Tranche 2 AML/CTF Reforms Explained: Who Will Be Affected and How to Prepare
How ComplyIQ helps businesses understand upcoming AML/CTF reforms and prepare for expanded regulatory coverage.
Disclaimer: This article provides general information only and isn’t legal advice. How AML/CTF reforms apply depends on your services, risk profile and circumstances. AUSTRAC has confirmed reforms affecting existing reporting entities commence from 31 March 2026, with additional services and entities coming under regulation from 1 July 2026 as part of Tranche 2.
Australia’s AML/CTF framework is undergoing significant change. While many businesses are familiar with the term Tranche 2, there is often uncertainty about what the reforms actually involve, who they affect, and what preparation looks like in practical terms.
This article explains the Tranche 2 reforms, how they affect existing and future reporting entities, and what AUSTRAC is signalling about expectations during the transition.
Tranche 2 expands AML/CTF obligations to additional services and entities from 1 July 2026, while reforms for existing reporting entities commenced from 31 March 2026.
The practical issue is not just whether the law changes. It is whether your business is ready to operationalise those obligations.
What are the AML/CTF reforms and what is Tranche 2?
The AML/CTF reforms update Australia’s AML/CTF regime and expand the scope of regulated services.
What Tranche 2 means
Tranche 2 refers specifically to additional services and entities coming into the AML/CTF regime for the first time under the expanded framework.
These reforms form part of a broader effort to align Australia’s regime with international standards.
How do the reforms affect existing reporting entities?
For existing reporting entities, reforms commenced from 31 March 2026.
In practice, the shift is less about creating a completely new compliance model and more about raising expectations around operational maturity, record keeping and decision traceability.
Existing reporting entities should expect more scrutiny on how controls operate day to day, not just whether policy documents exist.
Which new services and entities are expected to be captured?
Tranche 2 extends AML/CTF obligations to additional services and sectors that have not previously been regulated.
Sectors publicly identified by AUSTRAC include
- Real estate professionals
- Accountants
- Lawyers
- Dealers in precious metals and stones
The exact application still depends on the designated services provided and the required geographical link to Australia.
When do Tranche 2 obligations commence?
Tranche 2 obligations commence from 1 July 2026 for businesses that become reporting entities under the expanded regime.
Key dates
- 31 March 2026 — reforms commence for existing reporting entities
- 1 July 2026 — Tranche 2 obligations commence for newly captured entities and services
Understanding this timing is essential for planning governance, systems and operational uplift.
How does reporting entity status change under Tranche 2?
Under Tranche 2, businesses that provide newly captured designated services may become reporting entities for the first time.
As with the current regime, status is based on activities performed, not business labels or professional titles.
If your activities match a designated service and have the required geographical link, AML/CTF obligations may apply even if compliance has never previously been part of your operating model.
What obligations will apply to new Tranche 2 reporting entities?
New reporting entities captured under Tranche 2 will need to comply with core AML/CTF obligations relevant to their services.
This typically includes
- Establishing and maintaining an AML/CTF program
- Conducting customer due diligence appropriate to risk
- Monitoring customer activity and transactions
- Reporting matters and transactions where required
- Retaining records in a secure and retrievable format
The exact scope depends on the designated services provided and the associated risk exposure.
How should businesses prepare in practice?
Preparation for Tranche 2 involves more than simply knowing the law is changing. It requires early operational planning.
Practical preparation steps
- Assess whether current or planned services fall within scope
- Understand how AML/CTF obligations would apply operationally
- Identify gaps in systems, processes and governance
- Plan how evidence will be captured and retained
Early preparation reduces implementation pressure and supports a smoother transition into the AML/CTF regime.
What is AUSTRAC signalling about expectations?
AUSTRAC’s messaging around Tranche 2 points toward practical implementation rather than formal compliance alone.
Expectations are moving toward
- Clearer operational controls
- Stronger links between risk, decisions and records
- Improved audit readiness
- Proportionate application of obligations based on risk
Businesses relying on fragmented or highly manual processes may find it harder to meet these expectations.
Where ComplyIQ fits
ComplyIQ supports both existing and future reporting entities by providing a structured environment to operationalise AML/CTF obligations and retain evidence as it is created.
For businesses preparing for Tranche 2, this supports earlier assessment, stronger system design and a more defensible transition into the AML/CTF regime.
Prepare for Tranche 2 before the pressure starts
ComplyIQ helps businesses turn regulatory change into structured operational readiness with clearer controls, better evidence and more confident compliance.