Up to 100,000 Australian SMEs may face new anti-money laundering (AML) and counter-terrorism financing (CTF) obligations after expanded regulations took effect on July 1, according to AML compliance firm Visibl.
Known as Tranche 2, the reforms extend Australia’s AML/CTF framework to real estate agencies, accounting firms, law practices, conveyancers and other professional service providers.
The regulations aim to strengthen Australia’s response to money laundering and terrorism financing by bringing sectors involved in high-value transactions under regulatory oversight. Businesses covered by the reforms must conduct customer due diligence, verify client identities, identify beneficial ownership, monitor business relationships and report suspicious matters to Austrac.
Each regulated business must appoint a compliance officer to oversee its AML/CTF program and ensure compliance with obligations. In many SMEs, business owners, partners, directors or office managers are expected to carry out the role.
According to compliance specialists, the main challenge is not customer identity verification but finding someone to take responsibility for compliance. Visibl MD Kaan Yuksel said many businesses do not yet understand that the reforms apply to them.
“Many business owners still don’t realise these laws will apply to them. They assume anti-money laundering obligations are something only banks need to worry about. From July, that changes,” he said.
Yuksel said Australia will need tens of thousands of compliance officers in a short period, while there are a limited number of professionals with AML experience. Compliance also includes risk assessments, written policies, governance arrangements, staff training, and record-keeping.
The reforms are expected to affect more than 45,000 real estate agencies, about 37,000 accounting firms and up to 16,000 legal practices across Australia. Industry observers warn SMEs may face greater pressure because they often lack in-house compliance teams and specialist resources.
Yuksel said the responsibility for compliance remains with business leadership rather than with the compliance officer alone. Failure to comply may result in financial penalties, regulatory action, reputational damage and loss of client confidence.
The reforms bring Australia’s AML framework closer to those in the UK, Canada and New Zealand amid international pressure to close regulatory gaps. Yuksel said early investment in compliance systems and training may gain a competitive advantage.
“Strong compliance is becoming a competitive advantage, not just a legal obligation,” he said.
- Further reading: The big changes coming for Australian businesses and workers on July 1.
