AML/CTF Reforms Have Commenced — Here’s What You Need to Know
If you have engaged a lawyer, accountant, or conveyancer in Australia before, you will likely already be familiar with providing identification as part of standard practice, such as a driver’s licence or passport. From 1 July 2026, that process has become more rigorous, not only at Southern Waters Legal, but across the legal profession in Australia.
The change comes from amendments to the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth), commonly known as the AML/CTF Act, administered by AUSTRAC, Australia’s financial intelligence and regulatory agency. For the first time, law firms are being brought into a framework that banks, casinos and other financial institutions have operated under for nearly two decades. So what is actually changing, and what could this mean for you?
What’s Actually Changing?
Historically, AML/CTF obligations applied mainly to what’s known as “tranche one” entities, such as banks, remittance providers, and gambling businesses. The latest reforms extend these obligations to “tranche two” entities: the legal, accounting, real estate, and trust and company service sectors. This is sometimes referred to as closing the “gatekeeper gap,” recognising that professional advisers can, often unwittingly, be used as a route to disguise the origin of illicit funds. It’s Commonwealth legislation, so it applies to law firms right across Australia, not just in one state.
The obligations only apply to certain types of legal work known as “designated services,” for example, matters involving property transactions, management of client funds or trust accounts, and some business or company transactions. Not every matter will be affected.
What This Means If You Have a Matter With Us
For most clients, the practical impact is a few extra steps at the start of, or during, a matter, not a fundamentally different experience.
1. More thorough identity verification
Where we provide a designated service, we’re now required to collect and verify your identity before we can act for you, or continue acting for you. This is sometimes called Customer Due Diligence (CDD). It’s a legal obligation for us, not a reflection of any concern about you personally; every law firm doing this type of work must comply.
2. Identifying who’s behind a company or trust
If we’re acting for a company, trust, or other entity, we may also need to identify and verify the individuals who ultimately own or control it, commonly called beneficial owners. This typically includes:
- individuals who hold 25% or more of the interests in the entity
- directors, trustees, or senior officers
- other individuals who exercise effective control
3. Ongoing obligations throughout your matter
Unlike a one-off identity check at the start of a matter, the Act may require us to update your information if circumstances change during your matter. Where required, we may ask for updated information or documentation as things progress.
How the Verification Process Works
To keep this as smooth and secure as possible, we use a platform called Legl, a secure, purpose-built identity verification service used by law firms to confirm client identity electronically. You won’t need to attend our office in person or post physical documents.
If your matter is affected, you’ll typically receive a link by email or text message, and the process usually takes just a few minutes. It may involve:
- Providing proof of identity (such as a driver’s licence or passport)
- Answering some questions about the purpose of your matter and the source of funds involved
- Completing a short online verification step
Is there a cost?
Where these checks are required, there is a fee associated with the verification process. This varies depending on the type and complexity of the check, and it will be clearly itemised as part of your matter costs where it applies.
What Do You Need to Do Now?
Nothing at this stage. If your current or future matter is affected, your solicitor or one of our team members will contact you directly to explain what’s needed and guide you through the process. We’re committed to only requesting the information required by law, and any information you provide is handled securely in line with our Privacy Policy and our legal obligations.
These changes reflect new AUSTRAC obligations for law firms across Australia — you can read more directly from the regulator on the AUSTRAC website. If you have any questions about how these changes may affect your matter, please contact our team. We are happy to help.
