What Is Tranche 2? A Plain-English Guide for Australian Businesses

8 min read · General information, not legal advice · Updated 2026-06-12

If you run a real estate agency, deal in precious metals or stones, or work as a lawyer, conveyancer, accountant or trust and company service provider, you have probably heard the phrase "Tranche 2" and wondered whether it actually lands on your desk. The honest answer for many of these businesses is: yes, it might. And the decision in front of you is not whether to read another headline, but whether to start preparing now or wait and scramble later.

This guide explains, in plain English, what Tranche 2 is, why it exists, who it touches, and the practical steps to take before the new obligations commence on 1 July 2026. It is general information to help you work out whether you are likely to be caught and what "getting ready" looks like. It is not legal advice, and your exact obligations depend on the specific designated services you provide.

What is Tranche 2, in plain English?

Tranche 2 refers to reforms under the Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024. These reforms extend Australia's existing AML/CTF regime to cover new sectors that, until now, have largely sat outside it. Businesses brought into the regime by these reforms are often called tranche 2 entities.

Australia's AML/CTF rules have applied to banks, casinos and remittance providers for years. The "tranche 2" sectors are the next wave: professional and high-value service providers who can, often unknowingly, be used to move or hide the proceeds of crime. Extending the regime to these sectors closes a long-standing gap and brings Australia closer into line with international standards.

The regulator overseeing all of this is AUSTRAC (the Australian Transaction Reports and Analysis Centre). Enrolment and reporting are done through AUSTRAC Online. The new obligations for tranche 2 entities are due to commence on 1 July 2026.

Why does Tranche 2 exist?

Money laundering rarely happens in a vacuum. Criminals need legitimate-looking ways to buy assets, settle property deals, set up companies and convert cash into something harder to trace. The professions and businesses that handle those transactions sit at exactly the points where dirty money tries to enter the legitimate economy.

The aim of the reform is not to treat these businesses as suspects. It is to give them the tools and the obligation to spot and report activity that does not add up, the same way banks already do. In practice that means knowing who your customer really is, understanding the risks in your particular business, and telling AUSTRAC when something looks wrong.

Who and what does Tranche 2 apply to?

Tranche 2 brings several new sectors into the AML/CTF regime. You are most likely to be affected if you operate in one of these areas:

• Real estate professionals involved in buying and selling property.
• Dealers in precious metals and precious stones, such as bullion and high-value jewellery dealers.
• Certain professional service providers, including lawyers, conveyancers, accountants, and trust and company service providers.

The crucial point is that these obligations are triggered when you provide specified designated services, not simply because of your job title. A lawyer drafting a will, for example, is in a different position from a lawyer helping a client buy real estate or set up a company structure. The same profession can be in scope for some work and out of scope for other work.

This is why a one-line answer to "does this apply to me?" is impossible. You need to look at the actual services you provide against the designated services list. Because some of the finer detail is still being settled, treat the specifics as something to confirm as the AUSTRAC rules are finalised, and check directly with AUSTRAC or a qualified adviser for your situation.

What obligations come with being a reporting entity?

If you are caught by Tranche 2, you become a reporting entity with a core set of obligations. These are well established for the sectors already in the regime, so they are a reliable guide to what is coming:

• Enrol with AUSTRAC through AUSTRAC Online.
• Develop and maintain an AML/CTF program — this includes governance, a documented ML/TF risk assessment, and the policies, procedures, systems and controls that manage those risks.
• Conduct customer due diligence (CDD/KYC) — verify who your customers are, including ongoing CDD and transaction monitoring over the life of the relationship.
• Report suspicious matters by lodging suspicious matter reports (SMRs) when you have reasonable grounds for suspicion.
• Report threshold transactions — physical currency of AUD 10,000 or more is reported as a threshold transaction report (TTR).
• Keep records, generally for seven years.
• Appoint an AML/CTF compliance officer (AMLCO) to oversee your obligations.

Failing to meet these obligations can attract significant civil and criminal penalties, so it is worth getting the foundations right rather than treating compliance as a box to tick at the last minute.

What steps should you take before 1 July 2026?

You do not need to do everything at once, but the businesses that cope best are the ones that start early and work through it methodically. Use this checklist as a practical starting point:

• Confirm whether you are in scope. Map the services you actually provide against the designated services that trigger obligations.
• Nominate your AML/CTF compliance officer (AMLCO). Decide who will own this internally before you need them.
• Run a money laundering and terrorism financing (ML/TF) risk assessment. Understand where your real exposure sits — your customers, services, channels and geographies.
• Draft your AML/CTF program. Build the governance, policies, procedures and controls that match your risk assessment.
• Set up customer due diligence processes. Decide how you will verify identity, handle higher-risk customers, and monitor transactions on an ongoing basis.
• Plan your reporting workflow. Know how and when you will lodge SMRs and TTRs through AUSTRAC Online.
• Sort out record-keeping. Make sure you can store and retrieve the right records for around seven years.
• Train your team. Staff need to recognise red flags and know what to do when they see them.
• Diarise enrolment. Be ready to enrol with AUSTRAC in line with the commencement timeline.

Working through these steps now turns a hard deadline into a manageable project, and gives you time to fix gaps before they become problems.

Common mistakes to avoid

The same avoidable errors come up again and again when businesses approach a new compliance regime. Watch out for these:

• Assuming it does not apply to you. Many in-scope businesses dismiss Tranche 2 because it sounds like it is only for banks. Check the designated services rather than guessing.
• Leaving it until the last minute. A credible AML/CTF program and CDD process take time to build and embed. A rushed program tends to look like one.
• Treating the program as a static document. Your AML/CTF program is meant to be lived, reviewed and updated — not written once and filed away.
• Skipping the risk assessment. Generic, copy-pasted policies that ignore your actual risks are a classic weak point. The risk assessment should drive the program, not follow it.
• Forgetting ongoing CDD and monitoring. Verifying a customer once at onboarding is not enough; obligations continue throughout the relationship.
• Under-resourcing the AMLCO role. Appointing someone in name only, without time or authority, sets that person up to fail.

How an audit-ready template kit can save time

Much of the heavy lifting in getting ready — the AML/CTF program structure, the risk assessment framework, CDD procedures, registers and reporting workflows — follows a consistent shape across similar businesses. Building all of that from a blank page is slow and easy to get wrong.

A well-structured, audit-ready template kit gives you a tested starting point: editable documents you can tailor to your services and risk profile, rather than reinventing the format. It will not make the decisions for you, and it is no substitute for understanding your own obligations, but it can take weeks off the build and reduce the risk of leaving something important out. Whatever you use, the end result still needs to reflect your business and be confirmed against the finalised AUSTRAC rules.

A note on legal advice

This article is general information only and is not legal advice. Whether Tranche 2 applies to you, and exactly which obligations you have, depends on the specific designated services you provide and on the rules as they are finalised. Always confirm your position with AUSTRAC (austrac.gov.au) or a qualified adviser before relying on any general guidance.