From July 2026, Australian law firms providing certain services will face a significant challenge: complying with sweeping reforms to the nation's anti-money laundering and counter-terrorism financing (AML/CTF) regime while continuing to run their practice.
We spoke to Jessica Smith, Director of Risk Consulting at Grant Thornton, on how to best navigate this transition. Jessica walks us through what the reforms actually require, how firms can start preparing now, and why building AML/CTF capability isn't just about ticking boxes; it's about shifting culture, investing in training, and giving practitioners the confidence to operate in a new regulatory landscape where managing the risk of financial crime becomes part of everyday practice.
Key changes introduced under the AML/CTF reforms
“The reforms to Australia’s anti-money laundering and counter-terrorism funding (AML/CTF) regime have been designed to address the evolving threats posed by serious and organised crime,” Jessica says.
As Jessica explains, the primary objectives of the AML/CTF reforms are to:
- improve the effectiveness of the AML/CTF regime by making it simpler and clearer for businesses to comply with their obligations.
- modernise the regime to reflect changing business structures, technologies and illicit financing methodologies.
- extend the AML/CTF regime to certain higher-risk services (designated services) provided by real estate professionals and professional service providers, including lawyers, accountants, trust and company service providers, and dealers in precious stones and metals (Tranche 2 entities).
What law firms will be required to do from July 2026
If you operate a law firm providing ‘higher risk services’ - i.e. designated services - then from July 2026, you will be required to comply with the AML/CTF Act and Rules.
According to Jessica, this means you will need to:
- Enrol with the Australian Transaction Reports and Analysis Centre (AUSTRAC) which is Australia’s AML/CTF regulator.
- Prepare and maintain an AML/CTF program containing:
- a risk assessment identifying relevant money laundering (ML/TF) risks and explaining how these risks will be managed; and
- the AML/CTF policies, procedures, systems and controls used to manage and mitigate the firm’s money laundering and terrorism financing risks and comply with its obligations.
- Conduct due diligence on and provide AML/CTF training for the people performing AML/CTF functions within the firm.
- Complete due diligence on your clients both prior to providing any designated services as well as on an ongoing basis to understand who your clients are and the ML/TF risks they bring to the firm.
- Report certain transactions or clients which may be suspicious.
Now is the time to get prepared. Enrolment with AUSTRAC opens from 31 March 2026.
“We recommend firms commence this process early because there is a significant amount of information you will need to provide as part of the enrolment process,” Jessica says. “This includes specific information about the designated services that will be provided, as well as corporate information (including the names of any beneficial owners of your entity) and information about the individual completing the enrolment.”
Practical steps firms should take now
“We have been advising clients to conduct a mapping exercise of their current matters to identify which designated services are relevant to their firm,” Jessica says.
“Depending on the practice areas within the firm, not all clients will be receiving a designated service. It's important to ensure staff are aware of when the firm will be providing a designated service to clients and when it is not.”
Jessica also recommends that firms prepare an inventory of all existing clients (referred to as “pre-commencement” customers under the legislation, and identify:
- which client matters should be closed;
- which client matters should remain open; and
- which clients are likely to receive designated services from July 2026.
“Next, law firms will need to decide who will be appointed as their ‘governing body’, ‘senior manager’ and ‘AML/CTF compliance officer’ as these are key roles under the legislation with specific responsibilities,” she advises. “Due diligence will also need to be conducted on these individuals.”
What challenges can you expect from the AML/CTF transition?
“In my view, the key challenges for law firms centre around the cultural component of regulatory reform as well as the practical implications,” says Jessica.
“A key issue will be building AML/CTF compliance capability in an environment where many practitioners have had limited exposure to AML/CTF regulatory compliance and financial crime risk management,” she observes. “Firms will need to design and embed client due diligence, risk assessment and reporting processes without undermining client service or confidentiality obligations. Resourcing will also be challenging, particularly for small and mid-sized practices, as compliance requires time, specialist expertise and ongoing training.”
“Integrating AML/CTF controls into existing practice management systems and workflows will require careful planning and investment,” she continues. “Finally, driving consistent adoption across partners and staff—particularly where the reforms are perceived as administrative or low risk—will be critical to achieving effective and sustainable compliance.”
In short, start early, invest in the right expertise, and view AML/CTF compliance not as a checkbox exercise but as a recognition that legal services are entering an environment increasingly focused on combating financial crime.
The College is running an AML/CTF Lunch and Learn series on March 12, please follow the link to register: AML/CTF Changes Unpacked for Lawyers - Lunch and Learn Series.
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