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 towards a risk-based approach to know your customer (KYC) and compliance obligations.
This model allows organisations to tailor risk assessments and compliance protocols to their specific risk appetites.
By focusing more intensely on higher-risk areas, firms can deploy resources more efficiently and strengthen their defences against financial crime. Unlike compliance-based models that require blanket adherence to regulation, the risk-based strategy gives firms room to proactively identify and mitigate potential threats.
This flexible framework is designed to help entities adapt more effectively to emerging risks and evolving regulatory requirements, potentially reducing the overall burden of compliance.
AUSTRAC outlines key milestones for implementation
AUSTRAC has outlined a clear timeline for rolling out the new regulatory requirements. In August 2025, the AML/CTF Rules are expected to be finalised, followed by the Core Guidance in September.
By January 2026, AUSTRAC will release sector-specific guidance for Tranche 2 entities.
Tranche 1 reporting entities and virtual asset service providers will see updated obligations finalised by 31 March 2026.
From 1 July 2026, AML/CTF requirements will officially apply to Tranche 2 entities. Throughout 2026, AUSTRAC plans to enhance and refine sector-specific guidance to support compliance efforts. These milestones are current as of 5 May 2025, with updates available on AUSTRAC’s official site.
Aligning with international AML/CTF standards
The expanded regulation is closely aligned with global standards, particularly the Financial Action Task Force (FATF) Recommendations, which identify Designated Non-Financial Businesses and Professions (DNFBPs) as sectors with elevated money laundering risks.
These include casinos, real estate agents, dealers in precious metals and stones, legal professionals, and trust service providers.
This alignment is intended to increase transparency, prevent the misuse of complex corporate structures, and standardise regulatory expectations across borders. Other jurisdictions that have already extended AML/CTF regulations to DNFBPs include Singapore, Portugal, Luxembourg, and the UAE.
Preparing for compliance by July 2026
With just over a year until Tranche 2 obligations come into force, businesses—particularly smaller ones—may struggle to meet the new compliance standards due to limited resources.
Larger firms may benefit from existing compliance infrastructure but still need to ensure consistent implementation across subsidiaries. Regardless of size, early preparation will be essential to comply with the enhanced AML/CTF regime.
Technology-led compliance with AI and automation
To ease the burden of compliance, many organisations are turning to artificial intelligence and machine learning (AI/ML) solutions to enhance the efficiency of AML workflows.
These technologies can reduce false positives in KYC screening and improve the accuracy of suspicious activity detection. Moody’s has partnered with firms to implement AI/ML-driven intelligent screening tools that automate critical compliance tasks.
Integrated risk management for long-term resilience
Effective compliance with the Tranche 2 reforms will require more than just technology—it will demand cohesive strategies combining automation, risk alignment, and staff training. A unified risk management platform can centralise these efforts.
Moody’s Maxsight™ offers one such solution, providing global datasets embedded into automated compliance workflows to help organisations streamline onboarding and monitoring processes in line with their risk policies.
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