Tips for Fund Managers Amid AML/CTF Reforms

Since 2006, fund managers, responsible entities and trustees have operated under Australia’s Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) framework. 

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Major reforms to this Act are scheduled to begin in 2026, aiming to overhaul current compliance obligations. These will require reporting entities to update their AML/CTF programs, adopt adjusted Know Your Customer (KYC) procedures and review how they report to the Australian Transaction Reports and Analysis Centre (AUSTRAC).

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Next year, new industries, including lawyers and real estate agents, will be regulated under the AML/CTF Act. Here’s what you need to know. 

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What Is Changing in the AML/CTF Rules?

On 29 August 2025, AUSTRAC tabled the new Anti-Money Laundering and Counter-Terrorism Financing Rules 2025 (the Rules) in Parliament. These will replace the current 2006 AML/CTF financing rules and provide supplementary detail to obligations set out in the amended Anti-Money Laundering and Counter-Terrorism Financing 2006 Act (the Act).

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Here's what's changing:

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• A shift in focus from a compliance-based approach to a risk-based, outcomes-oriented approach.
• Introduction of new AML/CTF program requirements, including customer due diligence, independent evaluations of programs and money laundering and terrorism financing (ML/TF) risk assessments.
• A new test for determining a "lead entity" in reporting groups (to replace the existing concept of “designated business groups”).
• Codified "Day 2 PEP checks," which allow circumstantial delayed verification of potentially exposed persons (PEP) status.
• Delayed verification for other KYC information, such as beneficial owners or beneficiaries of a trust.
• Exemptions from beneficial ownership checks for specified customers that present low ML/TF risk.

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What Do Currently Regulated Entities Need To Do?

If you are a business already regulated under the AML/CTF Act, your next steps are to:

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1. Review and adjust existing AML/CTF controls.
2. Develop and document implementation plans to meet the new obligations.
3. Demonstrate continued progress in implementing those plans.
4. Make interim improvements to systems and processes.
5. Review and improve AML/CTF frameworks to ensure they’re effective.

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What Do Newly Regulated Industries Need To Do?

AUSTRAC will begin regulating businesses in the legal, accounting and real estate industries under the AML/CTF regime next year. If you are among those industries, here’s what to prepare for:

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1. Enrol as a reporting entity (from 31 March 2026).
2. Develop and implement an AML/CTF program.
3. Appoint an AML/CTF compliance officer.
4. Provide staff training and education on the AML/CTF program and its associated processes.
5. Be ready to ask clients questions and report any suspicious activity. 

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What’s Coming Next?

In the midst of these changes, AUSTRAC acknowledges the challenges that newly and currently regulated industries are likely to face, and does not expect perfection from the outset. However, businesses must demonstrate proactivity in developing and reviewing their current AML/CTF programs. 

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The reforms to the AML/CTF Act will take effect on 31 March 2026 for currently regulated entities, and  1 July 2026 for newly regulated entities — including the legal, accounting and real estate industries.

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Start Preparing for AML/CTF Reforms Now

AUSTRAC expects fund managers to proactively and continually develop their frameworks to accommodate reforms during the lead-up to March 2026. 

If you plan to stay ahead of these changes, now is the time to make a move. Contact PMC Legal for expert guidance on reviewing your current practices and implementing the necessary adjustments to ensure your frameworks remain compliant.