Which Accounting Services Trigger Tranche 2?

Not every service your accounting firm provides will make you a reporting entity under Australia's Tranche 2 AML/CTF reforms. The AML/CTF Act 2006—as amended by the Tranche 2 legislation—only captures accountants who deliver specific 'designated services' involving asset management, legal structure formation, or property transactions. With 50 days until the 1 July 2026 compliance deadline, mapping which of your services are caught is the essential first step before building your AML/CTF programme.

What Is a 'Designated Service' Under the AML/CTF Act?

A 'designated service' is a specific transaction or service listed in the AML/CTF Act 2006. Any business or professional that provides a designated service is a 'reporting entity' with obligations to enrol with AUSTRAC, implement an AML/CTF programme, conduct customer due diligence, and report suspicious matters. Before Tranche 2, this list covered banks, credit unions, money remitters, and financial institutions. From 1 July 2026, it expands to include accountants, lawyers, real estate agents, trust and company service providers, and dealers in precious metals and stones. The critical phrase for accountants is 'on behalf of a client'—you are caught when you act as the intermediary who carries out or arranges the relevant transaction, not simply when you advise on it.

Which Accounting Services Are Caught by Tranche 2?

The Tranche 2 reforms capture accountants when they prepare for, or carry out, transactions on behalf of a client in the following areas:

1. Buying or selling real property — arranging, facilitating, or settling a real estate transaction for a client, including acting in a conveyancing or settlement capacity. Providing tax advice about a property sale is not itself a designated service, but managing the actual transaction is.

2. Managing client money, securities, or other assets — holding funds in a trust account, managing an investment portfolio, or handling asset transfers on a client's instructions.

3. Operating or managing bank or securities accounts on behalf of a client — this includes holding signatory authority over a client's account or directing funds at their direction.

4. Organising contributions for the creation, operation, or management of a company — assisting a client to capitalise or restructure a company by arranging the flow of funds into or within the entity.

5. Creating, operating, or managing legal persons or arrangements — forming companies, unit trusts, discretionary trusts, or partnerships on a client's behalf, including acting as a company secretary or ongoing trust administrator.

6. Buying or selling a business entity on behalf of a client — facilitating a business sale, merger, or acquisition where you handle the transaction rather than simply providing strategic or tax advice.

These obligations apply regardless of whether you operate as a sole practitioner, a boutique advisory firm, or a mid-tier practice. If you provide even one designated service to even one client, you are a reporting entity for that service.

Which Accounting Services Are NOT Caught?

The majority of everyday accounting work falls outside the Tranche 2 net. The following services do not, in themselves, trigger reporting entity obligations:

• Preparing and lodging income tax returns — individual, company, trust, or partnership returns

• Preparing financial statements — including compilation, review, or audit engagements

• Providing general tax or structuring advice — where you are not executing the underlying transaction on the client's behalf

• Business advisory and consulting — strategic planning, budgeting, or performance analysis

• Bookkeeping — processing transactions and reconciling accounts where you do not hold signatory authority or control over funds

• Preparing Business Activity Statements (BAS) — GST, PAYG, and related obligations

• Payroll processing — unless you also manage the payroll bank account on the client's behalf

The distinction consistently comes back to control and execution. Advising a client to establish a discretionary trust is not a designated service. Establishing that trust for them—selecting the trustee structure, arranging the initial settlement, and administering the deed as their agent—almost certainly is.

What If Your Firm Provides Both Caught and Uncaught Services?

Most accounting firms will sit in this mixed position, and it is where careful scoping becomes critical. Your AML/CTF programme obligations apply only to the designated services you provide—you are not required to apply the full compliance framework to your entire client base. However, AUSTRAC expects your AML/CTF programme to clearly identify which services are designated, segment the affected clients, and apply appropriate controls to those engagements. A common mistake is to assume that because most of your practice involves uncaught services, Tranche 2 does not apply to your firm at all. If even a small part of your work involves trust formation, property settlement, or client fund management, you must enrol with AUSTRAC and be compliant by 1 July 2026.

What Obligations Does Providing a Designated Service Trigger?

Once you are a reporting entity—even for just one designated service—the AML/CTF Act 2006 requires you to:

1. Enrol with AUSTRAC before providing the designated service (or as soon as practicable if the reforms capture an existing service).

