Draft AML/CTF Transitional Rules unveiled for existing and new reporting entities

Existing reporting entities will be afforded a three-year initial CDD transition period (from 31 March 2026 to 30 March 2029), which includes existing digital currency exchange providers. This relief will exclude ongoing CDD. 

Existing reporting entities must comply in full with a single method, meaning:

• full compliance with pre-reform applicable customer identification procedures for all new customers and all customer types until the date the entity elects to transition to the reformed initial CDD obligations; and
• full compliance with the new section 28 initial CDD obligations for all new customers and all customer types from the date the entity elects to transition.

For the avoidance of doubt, the transitional relief will extend to both the requirement to have in place AML/CTF policies relating to initial CDD, as well as the requirement to conduct initial CDD.

The AML/CTF reforms introduced regulation for a number of new VASPs. The transitional rules will defer obligations for these new VASPs until 1 July 2026, in line with the tranche 2 reforms.

• The deferral will apply to value transfer services involving virtual assets (only). This means both existing and newly regulated VASPs that are regulated from 31 March 2026 must implement the ‘travel rule’ for virtual asset transfers from 1 July 2026.
• The reporting obligation for international value transfer services will also be deferred until 2029. Existing international funds transfer reporting obligations will continue to apply until then.

The AML/CTF reforms will not affect the registration status of the following persons:

• registered remittance network provider; or
• registered independent remittance dealer; or
• registered remittance affiliate of a registered remittance network provider.

Otherwise, a person who is a registered digital currency exchange provider before 31 March 2026 will not need to register as a VASP.

Financial advisers and wealth groups who will on and from 31 March 2026 be providing designated services, under both item 54 of table 1 (arrangers) and table 6 (professional services) of section 6 of the AML/CTF Act, will not need to comply with the reforms until 1 July 2026.   

Such entities are currently eligible for ‘special’ AML/CTF programs on the basis that the only designated services they provide at present are under item 54.

Existing reporting entities

Where an independent review of Part A of its AML/CTF program was carried out on or before 30 March 2026, it will need to carry out the first independent evaluation of its new AML/CTF program before the later of four years from the date that the last independent review occurred and 31 March 2027.

New reporting entities

To reflect challenges regarding the availability of suitably qualified persons and entities to perform independent evaluations, AUSTRAC is proposing to stagger the deadline for the first independent evaluation cycle for new reporting entities.  The staggered deadlines will be based on the relevant entity’s enrolment identifier, however in any case will not be before 1 July 2029.