical conduct, while reducing the risk of organisations being unknowingly involved in criminal activity. For boards, company secretaries and governance advisers, AML/CTF obligations also intersect with directors’ duties, enterprise risk management and reputational risk.

Looking ahead

The expanded AML/CTF regime will require adjustment, particularly for professionals entering the framework for the first time. But it also presents an opportunity. By embedding AML/CTF thinking into everyday governance practice, professionals can strengthen trust, protect their organisations and contribute to a more resilient financial system. With clear timelines and transitional guidance now available, the focus can shift from uncertainty to preparation and confident compliance.