Obligations are in effect·Enrolment deadline: 29 July 2026—21 days remaining
AML/CTF Compliance · Lawyers & Law Firms
AML/CTF Compliance for Australian Law Firms — AUSTRAC Tranche 2
Since 1 July 2026, Australian law firms providing designated legal services are reporting entities under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) as amended by the AML/CTF Amendment Act 2024. Tranche 2 is service-based, not entity-based — a sole practitioner doing property conveyancing is captured; a litigation-only firm may not be. Enrolment with AUSTRAC must be completed by 29 July 2026.
Built on AUSTRAC official guidance · Built to current law · Firm-specific · No legal knowledge required · Ready in one session
Scope questions
Is your law firm a reporting entity?
Tranche 2 captures firms based on the services they provide, not the type of entity they are. A sole practitioner conveyancer is a reporting entity. A national litigation firm with no designated services is not. Check against the designated services list below.
In scope — designated services
- ●Acting on a real property transaction
- ●Managing or controlling client money or assets
- ●Forming companies or trusts for clients
- ●Acting as or arranging nominee directors/shareholders
- ●Buying or selling a business entity or business assets
- ●Providing registered office or company secretarial services
Generally not in scope
- ○General litigation and dispute resolution
- ○Criminal defence
- ○Family law proceedings
- ○Drafting wills and powers of attorney
- ○Pure legal advice — no fund handling or transaction execution
- ○Barristers providing advocacy services only
Not legal advice — confirm your specific services at austrac.gov.au ↗.
Common mistakes
What law firms get wrong about AUSTRAC Tranche 2
Assuming the whole firm is in scope — or out of scope
Tranche 2 is service-based, not entity-based. A sole practitioner who handles one property settlement per year is a reporting entity. A large firm that does only litigation is not. Scope is determined service-by-service.
Treating the AUSTRAC Starter Kit as a finished product
The AUSTRAC Legal Profession Starter Kit is a template. It must be customised to your firm's specific services, clients, and risk profile. Filing it unchanged does not satisfy your program obligation under the AML/CTF Act 2006.
Not understanding the tipping-off prohibition after filing an SMR
Once you file an SMR, you cannot tell the client — or anyone else — that you have done so. The tipping-off prohibition under the AML/CTF Act 2006 is a criminal offence. Many firms continue to act for a client after filing and inadvertently breach this.
Legal professional privilege note
Privilege is protected — firms are not required to disclose privileged communications in an SMR under the AML/CTF Act 2006. However, underlying transaction facts — such as the movement of client funds, the mechanics of a property settlement, or the formation of a company — are generally not privileged. The obligation to report suspicious transaction facts coexists with the protection of privileged legal advice.
Your obligations
What must law firms do now that Tranche 2 is in effect?
Seven steps every in-scope law firm must complete. Klyvon generates all required documents automatically.
Confirm your designated services
Review the AML/CTF Act 2006. It is service-based, not entity-based. A sole practitioner doing property conveyancing is captured. A litigation-only firm may not be.
Enrol with AUSTRAC by 29 July 2026
Register at online.austrac.gov.au. Enrolment opened 31 March 2026. You need your ABN, firm details, and designated services list.
Appoint and notify your compliance officer by 29 July 2026
Name a compliance officer in writing and notify AUSTRAC. A principal or senior employed solicitor is appropriate — no specialist qualification required.
Build your AML/CTF Program
Customise to your firm's services and clients. The AUSTRAC Starter Kit must be tailored — an unmodified Starter Kit does not satisfy your program obligation.
Train all staff
All principals, employed solicitors, and support staff involved in designated services must complete AML/CTF awareness training. Annual refreshers required thereafter.
Apply CDD before every designated service
Since 1 July 2026, verify client identity before providing any designated service. File SMRs within 3 days of suspicion (24 hours for terrorism financing). Keep all records 7 years.
Schedule your independent evaluation
Your AML/CTF Program must be independently evaluated at least once every 3 years, by someone not involved in designing or running it. Transitional rules stagger the first evaluation deadline for newly regulated Tranche 2 firms.
What you get
What does Klyvon build for your law firm?
Every document is generated for your specific firm — your name, your compliance officer, your designated services. Not the AUSTRAC Starter Kit. Every document is built to current law using AUSTRAC's official guidance for your sector as context — then reviewed and owned by you.
AML/CTF Program
Personalised · Built to current lawYour firm-specific compliance program built to current law. Covers legal professional privilege, tipping-off, SMR obligations, property transaction CDD, trust account controls, and your ML/TF risk assessment.
