The Architecture of the Reform: Two Tracks, One Critical Decision
Australia's AML/CTF regime has always regulated financial services. AFS licensees have been reporting entities under the Act since the regime commenced — you are not new to this. What is new is the scope of regulation, the obligations that apply, and the consequences of providing services that tip you from one compliance track into another.
Track One — Item 54 Only
Under the AML/CTF Act, the provision of financial advice is an item 54 designated service — it is "making arrangements for clients to receive other designated services from other reporting entities." Because arranging for services from other providers is considered a lower AML/CTF risk activity, item 54 reporting entities may retain the adviser-exemption. Reporting obligations become primarily internal escalations, rather than direct reporting to AUSTRAC. The governance, ongoing CDD, and reporting obligations are materially reduced — but still exist.
Track Two — Tranche 2 Professional Services
From 1 July 2026, a new category of designated services — professional services under Table 6 of the Act — comes into force. If your practice provides any Table 6 designated services — even incidentally — you will lose the item 54 exemptions and be required to meet the full set of obligations, including governance and controls, compliance and reporting, and ongoing Customer Due Diligence (CDD).
Which Table 6 Services Catch Financial Advisers?
Holding Client Money to Assist in a Transaction
If your practice receives, holds, controls, or manages client funds in connection with a financial transaction — beyond merely arranging for funds to move — you are providing a Table 6 designated service.
Assisting in the Creation or Restructure of a Trust
This is the issue that has generated the most uncertainty in the advice sector. If the financial adviser takes steps to directly create the trust — including acting on instructions to draft the trust deed and draw up relevant paperwork to appoint trustees and assign beneficiaries — they are providing a designated service. Filling in an SMSF application form on behalf of a client is not a Table 6 service. Drafting the trust deed, appointing the trustees, and structuring the arrangements — that is.
Assisting in the Creation or Restructure of a Company
If your practice takes steps to incorporate a company for a client — acting on instructions to prepare or execute documentation that advances the creation of a new entity — this is a Tranche 2 service. Advice alone does not trigger the obligation; active participation in execution does.
Buying, Selling, or Transferring Real Estate on Behalf of a Client
If a financial adviser participates directly in the execution of a property transaction on behalf of a client — beyond recommending the investment — this triggers a real estate designated service.
The Regulatory Uncertainty That Is Still Unresolved
In a joint submission to AUSTRAC's consultation, the Financial Advice Association Australia (FAAA) and the SMSF Association raised concerns over how Tranche 2 designated services work in relation to financial advice, noting "there is a lack of regulatory clarity on the intersection between the provision of financial product advice as an item 54 designated service, and the new tranche 2 designated services."
Members reported receiving conflicting legal advice about whether they are providing a Tranche 2 professional service, even when based on the same facts. This is not a reason to wait — it is the opposite. Where regulatory uncertainty exists, the prudent course is to map your services and build the compliance infrastructure capable of responding to either outcome.
Core Obligations — Both Tracks
AUSTRAC Enrolment and Compliance Officer
The deadline for existing reporting entities to notify AUSTRAC of their AML/CTF compliance officer was 30 May 2026. New Tranche 2 entities must enrol and notify by 29 July 2026 — but obligations commence on 1 July regardless.
New-Format AML/CTF Program
One of the most sweeping changes is the removal of the Part A / Part B AML/CTF Program structure. The reforms introduce an outcomes-focused, risk-based format that replaces the prescriptive two-part model. Your existing program must be restructured. This is not optional and not trivial.
Suspicious Matter Reporting
The obligation to report suspicious matters to AUSTRAC applies to all reporting entities. New reportable details for suspicious matter reports are required under the reformed framework.
Additional Obligations — Track Two Entities
Full Governance Structure
You must formally designate a governing body with ultimate AML/CTF oversight responsibility, a senior manager who approves your program, and an AML/CTF compliance officer who manages day-to-day implementation.
