Obligations are in effect·Enrolment deadline: 29 July 2026—21 days remaining
AML/CTF Compliance · Australian Lawyers · 6 min read · Klyvon Compliance Team
AML compliance for lawyers in Australia — AUSTRAC Tranche 2 guide
Since 1 July 2026, Australian law firms providing designated legal services are AUSTRAC reporting entities under the AML/CTF Amendment Act 2024 — these obligations are now in effect. This guide covers exactly which legal services trigger obligations, what your AML/CTF program must contain, and how to comply, including the 29 July 2026 enrolment deadline still ahead. For the full industry guide see /lawyers.
Written by the Klyvon Compliance Team · Melbourne, Australia · General guidance only, not legal advice
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Which legal services trigger AUSTRAC obligations?
The key principle: the obligation attaches to the service, not the firm type. A litigation-only firm that never handles property transactions is not a reporting entity. A mixed-practice firm that does even one property settlement per year is.
Designated (regulated) legal services
✓ Acting in real property purchase or sale transactions
✓ Managing or controlling client money, securities, or assets
✓ Forming companies or trusts for clients
✓ Acting as or arranging nominee directors or shareholders
✓ Providing registered office or company secretarial services
✓ Acting in the purchase or sale of a business entity
NOT designated (not regulated)
✗ Litigation and court representation
✗ General legal advice (without fund management)
✗ Criminal law practice
✗ Family law (without asset management)
✗ Employment law
✗ Intellectual property advice
Legal professional privilege and the tipping-off prohibition
The AML/CTF Act 2006 contains specific provisions for legal professional privilege (s.242). If all grounds for suspicion are privileged, no SMR is required at all. If only part of the suspicious matter is privileged, you must still file the SMR covering the non-privileged content, and separately lodge an LPP form — within 24 hours for terrorism financing, or 5 business days for other matters. Underlying transaction facts — such as the movement of client funds or the mechanics of a property settlement — are generally not protected by privilege on their own.
The tipping-off prohibition is separate and applies once an SMR has been filed: you must not disclose to any person — including the client — that an SMR has been filed or that AUSTRAC is investigating. Breach is a criminal offence under s.123 of the AML/CTF Act 2006 (maximum 2 years imprisonment, 120 penalty units, or both).
What your law firm's AML program must cover
Your program must address both your risk framework and CDD procedures, tailored to your practice areas. For law firms, key specifics include:
Property transaction CDD
Identity verification of all parties, including beneficial owners of corporate buyers or sellers. Source of funds checks for large transactions.
Trust and company formation procedures
Identity verification of settlors, trustees, and beneficial owners of any trust or company formed on behalf of clients.
Client funds handling
Procedures for receiving, holding, and disbursing funds from trust accounts — including transaction monitoring triggers.
Nominee director/shareholder checks
Enhanced due diligence on principals who wish to remain undisclosed through nominee arrangements.
Politically exposed persons (PEPs)
Enhanced due diligence procedure for clients who are current or former senior government officials or their immediate family members.
Frequently asked questions
Do lawyers need to register with AUSTRAC?
Yes, if your law firm provides any designated legal services under the AML/CTF Act 2006 as amended by the AML/CTF Amendment Act 2024. Designated legal services include: acting in real property transactions, managing client money or assets, forming companies or trusts for clients, acting as or arranging nominee directors or shareholders, providing registered office or company secretarial services, and acting in the purchase or sale of a business entity. Litigation-only firms and pure advisory practices that provide none of these services are generally not reporting entities.
What AML program does a law firm need?
Law firms must implement an AML/CTF program covering a risk management framework — a documented ML/TF risk assessment, compliance officer appointment, transaction monitoring procedures, staff training, and audit arrangements — and customer due diligence procedures: how the firm identifies and verifies client identity before providing a designated service, including for corporate clients and trusts. AUSTRAC no longer requires these to be structured as separate labelled 'Part A'/'Part B' sections since the 2024 reforms — organise the program as suits your firm. The program must be tailored to the firm's specific practice areas and risk profile.
How much does AUSTRAC compliance cost for law firms?
The government's Regulation Impact Statement estimated significant ongoing compliance costs for small businesses — covering staff time, external advice, and software. Klyvon is designed to reduce that cost substantially. Boutique AML consultants charge $5,000–$15,000 for law firm programs. Large firm programs from specialist AML law firms or Big 4 cost $20,000–$50,000+. Klyvon is purpose-built for Australian law firms — it generates a firm-specific AML/CTF program in one session from $299/month.
What happens if a law firm doesn't comply now that obligations are in effect?
Operating as a reporting entity without an AML/CTF program, CDD procedures, and staff training, now that obligations commenced 1 July 2026, is a contravention of the AML/CTF Act 2006. Civil penalties for bodies corporate (law firms operating as companies or partnerships) can reach $33,000,000 per contravention (based on the current penalty unit rate of $330; due to re-index 1 July 2026 pending official publication). Non-enrolment after 29 July 2026 attracts daily penalties of up to $19,800. AUSTRAC publishes all enforcement actions publicly. Law firms also face potential consequences under state Law Society professional conduct frameworks.
Can law firms use AI to generate their AML program?
Yes. Klyvon is purpose-built for Australian law firms — it generates a firm-specific AML/CTF program in one session from $299/month on the Essential plan. The AI is prompted with AUSTRAC's published Legal Profession Starter Kit and sector guidance as context. The generated program covers your risk framework (compliance officer, monitoring, training) and CDD procedures (for individuals, companies, and trusts). The program must be reviewed and adopted by the firm's compliance officer. Klyvon is not a law firm and its output is not legal advice.
How often must a law firm get an independent evaluation of its AML/CTF program?
At least once every 3 years, and more often if appropriate to the size and complexity of the firm. This is a separate, mandatory requirement under the AML/CTF Act — distinct from the firm's annual internal program review. The independent evaluation must assess the firm's ML/TF risk assessment, the design of its AML/CTF policies, its actual compliance with those policies, and whether it's appropriately identifying, assessing, and mitigating ML/TF risk. Findings go in a written report to the firm's governing body or a responsible senior manager.
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Klyvon generates your complete AML/CTF program (risk framework and CDD procedures) for law firms in one session. From $299/month.
General guidance only · Not legal advice