Navigating AML compliance changes: A guide for legal & accounting practitioners

The landscape of anti-money laundering (AML) regulations in Australia is evolving, with significant changes set to take effect on 1 July 2026. In our recent webinar, James De Swert  and I provided insights on navigating these upcoming compliance changes for legal and accounting professionals, known as tranche 2 reporting entities. 

The importance of risk assessments

One of the main focuses of the webinar was the necessity of conducting comprehensive risk assessments. Tranche 2 reporting entities need to identify potential money laundering and terrorism financing risks associated with their clients and transactions. This involves assessing each new client and matter to ensure that any risks, such as unusual client behaviour, complex legal structures, and rapid transactions that might indicate money laundering or terrorism financing activities are captured. 

Real-life examples shared during the session illustrated the serious consequences firms face when they fail to conduct adequate due diligence. For instance, in conveyancing transactions, firms that neglect to verify the source of funds have been scrutinised and faced enforcement actions by regulators. As practitioners prepare for the upcoming changes, implementing a robust risk assessment protocol is critical to ensure compliance. 

Leveraging technology for compliance

The rise of technology plays a pivotal role in enhancing AML compliance. The session explored the value of utilising transaction monitoring systems and client management software to streamline the compliance process. By integrating technology into their practices, firms can efficiently gather client information, conduct conflict checks, client & matter risk assessments, and monitor transactions for suspicious activities.

For example, during client onboarding, legal firms should conduct comprehensive conflict searches and client due diligence (CDD). By using corporate tree data tools practitioners can perform live lookups of ownership structures, ensuring that all related entities are accounted for. This due diligence step is vital for uncovering any previous business relationships that may pose conflicts for the firm.

Client due diligence: A critical component

Client due diligence is not just a compliance requirement; it is a fundamental component of a firm’s overall risk management strategy. Understanding who instructs the firm and the nature of their requests significantly aids in detecting potential money laundering risks. The webinar underscored the importance of thoroughly vetting clients to ensure that all parties involved in a transaction are accurately identified. The webinar noted recent enforcement action taken in the UK by the Solicitor’s Regulatory Authority (SRA) against law firms who failed to conduct adequate CDD on new clients and related third parties, emphasising that missing this crucial step exposes the firm and makes them more vulnerable to money laundering risks. 

Best practices for legal and accounting practitioners

To navigate the forthcoming AML compliance changes effectively, tranche 2 reporting entities should adopt the following best practices:

• Conduct regular training: Ensure that all staff members are informed about AML regulations and the importance of compliance. Regular training sessions can improve awareness and adherence to best practices.
• Implement robust risk assessment protocols: Develop and maintain comprehensive risk assessment frameworks that are regularly updated to reflect regulatory changes.
• Utilise technology: Leverage technology to automate compliance processes, ensuring that client information is efficiently gathered and monitored.
• Document everything: Maintain thorough records of all client interactions, risk assessments, and due diligence efforts. This documentation will be crucial in demonstrating compliance during audits or investigations.
• Stay informed: Regularly review updates from regulatory bodies such as AUSTRAC to remain compliant with new changes and requirements.

The time is now

Navigating the changes in AML compliance requires legal and accounting practitioners to be proactive and prepared. By implementing structured methodologies for risk assessments and client due diligence and leveraging technology, tranche 2 reporting entities can mitigate risks associated with money laundering and terrorism financing and ensure compliance with regulatory obligations. 

As the 1 July 2026 deadline approaches, the time to prepare is now in order to avoid fines and reputational damage. Equip yourself with the necessary tools and strategies to navigate these changes successfully and safeguard your practice against potential pitfalls.

Learn more about how iManage can help guide your firm through these changes or schedule a demo for more personalised information.