Transitional Rules update announced for Australia’s AML/CTF reforms – key guidance for reporting entities
What do reporting entities need to know?
- The Department of Home Affairs and AUSTRAC have announced they intend to release transitional rules to support a smooth implementation of Australia’s anti-money laundering and counter-terrorism financing ( AML/CTF ) reforms.
- The key transitional relief includes initial customer due diligence ( CDD ), notifying AUSTRAC of their AML/CTF compliance officer, a staggered deadline for independent evaluations for new reporting entities, registration rollover, and deferred AML/CTF obligations for new virtual asset service provider ( VASP ) services.
- AUSTRAC intends to release a draft copy of the transitional rules in the coming weeks and will allow for a (brief) consultation period with industry.
- For tailored advice or assistance with navigating the transitional relief or the upcoming AML/CTF reforms reach out to our specialist AML/CTF team .
Background
Ahead of the upcoming reforms to Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) regime that begin 31 March 2026 for existing reporting entities (and from 1 July 2026 for newly regulated entities), the Department of Home Affairs and AUSTRAC have announced an intention to release transitional rules that it considers will ‘support a smooth implementation’ of the AML/CTF reforms. AUSTRAC’s media release is available on their website.
The AML/CTF reforms involve substantial amendments to the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (amended by the AML/CTF Amendment Bill 2024) and the introduction of the Anti-Money Laundering and Counter-Terrorism Financing Rules 2025 to replace the Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No.1).
Transitional relief
In summary, the transitional relief will be as follows:
| Item | Proposed relief |
|---|---|
| Initial CDD | A three-year initial CDD transition period for existing reporting entities from 31 March 2026 to 30 March 2029 which includes existing digital currency exchange providers (soon to be VASPs). This relief will exclude ongoing CDD. AUSTRAC’s guidance sets out that reporting entities must comply in full with the single method being used, which means:
|
| AML/CTF compliance officer notification | Existing reporting entities will have until 30 May 2026 to notify AUSTRAC of their AML/CTF compliance officer. Newly regulated businesses (tranche 2) and newly regulated VASPs that are regulated from 31 March 2026 [1] will have until 29 July 2026 to notify AUSTRAC of their AML/CTF compliance officer. |
| Staggered deadline for independent evaluations for 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. This deadline will not be less than three years from the original commencement date (ie not before 1 July 2029). Further evaluation deadlines will be staggered at six-month intervals from this date, depending on the AUSTRAC account number. |
| Registration rollover | The transitional rules will confirm that the AML/CTF reforms:
|
| Deferred AML/CTF obligations for new VASP services | The AML/CTF reforms introduced regulation for a number of new virtual asset services. The transitional rules will defer obligations for these new virtual asset services until 1 July 2026, in line with the tranche 2 reforms.
|
| Financial advisers becoming tranche 2 entities | Some current reporting entities have been eligible for pre-reform special AML/CTF programs. These reporting entities will not need to apply AML/CTF obligations to the new tranche 2 designated services until 1 July 2026, consistent with other tranche 2 entities. |
What’s next?
AUSTRAC intends to release a draft copy of the transitional rules in the coming weeks and will allow for a (brief) consultation period with industry. Enquiries about the relief can also be made to AUSTRAC by contacting the AUSTRAC and the Department of Home Affairs.
For both new and existing reporting entities seeking tailored advice or assistance with navigating the transitional relief or the upcoming AML/CTF reforms we provide comprehensive end-to-end support at every stage to ensure your practices are compliant and effective. Please reach out to a member of our specialist AML/CTF team or visit our AML/CTF guide for more information.
[1] This will include entities that engage in practices, including exchanging virtual assets for money (and vice versa), or make arrangements for this type of exchange; exchange virtual assets for virtual assets (or make arrangements for this type of exchange); provide a virtual asset safekeeping service; accept instructions to transfer virtual assets on customers’ behalf or make transferred virtual assets available to customers; or provide financial services in connection with the offer or sale of a virtual asset, where the business is participating in that offer or sale.
[2] See footnote 1.
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