FAQs: 'Reporting Group' under the new AML/CTF Regime

The new AML/CTF regime has introduced the concept of Reporting Group, which replaces the pre-reforms concept of a Designated Business Group (DBG)

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1. What is a Reporting Group?

A Reporting Group is a new concept under the updated Anti-Money Laundering and Counter Terrorism Financing Act (AML/CTF Act). In this, two or more reporting entities come together and agree to share certain AML/CTF compliance activities or functions.

A reporting group concept will be useful for businesses with common ownership, common control, or close operational alignment. It is also useful where a non-reporting entity provides AML/CTF compliance-related support to the reporting entities in the group, and thus can formally join the group.

The reporting group structure can help optimise costs, share resources, and identify, assess, manage and mitigate ML/TF/PF risks more effectively.

 

2.  Is the Reporting Group concept optional or mandatory?

The reporting group structure is optional, and it is up to relevant reporting entities to decide if the reporting group structure is useful for them.

 

3.  What happens to the currently permitted ‘Designated Business Group’ (DBG) structure?

The current DBG concept will be replaced with the reporting group concept once the transition to the new regime takes place.

DBG also allowed a reporting entity grouping, but only of reporting entities from the same corporate group.

In the new regime, DBGs will have to transition to the new reporting group structure, if they wish to continue as a group.

The transition should be completed by 31 March 2026 for existing reporting entities. The reporting entities cannot rely on pre-31 March 2026 DBG Joint AML/CTF program.

For Tranche 2 entities, they will have to form and activate their reporting group by 1 July 2026.

 

4.  Who can form a Reporting Group?

There are two ways to form a reporting group:

• Business Group – where the reporting entities in the same business group can come together to form a reporting group. An entity outside the group cannot be part of this group. One person in the group controls each other person in the group.

  
  

• Reporting Group formed by election – Here any two or more reporting entities can come together and elect to form a group. This group can also include: a) a member of a business group; b) a person who discharges the AML/CTF compliance obligations imposed on members of the reporting group.

  
  

• In both types of groups, the member is an Australian company, a registered foreign company, a trust with at least one trustee resident in Australia, or a resident of Australia.

5.  What is a Lead Entity?

• In both types of reporting groups, one member must be designated as a lead entity. Let’s say that the lead entity is the leader of the group!

• Members must agree in writing who will be the lead entity

• The lead entity, in either type of group, must not be controlled by another member providing designated services

• The lead entity has the capacity (in business group), or the members have agreed that the lead entity has capacity (in reporting group by election) to determine the outcome of the decisions about AML/CTF policies of the other members of the group.

• In case of a reporting group formed by election that includes members of one or more business group, the lead entity should be part of one of those business groups.

6.  Can unrelated entities form a Reporting Group?

Theoretically, the answer is yes. Such entities can come together under the reporting group by election.

Different reporting entities can come together to form a reporting group. Though of course, it is presumed that there is a commonality of purpose, or for instance, they have similar or common businesses.

7.  Do we need to inform AUSTRAC of the Reporting Group?

Yes, the details will have to be updated in the enrolment form lodged with the AUSTRAC.

8.  How can a member or a Lead Entity leave a Reporting Group formed by Election?

A member of the group can leave the group by a notice to the lead entity.

A lead entity can leave the group by notice to the members.

If a member leaving is a member of a business group, all members of such business group are taken to have elected to leave.

 

9.  What happens in case of vacancy in the position of a Lead Entity of a Reporting Group?

A reporting group must have a new lead entity within 28 days from the stepping down of the previous lead entity.

 

10.  What are some of the specific requirements in regards to the AML/CTF programme of a Lead Entity?

The AML/CTF program for a lead entity of a reporting group must be appropriate to the nature, size and complexity of the business of each reporting entity in the reporting group.

Further, the AML/CTF policies of a lead entity should have provisions regarding the sharing of information amongst the members on customer due diligence, risk assessment, to enable compliance with their AML/CTF obligations and with the AML/CTF policies of the lead entity. The members of the reporting group must comply with the lead entity’s AML/CTF policies as applicable under the program / policies.

In regards to the obligations of setting up an AML program, undertaking customer due diligence, maintaining reporting entity roll, record keeping requirements, or in regard to AUSTRAC notice to a reporting entity in the reporting group, the lead entity is also taken to have proposed to provide, provided or commenced to provide to the same extent the designated services as proposed to provide, provided or commenced to provide by an ordinary member.

 

11.  Is the Lead Entity accountable?

A lead entity is also considered to have contravened a civil penalty provision to the same extent as the ordinary member of the group actually committing the contravention.

 

12.  How are the designated services provided by a member of a Reporting Group to another member treated?

Services provided amongst members of a business group are not considered designated services, and thus not subject to the AML/CTF regulations. However, this is not the case where services are provided among the members of a reporting group formed by election, or by the members of a business group to the members of a reporting group formed by election.

 

13.  Does each entity still require its own AML/CTF Compliance Officer (AMLCO)?

Yes, unless AUSTRAC permits otherwise.

Regulatory Resources:

AUSTRAC Guidance- click here.

3 December 2025

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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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