Ongoing Monitoring Obligations for TCSPs: 2026 Guide
Ongoing monitoring is a continuous obligation for TCSPs under Tranche 2. Now that Tranche 2 has commenced, here is what AUSTRAC expects from your workflow.
Ongoing monitoring is a continuous obligation for Australian TCSPs under Tranche 2 of the AML/CTF Act 2006 — not a one-time task completed at onboarding. Now that Tranche 2 has commenced, TCSPs with a programme in place must now ensure their monitoring workflows are configured and operational before the deadline.
What Does Ongoing Monitoring Require for TCSPs?
Under Part 2 of the AML/CTF Act 2006, ongoing monitoring covers four core activities: re-screening clients against PEP and sanctions lists at a risk-appropriate cadence; reviewing beneficial ownership records for changes; monitoring whether the services provided remain consistent with each client's documented risk profile; and revisiting CDD records when trigger events occur. For TCSPs — who often serve clients with layered corporate and trust structures — the beneficial ownership component is the most demanding, because ownership can change silently through nominee replacements, trust deed amendments, or share transfers that ASIC records may not capture immediately.
How Frequently Must TCSPs Re-Screen Clients?
The AML/CTF Act 2006 does not mandate a single re-screening frequency. The cadence must be calibrated to each client's risk rating: - High-risk clients — re-screen at least monthly. High-risk categories for TCSPs include clients with PEP connections, cross-border beneficial owners, or complex multi-entity structures. - Standard-risk clients — re-screen quarterly as a baseline, with a more frequent cycle if activity patterns change. - Lower-risk clients — re-screen semi-annually at minimum, documented in the AML/CTF Programme with written justification for the reduced cadence. Your programme must specify each tier's cadence — an unspecified monitoring policy does not satisfy the obligation.
What Events Trigger an Immediate CDD Refresh?
Beyond scheduled re-screening, TCSPs must review a client's CDD record immediately when certain events occur: - A change in beneficial ownership — new shareholder above the 25% threshold, a trustee replacement, or a new trust appointor - A new director who is a PEP or is connected to a high-risk jurisdiction - An unusual or inconsistent service request with no apparent commercial rationale - A jurisdiction tied to the client's ownership being added to the FATF grey or black list - Adverse media, regulatory action, or credible third-party information about the client or a beneficial owner
How Does Monitoring Feed Into SMR Obligations?
Ongoing monitoring is the primary source from which TCSPs will identify grounds for suspicious matter reports. Once reasonable suspicion is formed — for example, because monitoring reveals that beneficial ownership has been deliberately obscured, or that a newly screened person appears on a sanctions list — the TCSP must lodge a Suspicious Matter Report with AUSTRAC within three business days. The tipping-off prohibition prevents disclosing to the client that a report is being prepared. Configure your SMR escalation path before 1 July 2026 so the AMLCO can action an alert without delay. For details on how AMLify connects monitoring to SMR lodgement, see the TCSP compliance module.
Key Takeaways
- Ongoing monitoring is continuous — TCSPs must re-screen clients at a risk-appropriate cadence and review beneficial ownership throughout the client relationship, not just at onboarding
- Frequency must match risk rating — high-risk clients monthly, standard-risk quarterly, lower-risk semi-annually, all documented in the AML/CTF Programme
- Trigger events require an immediate CDD refresh outside the scheduled cycle — ownership changes, new directors, unusual requests, and FATF list updates all qualify
- Monitoring feeds directly into SMR obligations — reasonable suspicion identified during monitoring must be reported to AUSTRAC within three business days
- Get compliant now — TCSPs should configure monitoring cadences, run a baseline re-screening of all existing clients, and test the SMR escalation path before 1 July 2026
Frequently Asked Questions
Q: Does ongoing monitoring apply to clients onboarded before 1 July 2026?
Yes. The Tranche 2 obligations apply to all active client relationships from 1 July 2026, not only to new clients onboarded after the deadline. TCSPs should run a first-pass PEP and sanctions screening of their entire existing client book as a priority task in the days immediately before or after commencement. Clients who have never been screened represent a compliance gap from day one.
Q: How long must records of monitoring activities be kept?
Records of all ongoing monitoring activities — screening results, CDD refresh decisions, suspicious-matter escalations, and SMR lodgements — must be retained for a minimum of seven years under the AML/CTF Act 2006. Records must be retrievable and producible to AUSTRAC on request. A purpose-built AML/CTF platform retains these records automatically with timestamped audit entries.
Q: What should a TCSP do if monitoring reveals a sanctioned person?
Where re-screening reveals that an existing client or beneficial owner has been added to a sanctions list, the TCSP must act immediately. Continuing to provide services to a sanctioned entity may be a separate offence under the Autonomous Sanctions Act 2011. The TCSP should suspend services pending legal advice, lodge a suspicious matter report with AUSTRAC, and consult its legal advisers on obligations under Australian sanctions legislation. Monitoring systems should alert the AMLCO immediately — not at the next scheduled review.
This is general information only and not a substitute for legal advice.