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FAQs: Transitional Rules to Defer Certain New AML/CTF obligations
- Feb 9
- 5 min read
AUSTRAC and Department of Home Affairs are working on Transitional Rules that will bring relief to the Reporting Entities implmenting new AML/CTF reforms. These rules will be notified, once finalised after a consultation round.
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a. Summary of key deferrals under the Transitional Rule for existing Reporting Entities
General Transitional Relief:
Initial CDD: 3-year transition period until 30 March 2029
Ongoing CDD: Must implement from 31 March 2026 (no deferral)
AML Compliance Officer notification: Extended to 30 May 2026
Existing REs already registered (DCE /Remitters):
No re-registration required - automatic rollover to VASP status
Registered remittance network providers retain existing registered status
Independent evaluation
First evaluation post-reforms will be suitably timelined to atleast three years after the commencement of the reforms, and will be staggered depending on the AUSTRAC account number.
Existing REs completing independent evaluation before reforms will be given suitable time for their next evaluation.
Travel Rule:
Applies from: 1 July 2026 for all VASPs
New IVTS reporting, replacing IFTI:
Deferred to 2029
Key Exclusion:
Transitional relief does not apply to newly regulated Tranche 2 businesses
Action Required:
Existing Reporting entities can use this to prepare for transition to the reformed obligations before the transitional rules are finalised.
Transitional Rules
b. What are Transitional Rules?
Transitional rules are temporary regulatory provisions that provide businesses – particularly Tranche 1, ie existing Reporting Entities (REs) with additional time and flexibility to adjust their business and processes to certain obligations, while still managing their ML/TF risk. It will allow additional time for these REs to develop systems and processes and to meet certain new obligations.
The transitional rules are made by the Minister for Home Affairs under Schedule 12 of the Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024.
c. Are the transitional rules in effect?
As per AUSTRAC’s note published here, the Department of Home Affairs will publish an exposure draft of the transitional rules, calling for comments. Following this process, the transitional rules will be notified.
Customer Due Diligence
d. Impact of transitional rules on the new obligations of initial customer due diligence?
For existing REs, the new initial CDD (ICDD) obligations are proposed to be deferred for three years from 31 March 2026 until 30 March 2029. Until then, these REs can continue with their current Applicable Client Identification Procedures (ACIP).
Tip: This means that the updated AML/CTF program must provide for these eventualities and procedures.
e. I have already made preparation to transition to ICDD from 31 March 2026. Do I necessarily have to continue with the old ACIP instead of transitioning to the new ICDD?
You have a choice –
- you can continue with the existing ACIP regime upto 30 March 2029; or
- fully transition to the new ICDD regime any time between 31 March 2026 to 30 March 2029.
You should ensure to follow only one set of provisions at a time fully - old ACIP or the new ICDD, and do not mix.
Thus, if you are following the ACIP, you cannot use the new deemed compliance provisions and the delayed CDD provisions until you have fully switched to the ICDD.
f. If I have not switched to the ICDD, does the provision like lower ICDD threshold – in the case of services of gambling – of $5,000 apply?
Yes, transitional rules do not defer this provision, and you must apply ACIP or ICDD to the newly lowered threshold.
g. Does the above deferment apply also for the Ongoing CDD (OCDD)?
No, REs must adopt the provisions of OCDD as per the new regime under Section 30 of the AML/CTF Act.
DCEs / VASPs
h. When do the new Virtual Asset Service Provider (VASP) obligations commence?
The VASP obligations are to be deferred to 1 July 2026, aligned with the date of Tranche 2 reforms. This means there is a 3-month extension proposed for the existing REs – being DCEs – from 31 March 2026 to the above date.
i. What is the deadline for VASP registration?
29 July 2026 - this is 28 days after the 1 July 2026 commencement of obligations.
j. Do existing Digital Currency Exchange (DCE) providers need to re-register?
No. Current DCE registrations are proposed to automatically roll over to the new VASP status without re-registration. The DCEs will become VASPs from 1 July 2026, instead of 31 March 2026 earlier.
This means their status will continue as ‘DCE’ until 30 June 2026.
Tranche 2 Reporting Entities
k. Does the transitional relief apply to Tranche 2 entities?
No. Newly regulated Tranche 2 businesses (real estate, lawyers, accountants, etc.) must comply with the reformed obligations from their notified commencement date without transitional relief.
This is except for the current DCEs - refer our VASP FAQs above.
AML/CTF Compliance Officer
l. What are the requirements for notifying AUSTRAC of my AML/CTF Compliance Officer (AMLCO)?
Under the reformed AML/CTF regime, all REs must designate an AML/CTF Compliance Officer and notify AUSTRAC of this appointment. An appointment or change in AMCLO is required to be notified to AUSTRAC within 14 days.
Tip: The AMLCO to be notified post-reforms must also meet the newly prescribed fit & proper norms.
m. Has there been transitional relief for the AMLCO notification?
Yes. In the case of existing REs, the transitional rules extend the time period for notifying of their AMLCO to AUSTRAC to 30 May 2026.
Initial Independent Evaluations post-reforms
The reforms prescribe the need to undertake an independent evaluation by the REs atleast once every three years.
n. Is there any transitional relief for independent evaluation?
Yes. The transitional rules will propose:
Extended period for first post-reform independent evaluation – For new REs (Tranche 2), the first evaluation will be not less than three years from the original commencement date, ie at least 1 July 2029. Further, the evaluation deadlines for these REs will be staggered at 6-month intervals from this date, depending on the AUSTRAC account number.
Staggered deadlines for independent evaluation for the existing REs will be prescribed depending on when they last completed an evaluation.
For existing REs, relief of extended period to be granted for their first post-reforms evaluation, if they have recently undertaken an independent review. This will depend on how recently they have undergone an independent review pre-reforms.
Travel Rule and Reporting
o. What is the deferral in travel rule?
The deferral will apply to value transfer services involving virtual assets (only). This means that both the existing and the newly regulated virtual asset service providers (including DCEs) must implement the ‘travel rule’ for virtual asset transfers from 1 July 2026.
p. Are there any reporting related deferrals?
Yes. International Value Transfer Reporting obligations (which will replaced IFTI obligations) are deferred until 2029. The existing international funds transfer reporting (IFTI) protocols continue until then.
Financial Advisers also providing Tranche 2 Designated Services
q. What about Financial advisers becoming tranche 2 entities?
Some current reporting entities have been eligible for pre-reform special AML/CTF programs. These reporting entities, if they also provide tranche 2 designated services, will apply AML/CTF obligations to the new tranche 2 designated services from 1 July 2026, consistent with other tranche 2 entities.
Final transitional rules
r. Where can I find the final transitional rules?
AUSTRAC and Department of Home Affairs intend to release the draft transitional rules with a brief consultation period. Monitor the AUSTRAC website and subscribe to their reform updates to track the release of final rules.
Resources -
Regulatory references:
AUSTRAC post on Transitional Rules – click here.
8 February 2026
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