Australia’s long-delayed “Tranche 2” reforms have now come into effect. In policy terms, “Tranche 2” refers to extending the Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) regime beyond traditional financial institutions to higher-risk “gatekeeper” services, including parts of the legal profession.
The relevant statute is the Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024, which passed Parliament on 29 November 2024. The reformed regime commenced for existing reporting entities on 31 March 2026 and for newly regulated entities, including certain legal practices, on 1 July 2026.
For criminal law defence firms, the practical point is this: criminal defence work alone is usually outside the scope of the Tranche 2 reforms. It might be expected to be included in future reforms. AUSTRAC (the Australian Transaction Reports and Analysis Centre) has stated that litigation generally will not fall within the new professional designated services, Barristers’ advocacy and litigation work is not expected to trigger the regime, and payments made to a court or tribunal through a lawyer’s trust account are expressly treated as excluded from item 3 risk capture.
However, the position changes if the same legal entity also undertakes designated services such as real estate transfers, company/trust structuring, corporate transactions, acting as a nominee officeholder, or managing client money in a way that directly advances a transaction.
Where a law firm does provide a designated service, the new obligations are substantial. They require enrolment with AUSTRAC, a risk-based AML/CTF program, an AML/CTF compliance officer, customer due diligence, ongoing monitoring, suspicious matter reporting, threshold transaction reporting for physical currency of AUD $10,000 or more, record retention, personnel due diligence, training, and governance/independent evaluation requirements.
The reforms will still require criminal defence firms to consider whether their trust-account activity is merely incidental to non-designated litigation work, how to preserve legal professional privilege in circumstances where they are required to commence reporting, handling clients with limited identity documents, and managing mixed-practice structures where one division undertakes designated services and another division does not.
Should you or someone you know be charged with an offence, it is essential you receive legal advice from an experienced criminal defence lawyer at any early stage. To discuss your options, call Hugo Law Group in Sydney (02 9696 1361), Canberra (02 5104 9640) and Perth (08 6255 6909) to make an appointment to speak to one of our lawyers.