Ongoing Customer Due Diligence
The moment you cross into Tranche 2 services, the item 54 CDD exemption disappears. You must implement ongoing monitoring of your client relationships — reviewing transaction patterns, flagging unusual activity, reassessing risk profiles as client circumstances change.
Enhanced Customer Due Diligence
For higher-risk clients — Politically Exposed Persons, clients with complex ownership structures, clients with offshore connections — you must conduct enhanced due diligence, collecting additional information about source of wealth and funds, and obtaining senior management approval before proceeding.
The Particular Complexity for Licensees with Authorised Representatives
For dealer groups and licensees with networks of authorised representatives (ARs) and corporate authorised representatives (CARs), the reform creates a layered compliance challenge. A licensee's AML/CTF compliance program is only as good as its weakest authorised representative. An AR who assists a client in establishing a trust or participates in a business acquisition — without the licensee's knowledge — creates a compliance exposure that sits on the licensee's books.
A CAR is not a reporting entity for item 54 purposes. If some of the tasks typically involved in providing financial advice are determined to be a Tranche 2 service, the CAR may be considered to be a reporting entity for that service and would need to enrol separately with AUSTRAC.
How Proximo Comply Solves This
Service Mapping and Track Determination
Proximo Comply guides practices through a structured service inventory — mapping every client-facing activity against the Table 6 designated services categories to determine whether Tranche 2 obligations apply. The output is a documented service scope analysis that your licensee, compliance officer, and — if needed — your regulator can interrogate.
AML/CTF Program Rebuild
The Part A / Part B program is no longer compliant. Proximo Comply rebuilds your AML/CTF program in the new outcomes-focused, risk-based format — pulling in your service scope analysis, risk assessment results, and governance structure. Version control, approval tracking, and review alerts are built in.
Digital KYC and CDD Workflows
For practices that cross into Tranche 2 services, customer due diligence is embedded into the service delivery workflow. Proximo Comply prompts identity verification at the right point, flags when enhanced due diligence is required, and maintains a complete, timestamped CDD file for every relevant client.
Governance Module
Proximo Comply supports the formal governance structure required — documenting role designations for governing body, senior manager, and AML/CTF compliance officer, tracking approvals, and maintaining the governance records AUSTRAC expects.
Key Dates for Financial Advice Practices
| Date | What Happens |
|---|---|
| 31 March 2026 | New AML/CTF Rules commence for all existing reporting entities including AFSLs |
| 30 May 2026 | Deadline for existing reporting entities to notify AUSTRAC of AML/CTF compliance officer |
| 1 July 2026 | Full Tranche 2 obligations commence. Table 6 designated services regulated. Full program, CDD, governance and reporting requirements operational. |
| 29 July 2026 | Deadline for new Tranche 2 entities to notify AUSTRAC of AML/CTF compliance officer |
| 30 March 2029 | End of 3-year initial CDD transition period for existing reporting entities |
Frequently Asked Questions
I only provide financial advice and arrange product applications. Do I have any new obligations?
Yes — even item 54 only reporting entities have significant new obligations from 31 March and 1 July 2026. Your AML/CTF program must be restructured from the Part A / Part B format. Your risk assessment must be updated. Your compliance officer must be formally notified to AUSTRAC. And your suspicious matter reporting processes must reflect the new reportable details.
My practice helps clients set up SMSFs. Does that trigger Tranche 2 obligations?
It depends on the nature of your involvement. If you assist clients in filling in application forms for an SMSF — without receiving, holding, or controlling the funds — you are likely not triggering a Table 6 service. If you take steps to draft or execute trust documentation that creates the SMSF structure, you are likely providing a Table 6 service and your full Tranche 2 obligations apply.
I operate as a corporate authorised representative. What are my obligations?
As a CAR, you are not the reporting entity for item 54 services — your licensee is. However, if you provide any service that constitutes a Table 6 designated service, you — as a separate legal entity — may be required to enrol with AUSTRAC as a reporting entity in your own right for those services.