2. Develop and maintain an AML/CTF programme covering a money laundering and terrorism financing risk assessment (Part A) and customer due diligence procedures (Part B).

3. Conduct customer identification and verification (CIV) before providing the designated service, with enhanced due diligence applied to higher-risk clients.

4. Identify beneficial owners of corporate and trust clients—the individuals who ultimately own or control the entity.

5. Monitor ongoing customer relationships for unusual activity, transaction patterns, and changes in risk profile.

6. Lodge Suspicious Matter Reports (SMRs) with AUSTRAC when you suspect a matter relates to money laundering, tax evasion, or other serious offences.

7. Retain records for at least seven years, including identification documents, transaction records, and programme documents.

8. Train your staff on the AML/CTF obligations relevant to their role and the firm's designated services.

How AMLify Helps Accounting Firms Get Compliant

AMLify is purpose-built for Australian Tranche 2 firms, including accounting practices navigating mixed-service environments. The platform guides you through identifying your designated services, completing your AUSTRAC enrolment, building a compliant AML/CTF programme, and managing ongoing obligations—all without needing a dedicated compliance team. With 50 days to the deadline, the time to act is now. Learn how AMLify is designed for accounting firms or explore the full feature set to see what's included.

Key Takeaways

• Not all accounting services are designated services. Tax returns, financial statements, audit, and general advisory are not caught by Tranche 2.

• The trigger is acting on behalf of a client in property transactions, asset or account management, or legal structure formation and administration.

• Mixed-service firms are not exempt. If any part of your practice involves a designated service, you must enrol with AUSTRAC and comply by 1 July 2026.

• Obligations go well beyond identity checks. Enrolled accountants must build an AML/CTF programme, monitor clients, lodge SMRs, keep records, and train staff.

• 50 days remain. Identifying your designated services and beginning your AUSTRAC enrolment process is the most urgent action your firm can take right now.

Frequently Asked Questions

Q: Does preparing a client's tax return trigger Tranche 2 AML obligations?

No. Preparing and lodging income tax returns—whether for individuals, companies, trusts, or partnerships—is not a designated service under the AML/CTF Act 2006 as amended by Tranche 2. The designated services that capture accountants relate to acting as a transactional intermediary for asset management, legal structure formation, or property dealings. Providing tax compliance services, without also executing the underlying transaction on the client's behalf, does not create reporting entity obligations.

Q: What if I only occasionally help a client set up a company or trust?

Frequency does not determine whether you are a reporting entity—providing a designated service even once is sufficient to trigger obligations. If you form companies or trusts on behalf of clients, rather than simply advising them on how to do it themselves, you are providing a designated service and must be enrolled with AUSTRAC with an AML/CTF programme in place before delivering that service. There is no de minimis exemption based on volume or frequency.

Q: When is the compliance deadline for accountants under Tranche 2?

The compliance deadline for accountants is 1 July 2026. From this date, accountants providing designated services must be enrolled with AUSTRAC and have an operational AML/CTF programme in place. AUSTRAC has signalled it will take a risk-based approach to early enforcement, but firms that have not begun their compliance journey by the deadline face significant civil and criminal penalties under the AML/CTF Act 2006, including penalties calculated per contravention.

Q: Do I need to apply AML checks to all my clients, or only those receiving designated services?

Your AML/CTF obligations apply specifically to customers receiving designated services. You are not required to conduct customer due diligence on a client who only engages you for tax return preparation, bookkeeping, or audit work. However, if that same client later requests a designated service—such as asking you to establish a trust or manage settlement funds—you must conduct customer identification and verification before providing that service, regardless of how long you have had the relationship.

Q: What are the penalties for non-compliance after 1 July 2026?

Non-compliance with the AML/CTF Act 2006 can attract substantial civil penalties—up to tens of thousands of penalty units per contravention—as well as criminal penalties for serious or wilful breaches. AUSTRAC also holds powers to issue compliance notices, accept enforceable undertakings, and pursue court-ordered injunctions. Beyond regulatory exposure, operating without an AML/CTF programme creates significant professional indemnity and reputational risk if a client engagement is later linked to financial crime activity.

This is general information only and not a substitute for legal advice.

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