AUSTRAC updates regulatory priorities ahead of major AML/CTF reforms

As Australia prepares for sweeping reforms to the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act), AUSTRAC has released its regulatory priorities for 2025–26. Earlier this month, AUSTRAC CEO Brendan Thomas also issued a statement outlining the regulator’s expectations for reporting entities over the coming year.

AUSTRAC will be directing its regulatory focus on the most significant money laundering, terrorism financing and proliferation financing risks (ML/TF/PF) (with proliferation financing coming under increasing scrutiny following reforms to AML/CTF laws). AUSTRAC’s 2025–26 strategy aims to:

1. enhance ML/TF/PF risk management by ensuring entities implement effective anti-money laundering and counter-terrorism financing (AML/CTF) controls, and

   
   

2. support AUSTRAC’s intelligence function and the work of its law enforcement partners through high-quality transaction reporting.

   
   

AUSTRAC has also outlined seven priority outcomes to guide its supervision and engagement with existing and newly regulated entities.

Outcome 1: ‘Tranche 2’ entities understand their AML/CTF obligations and start appropriately managing their ML/TF/PF risks

From 1 July 2026, AML/CTF obligations will extend to real estate agents, dealers in precious metals and stones, lawyers, conveyancers, accountants and trust and company service providers.

AUSTRAC aims to ensure these entities understand their obligations, enrol as reporting entities develop AML/CTF programs, train relevant staff and implement appropriate reporting and record-keeping systems. Entities that fail to enrol or show poor compliance effort will face increased scrutiny.

Outcome 2: Existing reporting entities implement changes to their AML/CTF programs and practice, to align with changes in the legislative regime

By 30 June 2026, AUSTRAC expects reporting entities to update their risk assessments and AML/CTF programs to reflect legislative changes, including those relating to customer due diligence, value transfer obligations, international transfer reporting and regulation of new virtual asset services.

Outcome 3: An increased proportion of entities understand and comply with their suspicious matter reporting obligations

Suspicious Matter Reports (SMRs) are central to AUSTRAC’s intelligence efforts. AUSTRAC intends to identify low and non-reporters, improve their systems and processes and ultimately ensure a higher volume of high-quality SMRs.

Outcome 4: Improved ML/TF/PF risk management within the digital currency exchange and virtual asset service provider sectors

AUSTRAC will prioritise regulatory intervention where virtual asset service providers are indifferent to the heightened ML/TF/PF risks they face, fail to manage those risks effectively, or are complicit in criminal activity. Registration as a digital currency exchange provider will be based on the entity’s ability to effectively manage these risks. This is consistent with increasing scrutiny of the sector over the last 12 months including a recent crackdown on crypto ATMs.

Outcome 5: Improved risk management by reporting entities whose exposure to cash creates ML/TF/PF vulnerabilities

AUSTRAC seeks to identify reporting entities failing to manage their cash-related ML/TF/PF risks and focus on improving adoption of industry-recognised controls to manage these vulnerabilities.

Outcome 6: An increased proportion of existing reporting entities update their enrolment details when required under the AML/CTF Act and Rules

Reporting entities are expected to keep their enrolment information up to date. To support this, AUSTRAC will use various channels to issue reminders.

Outcome 7: Increased capability and coordination around the management of ML/TF/PF risks in the Pacific region

To build stronger capability and coordination in managing ML/TF/PF risks across the Pacific region, AUSTRAC will establish a PSF Secretariat aligned with the Pacific Financial Intelligence Community Secretariat, deliver the PSF annual meeting and establish an annual work program.

What does this mean for businesses?

At the AUSTRAC Industry Forums on 28 May 2025, AUSTRAC CEO Brendan Thomas made it clear that the regulator’s mission is not about perfection:

Keeping Australia safe from criminal harm is our primary goal. AUSTRAC does not expect perfection on day one. However, we do expect you to maintain your focus on reducing your money laundering risks. The core principles of identifying, mitigating and managing those risks remain unchanged. We recommend businesses resist the urge to implement programs or processes that may create the impressions of compliance with the AML/CTF Act, but have minimal impact on the risk of money laundering.

AUSTRAC appears to recognise that reporting entities will need time to adapt but makes it clear that effort and intent matter. This means avoiding “tick-a-box” compliance and instead developing AML/CTF programs tailored to each entity’s specific risk exposure with a focus on reducing actual harm.

With that in mind, and with reforms approaching, now is the time for businesses to review their exposure to ML/TF/PF risks, update their AML/CTF programs and ensure their systems and controls are capable of addressing the risks they may face.

Written by Steven Pettigrove and Emma Assaf