Australia Braces for Largest AML/CTF Overhaul in Two Decades

AUSTRAC 2026 Reforms: On the eve of March 31, 2026, Australia’s financial and professional sectors are preparing for the commencement of the most significant regulatory shift in the nation’s history of combating financial crime.

31 March 2026 represents the official implementation of the major schedules of the Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024, a reform package designed to modernise Australia’s defences against sophisticated illicit financing”Tranche 2″ Extension

The AUSTRAC 2026 Reforms are the long-awaited extension of the AML/CTF regime to additional services identified by the Financial Action Task Force (FATF) as posing high risks for money laundering and terrorism financing. This expansion brings previously unregulated sectors into the AUSTRAC fold, requiring them to comply with strict identification, reporting, and record-keeping obligations.

This move is intended to close persistent gaps in Australia’s regulatory framework that have historically been exploited by criminal syndicates to hide the proceeds of crime.

Reframed Program Obligations

A fundamental change is the reframing and clarification of AML/CTF programs. Under the old regime, Part 7 governed these programs; however, as of March 31, 2026, the traditional Part 7 is repealed and replaced by a modernised structure.

Reporting entities must now adhere to these reframed obligations, which focus on more effectively identifying, mitigating, and managing risks. The reforms also update customer due diligence (CDD) requirements to reflect modern business structures and evolving illicit financing methodologies.

Expanded Powers for AUSTRAC

The reform grants the Australian Transaction Reports and Analysis Centre (AUSTRAC) enhanced oversight and enforcement capabilities. New provisions enable AUSTRAC to:

Require the disclosure of information more broadly to support efforts against money laundering and serious crimes.

The AUSTRAC 2026 Reforms mark the end of an era with the repeal of the Financial Transaction Reports Act 1988. This streamlines the legal landscape, consolidating Australia’s financial intelligence requirements under a single, contemporary legislative framework.

Compliance and Penalties

As the new rules take effect, reporting entities face stringent penalties for non-compliance. Civil penalty provisions apply to various failures, including neglecting to carry out customer identification procedures or failing to report threshold transactions. For bodies corporate, the Federal Court can order pecuniary penalties of up to 100,000 penalty units.

AUSTRAC 2026 Reforms: A Risk-Based Future

In performing these expanded functions, the AUSTRAC CEO is mandated to have regard to the integrity of the financial system, the desirability of adopting a risk-based approach, and the need to avoid imposing unnecessary administrative burdens on reporting entities.

Thousands of Australian businesses will transition into a new era of transparency and accountability, aimed at ensuring Australia remains a “hostile environment” for serious financial crime