With the second exposure draft of the AML/CTF Rules closing for public consultation on 27 June 2025, Australia’s reform program has entered its critical phase. AUSTRAC is now reviewing submissions, with final Rules anticipated in August. This marks a decisive milestone in Australia’s effort to modernise its financial crime framework and prepare for the Financial Action Task Force (FATF) mutual evaluation in 2026.
AUSTRAC’s 2025 Timeline: From Drafts to Enforcement
Following significant legislative groundwork laid by the AML/CTF Amendment Act 2024, the remainder of 2025 is set to bring rapid changes across guidance, governance, and enforcement expectations:
- May–July: Targeted consultation on core guidance
- October: Finalisation of core AML/CTF guidance
- October–November: Sector-specific guidance consultation
- December: Finalisation of sector-specific guidance
This sequence reflects the regulatory urgency, and the strategic imperative, for all reporting entities, especially those under Tranche 1 and soon-to-be-regulated Tranche 2 sectors, to move decisively from planning to implementation.
As AUSTRAC has signalled: compliance must reflect genuine risk reduction, not just procedural box-ticking. The reforms demand active risk management, operational readiness, and ongoing auditability.
What’s Changing – and Who It Impacts
Tranche 1 – Strengthened Expectations for Financial Entities
Key dates:
- Tipping-off offence changes in effect from 31 March 2025
- Full program and compliance required by 31 March 2026
Notable updates include:
- A risk-based AML/CTF program replacing the rigid Part A/B structure
- Mandatory governance roles: board accountability and designated AML compliance officer
- Overhauled reporting duties and due diligence requirements
Tranche 2 – A 70,000-Entity Uplift for Australia’s AML Net
From July 2026, Tranche 2 obligations will apply to certain services provided by:
- Lawyers, accountants, real estate agents, conveyancers
- Trust and company service providers
- Dealers in precious metals and stones
These professions must:
- Enrol with AUSTRAC by 31 March 2026
- Begin full compliance from 1 July 2026
Reform Urgency: FATF Evaluation on the Horizon
Australia’s reform roadmap is not optional, it’s instrumental to avoiding a negative outcome in the upcoming FATF mutual evaluation in 2026.
AUSTRAC has been clear: avoiding grey-listing is critical. Failing the evaluation could:
- Diminish Australia’s standing in global financial markets
- Increase cross-border friction for financial transactions
- Risk a 3–7% GDP impact due to financial system disruption
Where LAB Group Fits: Transforming Compliance into Competitive Advantage
As a trusted provider to regulated institutions across Australia, LAB Group is already the AML compliance infrastructure for half of the world’s top 10 asset managers, and our solutions are purpose-built for the realities of Tranche 1 and Tranche 2.
- Tranche 1 Compliance, Delivered at Scale
Our platform is already aligned with Tranche 1 obligations:
- Risk-Based Onboarding & Verification
LAB Engage supports dynamic onboarding that adjusts in real-time based on client risk level. Combined with LAB Verify’s multi-source verification and UBO automation, this ensures tailored compliance at first touch. - Board-Level Oversight & AML Governance
LAB Portal provides auditability, override tracking, escalation workflows, and full AML case management with persona-based access controls, core to the new governance requirements. - Real-Time Screening & Ongoing Monitoring
PEPs, sanctions, adverse media, and document fraud checks are orchestrated via LAB Verify in real-time, at the point of onboarding, and integrated across all client touchpoints. - Regulatory Reporting Readiness
Built-in audit trails and reporting capabilities are designed to support AUSTRAC audit and reporting needs with minimum manual intervention.
- Tranche 2 Scalability – Built for SMEs, Powered by Expertise
As Tranche 2 entities come under AUSTRAC regulation for the first time, LAB offers a modular, scalable, and cost-effective solution tailored to their specific needs:
- Digitised Onboarding & Verification
Real estate agents, law firms, and accounting practices can eliminate paper-based processes with LAB Engage and LAB Verify, replacing disjointed client handling with a secure, unified platform for seamless, low touch onboarding. - Enhanced Due Diligence for Complex Structures
LAB’s UBO tracing, ASIC integration, and layered entity verification workflows simplify due diligence for trusts, SMSFs, and foreign buyers. - Turnkey AML Capability
From day one, Tranche 2 entities can meet AML/CTF requirements including identity verification, record-keeping, risk scoring, and ongoing due diligence. - Advisory & Managed Service Support
LAB Service provides hands-on support for firms without internal compliance resources, from exception handling to AML remediation workflows, backed by LAB’s deep expertise in onboarding best practices and regulatory alignment.
What Should Firms Do Now?
With Rules finalisation expected in August, and sector guidance by December, the timeline to be operationally compliant is narrow. We recommend:
- Audit your current state: Are your onboarding and KYC workflows digital, risk-aligned, and audit-ready?
- Assess your governance: Do you have systems in place to provide board-level visibility and compliance controls?
- Engage a trusted provider: LAB Group delivers proven real-time onboarding, verification, and AML orchestration – deployed rapidly and built for Australia’s evolving framework.
The LAB Group Commitment
As AUSTRAC drives urgency in the AML/CTF reform agenda, LAB is committed to enabling firms, large and small, to not just comply, but thrive. Our mission is to simplify and automate compliance for every regulated entity.
We are your partner in real compliance, not just the appearance of it.
“LAB Group is the compliance infrastructure for Australia’s regulated economy – purpose-built for Tranche 1 mastery and engineered to scale into Tranche 2 and beyond.” Nick Boudrie, CEO and co-founder.