CDD Templates
Personalised · Built to current lawClient due diligence procedures for individual clients, companies, trusts, and beneficial owners — with enhanced CDD triggers for PEPs, high-value transactions, and complex ownership structures.
Staff Training Quiz + Certificate
Personalised · Built to current lawScenario-based training covering AML/CTF fundamentals, red flags for legal practices, tipping-off obligations, and how to file an SMR. Generates a dated certificate per staff member.
Compliance Officer Letter
Personalised · Built to current lawFormal appointment letter satisfying the written appointment requirement under the AML/CTF Act 2006. Names your designated Compliance Officer and their responsibilities.
Suspicious Matter Report Assistant
Personalised · Built to current lawWhen suspicion arises, you have 3 business days to file with AUSTRAC. Klyvon drafts a formal 6-section SMR from the transaction details you enter — legal-sector red flags, tipping-off guidance, privilege considerations, and your firm's AUSTRAC ID pre-populated. You review and submit. (Limited drafts on Free · high monthly allowance on Essential)
Documents built to current law are a starting point — reviewed and owned by you. All decisions remain with your firm.
Pricing
How much does AML/CTF compliance cost for a law firm?
Compliance consultants charge $8,000–$50,000 to build your program. Klyvon generates your complete compliance documents from $299/month — documents ready in one session.
Why Klyvon?
$8,000–$50,000 to build your program
Custom program development
From $299/month — built to current law in one session
Month-to-month · cancel anytime
Klyvon Essential — Lawyers & Law Firms
$299/month
- ✓ AML/CTF Program (risk framework and CDD procedures)
- ✓ CDD Templates
- ✓ Staff Training Quiz + Certificate
- ✓ Compliance Officer Letter
- ✓ SMR Template + AUSTRAC Enrolment Guide
Month-to-month · cancel anytime · Documents ready in one session
Common questions
Common questions from law firms about AUSTRAC Tranche 2
Does my law firm need to enrol with AUSTRAC?
Yes, if your firm provides any designated legal services under the AML/CTF Act 2006 as amended. Designated services include: acting in real property transactions, managing or controlling 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 or business assets. Enrolment opens 31 March 2026 and must be completed by 29 July 2026.
What are the designated services for lawyers under Tranche 2?
Under the AML/CTF Act 2006, designated legal services are: (1) acting on behalf of a client in a real property transaction; (2) managing or controlling client money, securities, or other assets; (3) forming a company, trust, or other legal arrangement for a client; (4) acting as or arranging for a person to act as a nominee director or shareholder; (5) providing a registered office, business address, or accommodation for a company or trust; and (6) acting on behalf of a client in the purchase or sale of a business entity or business assets.
Does legal professional privilege protect lawyers from SMR obligations?
Partially. Section 242 of the AML/CTF Act 2006 makes clear you are not compelled to disclose information subject to legal professional privilege. If ALL the grounds for suspicion in a matter are privileged, you do not need to submit an SMR at all. If only PART of your grounds for suspicion is privileged, you must still submit the SMR covering the non-privileged information, and separately submit an LPP form claiming privilege over the rest — within 24 hours for terrorism financing, or within 5 business days of forming the suspicion for all other matters. Underlying transaction facts — such as the movement of client funds or the mechanics of a property settlement — are generally not privileged, only legal advice itself is.
What is tipping-off and how does it affect law firms?
Once a Suspicious Matter Report is filed with AUSTRAC, the tipping-off prohibition under the AML/CTF Act 2006 applies. A reporting entity must not disclose to any person — including the client — that an SMR has been filed or that AUSTRAC is investigating. Breach of the tipping-off prohibition is a criminal offence. This creates practical complexity for law firms that continue to act for a client after filing an SMR. Firms must carefully manage communications to avoid inadvertently breaching this prohibition.
Do I need a separate AML/CTF program for conveyancing services?
Yes, if your firm provides both general legal services and conveyancing services, AUSTRAC recommends (and its Starter Kit contemplates) that your AML/CTF Program address each designated service separately in its risk assessment. Mixed-practice firms — those providing both Legal Profession services and Conveyancing services — must ensure both service categories are captured in their risk assessment and CDD procedures.
What is an AML/CTF compliance officer and who can be appointed?
