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AML/CTF Hub
Your hub for the latest updates and obligations relating to the AML/CTF reforms.
Significant reforms – what are they?
There are significant changes to the AML/CTF regime that will impact all financial advisers and licensees, commencing 31 March 2026.
- Harm prevention approach to tipping off offence (commenced 31 March 2025)
- New AML/CTF program requirements – (no more part A and part B – if you provide only item 54 services, you will be exempt from many of the governance obligations)
- Reporting groups replace designated business groups
- Customer due diligence requirements changes (if you provide only item 54 services, you will be exempt from ongoing CDD obligations)
- New reportable details for suspicious matter reports
Act now to prepare for AML/CTF reforms
You will not meet your obligations in the new regime if you just do what product providers ask you to do. Your AML/CTF policies must match the ML/TF risk of your business.
Start with the below simple steps:
| Advisers and Corporate Authorised Representatives |
|---|
1. Do you provide tranche 2 services?
- Speak to your licensee about the services you provide, especially if you prove a tranche 2 service
2. Conduct a risk assessment for your business
3. Build staff awareness
- Build staff awareness of ML/TF risk indicators and controls to minimise the risk for your business
4. Read Customer Due Diligence changes
5. Understand your SMR obligations and the tipping off guidance
6. Speak to your licensee
- Speak to your licensee to ensure they understand your business’ ML/TF risk and that their policies help mitigate these to protect your business, staff and clients
| Australian Financial Services Licencees |
|---|
1. Read AUSTRAC's implementation expectations
2. Seek guidance
Seek qualified AML/CTF guidance from a compliance specialist or lawyer
3. Create an implementation plan
To include how you will embed the reforms into your business while maintaining current ML/TF controls and update enrolment information by 31 March 2026
4. Speak to your authorise representatives
- About the AML/CTF reforms
- About the service provided under your licence – do they provide only item 54 services or a tranche 2 service as well?
- And build AML/CTF awareness in your business to aid effective implementation
5. Review your ML/TF risk assessment
Review your ML/TF risk assessment; and review AUSTRAC’s risk assessment information:
6. Update your ML/TF risk assessment
Update based on these:
- AML/CTF program, AML/CTF policy, AML/CTF systems and controls
- SMR obligations and the beefed up tipping off guidance
7. Review your reliance arrangements
- Review your reliance arrangements with product providers
Act now to prepare for AML/CTF reforms
You will not meet your obligations in the new regime if you just do what product providers ask you to do. Your AML/CTF policies must match the ML/TF risk of your business.
Act now:
- Assess the services you provide your clients – are they item 54 only or new tranche 2 designated services?
- Speak to your licensee about the AML/CTF reforms
- Access AUSTRAC guidance and education tools – practical steps and considerations
- Determine who you are getting AML/CTF guidance from – compliance specialist/lawyer
- You must develop and document implementation plans
- AFSLs must update enrolment information by 31 March 2026
- Build AML/CTF awareness and understanding in your business to help with effective implementation
- Review your ML/TF risk assessment
- Assess your AML/CTF programs – what changes to processes, systems and controls are required?
- Update your AML/CTF systems and controls now so they are effective
- Manage your ML/TF risks to ensure effective controls continue while you are embedding the changes
- Implement changes to your business or be making sustained progress against documented implementation plan to control ML/TF risk
- Embed in BAU – make AML/CTF part of the culture, risk management and BAU activity of your business
- Read the changes to the CDD obligations, including customer risk assessments
- Stay informed by subscribing to AUSTRAC updates
- Read the indicators of suspicious activity for the financial planning sector
Commencement
- 31 March 2026 - all existing reporting entities, including advice AFSLs
- 1 July 2026 - reforms will apply to new tranche 2 designated services, including if provided by advice AFSLs
COMING SOON – FAAA SafeID is our digital solution for advisers looking for a safe, secure and fast way to conduct client identification.
