AML/CTF Reforms - Few Key Updates Since July 2025

In the run-up to the upcoming effective dates for the AML/CTF reforms for Tranche 1 and 2 reporting entities, there is plenty of action going. This article presents a few key updates.

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A. AML/CTF REFORMS RELATED UPDATE

B. OTHER UPDATES

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A. AML/CTF Reforms related updates

i)   Reforms Guidance | AUSTRAC has issued a significant amount of guidance for both Tranche 1 and Tranche 2 entities across a range of subjects. This is further supported by industry webinars on Essentials of AML/CTF, Risk Assessment, and presenting on new developments. These resources are also available on AUSTRAC’s website and YouTube channel.

ii)  AML/CTF Program Starter Kits | A notable development has been AUSTRAC’s release of AML/CTF Program Starter Kits for the newly regulated sectors. These kits provide practical templates ranging from risk assessments, policies and procedures, to customer due diligence, reporting to board, unusual activity reporting and many more, and are designed for smaller businesses entering the AML/CTF regime for the first time. These kits may be all that a Tranche 2 small business may need, depending on its needs and context.

 

iii)  Risk and Suspicious Activity Indicators | AUSTRAC has issued sector-specific risks and indicators of suspicious activity to assist Tranche 2 entities in identifying risks relevant to their operations. Indicators have also been issued for the existing current REs.

It would be useful for the REs to review these materials and update their AML/CTF framework including risk assessments and transaction monitoring. REs should also consider National Risk Assessments, and relevant sectoral risk assessment for a comprehensive overview of risks.

iv)  Updated AML/CTF Rules Released | The updated AML/CTF Rules, aligned with the new regime, were released in August 2025, and will commence in two phases on 31 March 2026 and 1 July 2026. The updated rules will support the legislative reforms, providing operational detail on how new and existing obligations will apply in practice, and should be factored in the updated compliance framework.

Note that AUSTRAC has just concluded a consultation on proposed amendments to the above Rules, and also bringing few other rules. These are aimed at improving the effectiveness of the rules and granting certain rules-based exemptions. Refer AUSTRAC resources here.

 

v)  Deferring Certain Obligations for Tranche 1 REs - Transitional Rules | AUSTRAC has indicated it is working with the Department of Home Affairs to develop transitional rules to support existing REs in implementing the new requirements.

The proposed transitional measures include:

• additional time upto three years to transition to new initial CDD obligations (this does not apply for ongoing CDD obligations);

• extended deadline until 30 May 2026 to notify AUSTRAC of the AML Compliance Officer’s appointment;

• staggered timelines for initial independent reviews (under the new regime) to avoid duplication and bunching;

• removal of re-registration requirements for existing registered entities (DCEs and Remitters);

• deferred compliance timelines until 1 July 2026 for new Virtual Asset Service Providers (VASPs) services;

• Deferral of travel rule for VASPs until 1 July 2026, and reporting for International Value Transfer Services (ITVS) until 2029.

Read more about Transitional Rules in our Blog post FAQs here.

B. Other updates:

i)       AUSTRAC’s Regulatory Expectations | AUSTRAC has reiterated its expectations for both Tranche 1 and Tranche 2 entities, in its Regulatory Priorities document. You may further refer to our write-up on this in our earlier blog, here. 

ii)     AML/CTF Compliance Report 2025 | AUSTRAC has released the 2025 Compliance Report template, having the submission deadline of 31 March 2026. REs should prioritise timely and accurate submissions to avoid potential enforcement actions. You can read more on Compliance Reports in our blog here.

On a side note, this will be the last report under the current regime before the reforms commence.

iii)   Proposed Expansion of AUSTRAC’s Powers | The Department of Home Affairs recently consulted with the industry on –

• granting AUSTRAC powers to prohibit or restrict high-risk products, services or delivery channels to combat and prevent money laundering, sanctions evasion, financial crime and other forms of transnational, serious and/or organised crime. Before imposing any such restriction, AUSTRAC must undertake consultations with the stakeholders to be impacted.

• proposal to amend relevant definition for new proposed offences relating to the financing of a state sponsor of terrorism.

The consultation was open until 21 January 2026.

20 February 2026

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Compliense Advisors is an AML/CTF and FinCrime compliance and risk management advisory firm.

Our experience includes implementing legislative changes; undertaking ML/TF risk assessment; setting up, implementing, uplifting AML/CTF program; and advising on AML/CTF and FinCrime compliance and risk matters.

The article above is for general awareness and informational purposes only. Please carefully evaluate your circumstances, and seek professional advice for your specific needs. You are responsible for your compliance obligations, and for any action taken or omitted. We are not a law firm, and do not provide legal advice.

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