Real Estate Transactions
Assisting in planning or execution of real property sale, purchase or transfer—including settlement services.
Legal Sector | Tranche 2
Tranche 2 AML Reforms for Lawyers & Conveyancers
Complete guide to Tranche 2 AML/CTF reforms for lawyers, solicitors and conveyancers. Learn about AUSTRAC designated services, legal professional privilege protections, and compliance obligations.
Key Information
Legal Professionals: Gatekeeper Obligations Under AUSTRAC
From 1 July 2026, lawyers, solicitors, and conveyancers providing designated services will have AML/CTF obligations under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006. According to AUSTRAC, for too long, criminals have been able to take advantage of so-called 'gatekeeper professions' to facilitate money laundering.
The 9 Designated Services for Legal Professionals
Under the Act, these services trigger your AML/CTF obligations:
- Buying or selling real estate - acting on behalf of the buyer or seller in any capacity
- Managing client money, securities or property - including trust account management
- Managing bank or securities accounts for clients
- Organising investments or contributions for companies or legal entities
- Creating, restructuring or forming companies, trusts, or other legal entities
- Selling shelf companies
- Arranging person to act as nominee director/secretary
- Arranging person to act as nominee shareholder
- Acting as registered office or business address
Not covered: Litigation, court representation, general legal advice, criminal law, family law advice, tax advice, and other services without designated service elements.
AUSTRAC Risk Indicators for Legal Professionals
Client behaviour red flags:
- Avoids face-to-face meetings, appears nervous or defensive
- Ends relationship when CDD information is requested
- Excessive concern about confidentiality beyond normal expectations
- Prepared to pay higher fees without clear commercial reasons
- Shows unusual knowledge of AML/CTF reporting requirements
- Associates with persons of known bad reputation
Client Profile Red Flags
- Foreign political figures (PEPs) or their associates
- Frequent change of lawyers with no clear explanation
- No established office, recently arrived from high-risk country
- Businesses with little online presence or evidence of trading
- Structure or business purpose doesn't make commercial sense
Complex Structure Red Flags
- Requests complex structures to hide beneficial ownership
- Requests to use your trust account with no clear purpose
- Large volumes of company/trust creation at one time
- Use of shell/shelf companies to create distance from funds
- Transfers between subsidiaries with no apparent business purpose
Legal Professional Privilege Protection
The Act explicitly preserves LPP. Nothing takes away your right to refuse to give privileged information. If you withhold information on LPP grounds, you must submit an LPP form to AUSTRAC within the required timeframe. However, privilege does not apply to communications made for the purpose of furthering crime or fraud.
Key Dates
- 31 March 2026: AUSTRAC enrolment opens
- 1 July 2026: AML/CTF obligations commence
- 29 July 2026: Enrolment deadline (within 28 days of first designated service)
Designated Services for Legal Professionals
Corporate Transactions
Assisting in transactions to buy, sell or transfer a body corporate, including share sales and business transfers.
Conveyancing Services
Settlement services that directly advance property transactions—triggers when transaction is expected to proceed.
Trust Services
Acting as trustee of an express trust or providing trust administration services.
Nominee Director/Secretary
Acting as or arranging for others to act as director, secretary or partner of a body corporate.
Managing Client Property
Managing money, securities or other property for clients—includes trust account management.
Legal Professional Privilege Protection
LPP Rights Preserved
The Act explicitly states that nothing takes away a person's right to refuse to give information protected by LPP. Your duty of confidentiality to clients regarding privileged matters remains intact.
LPP Form Requirement
If you withhold information on LPP grounds, you must complete and submit an LPP form to AUSTRAC within the required timeframe. This notifies AUSTRAC that privileged information exists without disclosing it.
Key Compliance Obligations
AML/CTF Program
Written policies and procedures tailored to your practice. Must address risks specific to your client base and service offerings.
- • ML/TF risk assessment for your practice
- • Customer due diligence procedures
- • Ongoing monitoring processes
- • Staff training and awareness
Customer Due Diligence
Verify identity of clients before providing designated services. Understand the nature and purpose of the business relationship.
- • Identify and verify all parties
- • Identify beneficial owners
- • Screen for PEPs and sanctions
- • Verify source of funds
Suspicious Matter Reporting
Report to AUSTRAC when you suspect ML/TF. Tipping off clients about reports is prohibited.
- • 24 hours: terrorism financing suspicions
- • 3 business days: other suspicions
- • Use LPP form for privileged matters
- • Safe harbour for good-faith reports
Key Dates
- 31 March 2026: AUSTRAC enrolment opens
- 1 July 2026: AML/CTF obligations commence
- Within 28 days: Enrol after providing first designated service
- 7 years: Record retention period
Frequently asked questions
Which legal services trigger AML/CTF obligations?
Designated services include: assisting with real property transactions, corporate transactions, conveyancing/settlement services, acting as trustee, providing registered office addresses, and acting as nominee director/secretary. General legal advice on consequences or strategy does NOT trigger obligations—only services that directly advance transactions.
How does Legal Professional Privilege (LPP) work under the reforms?
The Act explicitly protects LPP. Nothing takes away your right to refuse information protected by legal professional privilege. If you withhold information on LPP grounds, you must submit an LPP form to AUSTRAC within the required timeframe in lieu of the withheld information.
When do conveyancing obligations start?
Obligations commence when it's reasonably expected the transaction will proceed—typically when the buyer's offer is accepted and contract signed. You must conduct CDD on both buyers and sellers involved in the transaction.
What CDD is required for property transactions?
Verify identity of all parties (buyers, sellers, beneficial owners), understand the source of funds for the purchase, screen for PEPs and sanctions, and maintain records for 7 years after the relationship ends.
Do barristers have AML obligations?
Barristers providing advice or representation in court proceedings do not have obligations. However, if a barrister provides designated services (like trust services or corporate transactions directly), obligations would apply to those services.
What if I suspect money laundering but have LPP concerns?
You can withhold privileged information by submitting an LPP form to AUSTRAC. However, LPP does not cover information that furthers a crime. If you suspect your services are being used for ML/TF, reporting obligations still apply to non-privileged information.
CDD Solutions for Law Firms
ARCaml automates customer due diligence while respecting the unique requirements of legal practice.