FAAA SafeID offers significant benefits for members and has been developed to be an end-to-end client identification and verification platform. It has the ability to conduct immediate ID verification and PEP and sanctions checks, and also provides a report that product providers can use to rely on the result of these checks.
If you’d like to know more and have not already registered for updates, express your interest below.
Industry standardised CDD forms
We have also engaged with the Financial Services Council (FSC) on updating the joint FAAA/FSC Guidance Note and Client Identification forms. These 13 customer identification forms (for various customer types) help financial advisers and product issuers to standardised and manage their AML/CTF customer identification obligations.
For more background
Please note, these webinars may include references to some obligations that ‘entities who provide only item 54 services’ are exempt from.
Commencement
- From 31 March 2026, there will be new AUSTRAC rules and guidance affecting all existing reporting entities, including AFSLs
- From 1 July 2026, the new regime will apply to new tranche 2 designated services
For more background visit:
What is the purpose of the AML/CTF regime?
The AML (Anti-Money Laundering) and CTF (Counter-Terrorism Financing) regime serves to prevent criminals and terrorists from abusing the financial system by identifying and stopping currency flows linked to serious crime and terrorism, making society, and your business safer. AUSTRAC are the regulator of the AML/CTF regime in Australia.
Obligations for financial advisers - Item 54 reporting entities
The provision of financial advice is considered an item 54 designated service under the AML/CTF Act. It is “making arrangements for clients to receive other designated services from other reporting entities”, such as product providers. As arranging for services from other providers is considered a low AML/CTF risk activity, item 54 reporting entities (AFSLs) are exempt from a few of the obligations in the AML/CTF Act.
Tranche 2 services
Following extensive advocacy from the FAAA, AUSTRAC released regulatory guidance clarifying the scope of the new tranche 2 services, clearly differentiating financial advice from the newly regulated professional services – a shift that will maintain critical exemptions for advisers.
Significant reforms – what are they?
There are significant changes to the AML/CTF regime that will impact all financial advisers and licensees over the next year.
- From March 2026, there will be new AUSTRAC rules and guidance affecting all existing reporting entities, including AFSLs
- From 1 July 2026, the new regime will apply to new tranche 2 designated services
AUSTRAC has released its regulatory expectations for implementing the AML/CTF reforms, providing flexibility given the tight timeframe to meet the new obligations.
To allow each business to meet their AML/CTF obligations in a way that best facilitates the risk assessment of their business, the reforms will make the requirements less prescriptive, more outcomes focused, and more flexible.
For the new laws visit:
AUSTRAC regulatory guidance to be released early October 2025.
For more background visit:
Please note, these webinars may include references to some obligations that ‘entities who provide only item 54 services’ are exempt from.
Do you provide the new ‘tranche 2 designated services’?
The reforms introduce new tranche of designated services that include services typically provided by lawyers, accountants and real estate agents. These new definitions are based on the services provided, not the professional who provides them.
IMPORTANT: If the additional services you offer clients fall within the definition of another designated service, you will lose the item 54 exemptions and be required to meet the full set of obligations.
It will be a business decision for advisers and licensees to determine whether to provide item 54 services only and utilise the exemptions; or provide additional services to clients and comply with the full range of AML/CTF obligations, including governance and controls (ie. governing body and compliance officer), compliance and reporting, and ongoing Customer Due Diligence (CDD).
What should you do to prepare for the reforms’?
You may not meet your obligations in the new regime if you just do what product providers ask you to do. Your AML/CTF policies must match the ML/TF risk of your business.
- Incorporate the reforms into your business as a risk management tool, like cyber security risk or business interruption risk.
- Embed in BAU – make AML/CTF part of the culture and BAU activity of your business.
- Prepare early – take time now to assess whether the services you provide your clients are likely to be captured by the new tranche 2 designated services and understand the additional governance arrangements you must put in place in your business if you do
- Speak to your licensee about the AML/CTF reforms
- Read the changes to the CDD obligations, including customer risk assessments.
