In 2024, the Australian Parliament passed the Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Amendment Bill, significantly expanding the country’s financial regulatory framework. The legislation will bring approximately 100,000 additional businesses under the supervision of AUSTRAC, Australia’s financial intelligence agency. These newly included organisations fall into the category of so-called Tranche 2 entities. Moody’s has put together a comprehensive guide outlining what these firms need to know by 2026.
At the heart of the reforms is a shift to a risk-based approach for KYC and compliance. This allows organisations to align risk assessments and protocols with their specific risk appetite.
By focusing on higher-risk areas, firms can allocate resources more effectively and strengthen defences against financial crime. Unlike blanket regulatory models, this approach supports proactive threat mitigation and greater adaptability to emerging risks and regulatory changes—potentially easing the overall compliance burden.
AUSTRAC outlines key milestones for implementation
AUSTRAC has set a clear rollout timeline. Final AML/CTF Rules are expected in August 2025, followed by Core Guidance in September. Sector-specific guidance for Tranche 2 entities will be released by January 2026. Updated obligations for Tranche 1 entities and virtual asset service providers are due by 31 March 2026. From 1 July 2026, AML/CTF requirements will apply to Tranche 2 entities. Throughout the year, AUSTRAC will continue refining guidance to support compliance. (Milestones current as of 5 May 2025.)
Aligning with international AML/CTF standards
The expanded regime aligns with global standards, particularly the FATF Recommendations, which classify DNFBPs—like casinos, real estate agents, precious metal dealers, legal professionals, and trust service providers—as higher-risk sectors. This alignment aims to increase transparency, prevent misuse of complex structures, and standardise expectations across jurisdictions. Countries with similar rules already in place include Singapore, Portugal, Luxembourg, and the UAE.
Preparing for compliance by July 2026
With just over a year until Tranche 2 takes effect, smaller firms may face resource constraints, while larger ones must ensure consistency across operations. Regardless of size, early preparation is essential to meet the enhanced obligations.
Technology-led compliance with AI and automation
To reduce compliance workload, many firms are adopting AI and machine learning to streamline AML processes. These tools help lower false positives and improve detection accuracy. Moody’s, for example, is working with firms to implement intelligent screening solutions that automate key compliance functions.
Integrated risk management for long-term resilience
Compliance under Tranche 2 will require more than technology—it demands cohesive strategies that integrate automation, risk alignment, and staff training. Moody’s Maxsight™ offers a unified risk platform with embedded global data to support seamless, policy-aligned onboarding and monitoring workflows.
Keep up with all the latest FinTech news here
Copyright © 2025 FinTech Global
Investors
The following investor(s) were tagged in this article.