An AML/CTF Compliance Officer is the individual named in your AML/CTF Program who is responsible for managing the firm's AML/CTF obligations, overseeing staff training, and making regulatory notifications. There is no requirement for the Compliance Officer to be a qualified AML specialist — in most law firms, a principal or senior employed solicitor will be appointed. The appointment must be in writing and documented in your AML/CTF Program.
Can I use the AUSTRAC Starter Kit as my AML/CTF program?
No. The AUSTRAC Starter Kit for Legal Profession Businesses is a template designed to help firms understand their obligations — it is not a ready-to-use AML/CTF Program. It must be customised to your firm's specific services, client types, risk profile, and compliance controls before it constitutes a compliant AML/CTF Program under the AML/CTF Act 2006. Submitting the Starter Kit unchanged to AUSTRAC would not satisfy your program obligations.
What are the penalties for law firms that don't comply with AUSTRAC?
Under the AML/CTF Act 2006 (Cth), civil penalties for body corporates can reach up to $33,000,000 per contravention (based on current penalty unit rate of $330; re-indexes 1 July 2026) and up to $6,600,000 for individuals (based on current penalty unit rate of $330; re-indexes 1 July 2026). Criminal penalties apply for operating without enrolment and for serious or wilful non-compliance. AUSTRAC publishes all enforcement actions publicly, creating reputational risk beyond the financial penalty. Law firms also face potential consequences under state Law Society professional conduct frameworks if found to be non-compliant.
When is the AUSTRAC enrolment deadline for law firms?
Law firms providing designated services must enrol with AUSTRAC by 29 July 2026. Enrolment opened 31 March 2026 at online.austrac.gov.au. A compliance officer notification must also be submitted by 29 July 2026, or within 14 days of enrolling if later. Operating designated services without enrolment is a contravention of the AML/CTF Act 2006 — civil penalties accrue daily with no intent required.
What does customer due diligence look like for a legal practice?
Before providing a designated service, a law firm must: (1) verify the identity of the client — full name, date of birth, and residential address for individuals; (2) for companies, verify the entity's identity (ASIC extract) and identify the beneficial owners; (3) for trusts, verify the trust's identity and the identity of beneficiaries and controlling parties. Enhanced CDD is required for high-risk clients including politically exposed persons (PEPs) and clients from high-risk jurisdictions.
Does Tranche 2 apply to barristers?
Barristers typically do not directly provide designated legal services — they are generally instructed by solicitors and do not manage client funds, execute property transactions, or form companies. However, barristers who are self-employed and directly accept client money or who provide company formation services may be caught. Most barristers providing only litigation or advocacy services should not be reporting entities, but each barrister should confirm their specific services against the designated service table.
How long does it take to build a compliant AML/CTF program?
Building a compliant AML/CTF program from scratch using consultants typically takes 4–8 weeks and costs $10,000–$50,000. Using Klyvon, law firms can generate a customised AML/CTF Program document (risk framework and CDD procedures), CDD templates, a staff training quiz and certificate, an SMR template, and a compliance officer letter in one session. Review and final sign-off by a principal typically takes 1–2 hours.
Can Klyvon help me write a Suspicious Matter Report?
Yes. Klyvon Essential includes a suspicious matter report assistant. Enter the transaction date, transaction details, and the suspicious elements you observed. Klyvon drafts a formal, AUSTRAC-formatted SMR covering all six required sections — reporter obligations, matter details, grounds for suspicion, suspicious indicators, recommended action, and AUSTRAC submission notes. You review and submit directly via AUSTRAC Online. Essential includes a high monthly draft allowance.
Does Klyvon include sanctions screening?
Targeted financial sanctions screening is now part of your AML/CTF program obligation under the AML/CTF Rules 2025 — not a separate exercise. Klyvon's generated program includes the required policy controls for targeted financial sanctions. You will still need to screen clients against the DFAT Consolidated List as part of your CDD workflow. Klyvon does not run live screening checks, but your program documents exactly when and how to do it.
Does my law firm's AML/CTF program need an independent evaluation?
Yes. Every AML/CTF program must undergo an independent evaluation at least once every 3 years, conducted by someone who was not involved in designing, implementing, or maintaining the program — an external compliance consultant, or for larger firms, a genuinely independent internal audit function not tied to the compliance team. The evaluation must assess whether the program is effective, whether it complies with the AML/CTF Rules, and whether it has actually been followed in practice — not just whether the document exists. Transitional rules stagger the first evaluation deadline for newly regulated Tranche 2 firms.
Build your law firm’s AML/CTF program
The 29 July 2026 enrolment deadline is 21 days away.