- Stay informed by subscribing to AUSTRAC updates
The FAAA’s AML/CTF advocacy efforts
The FAAA has a member working group has worked tirelessly with us for nearly two years and has been instrumental in informing the policy positions the FAAA have put to AUSTRAC on the critical issues impacting item 54 reporting entities, including the scope of the new tranche 2 designated services.
Following extensive advocacy from the FAAA, AUSTRAC released regulatory guidance clarifying the scope of the new tranche 2 services, clearly differentiating financial advice from the newly regulated professional services – a shift that will maintain critical exemptions for advisers.
We also gained confirmation from ASIC that AML/CTF training can count towards an adviser’s CPD Plan under the regulatory, compliance and consumer protection category, and we are working with AUSTRAC to ensure there is CPD assessed material for our members.
The FAAA’s AML/CTF advocacy efforts
Priorities
The FAAA’s priorities are:
- to maintain the item 54 exemptions that apply to AFSL holders
- to ensure financial advisers are not unreasonably captured by tranche 2 designated services definitions
Informed by members
The FAAA has a member working group that commenced well over a year ago and meets regularly to discuss draft Rules and guidance released by the government and AUSTRAC. This working group includes practitioners, small licensees, a compliance firm that services medium and small licensees, as well as AML/CTF experts from middle and large advice licensees. This group has been instrumental in informing the policy positions the FAAA have put to AUSTRAC on the critical issues impacting item 54 reporting entities.
Joint advocacy
The FAAA and SMSF Association have been working very closely on the AML/CTF reforms since the reform activity commenced. We have provided joint papers to AUSTRAC specifically on the scope of the tranche 2 services (with our working group members providing direct input into the drafting of these documents) and improving the operation of reliance arrangements.
Tranche 2 services
The ‘scope’ of the tranche 2 services will determine whether the incidental services financial advisers may offer clients will fall under the new definitions. This is a priority for the FAAA as this may impact the item 54 exemptions of some AFSLs and advisers.
Guidance and education
The FAAA will hold webinars on the application of the AML/CTF for members, as soon as we have certainty as to the scope of the tranche 2 services. We will also hold an AML/CTF session at the FAAA Congress. We have engaged with AUSTRAC to ensure the tools and materials they are developing will help members understand how the new obligations will apply to them.
Continued professional development
We have gained confirmation from ASIC that AML/CTF training can count towards an adviser’s CPD Plan under the regulatory, compliance and consumer protection category, and we are working with AUSTRAC to ensure there is CPD assessed material for our members.
FAAA submissions in relation to the AML/CTF reforms
What are the current AML/CTF item 54 obligations?
All Financial Advice AFS Licensees must enrol as a reporting entity with AUSTRAC:
Under the item 54 exemptions, AFS licensees are currently required to adopt and implement throughout their business the following aspects of an AML/CTF program:
See also:
While the above is an old report if may help financial advisers and AFSLs understand and identify potential ML/TF risks in their business and when servicing clients.
IMPORTANT: Advisers should ensure they understand their licensee's AML/CTF policy
Industry standardised CDD forms
The Financial Services Council (FSC) and the FAAA previously developed a Guidance Note and 13 standardised customer identification forms (for various customer types) to help financial advisers and product issuers manage their AML/CTF customer identification obligations. Advisers are likely to be familiar with the FSC/FAAA Client Identification forms where they record how they have identified a client.
FAAA SafeID
In addition to supporting the FSC/FAAA client identification forms, the FAAA will be launching a digital client identification and verification tool called FAAA SafeID. We are working with product providers to accept this new form of identification to make the process easier and safer for advisers and clients. FAAA SafeID will be a fast, convenient, digital tool for identifying and verifying your clients while protecting their data.
Get in touch...
We are always keen to hear your valuable feedback and suggestions. Please let us know if there are any policy issues or concerns that affect you.
