AUSTRAC has confirmed its direction for the 2025–26 financial year, reflecting a significant shift in the regulator’s focus. The regulator says it is now embarking on an ambitious overhaul of Australia’s anti-money laundering laws and is determined to construct the right regulatory framework.
With a renewed emphasis on reducing harm from money laundering, terrorism financing and other serious crimes, AUSTRAC is moving beyond entity-level compliance to target industry-wide behaviours and gaps.
“This year marks a regulatory shift – from regulation that primarily checks for compliance to one focussed on substantive risks and harms,” says AUSTRAC CEO Brendan Thomas. “AUSTRAC will look at risk and behaviour at an industry and sector level rather than focussing solely on individual entities.”
AUSTRAC’s Strategic Objectives
AUSTRAC outlines two strategic objectives that highlight the requirements for regulated firms:
- Enhancing the risk management of money laundering, terrorism financing, and proliferation financing (ML/TF/PF). The regulator seeks to do this by supporting more effective anti-money laundering and counter-terrorism funding (AML/CFT) controls from reporting entities.
- High-quality transaction reporting from reporting entities will enable AUSTRAC’s intelligence function and its law enforcement partners, by extension.
The regulator aims to enable reporting entities to uphold its expectations of AML/CFT controls and reporting through three key avenues:
- Guidance and education.
- Monitoring, assessing and providing feedback on ML/TF/PF risk management practices
- Intervention and enforcement action where failure to manage ML/TF/PF risks results in harm.
Bringing More Industries into the Fold
AUSTRAC is preparing to bring approximately 80,000 new entities into the AML/CTF regime from 01 July 2026. These “tranche 2” entities span a range of industries, including real estate professionals, lawyers, conveyancers, accountants, and dealers in precious metals and stones. This expansion targets sectors identified as being at greater risk of criminal misuse, where AML/CTF controls have historically been lacking.
By 30 June 2026, AUSTRAC says it will have published guidance and conducted education activities to help tranche 2 entities understand their ML/TF/PF risks and obligations.
Reform for Existing Industries
In parallel, AUSTRAC will also require existing reporting entities to adapt their compliance programs in response to legislative reforms taking effect from March 2026 onwards. For financial firms and others already subject to the regime, these reforms will target obligations related to AML/CTF program requirements, customer due diligence, value transfer, and international funds transfer instructions. Additional regulatory coverage will also extend to new virtual asset services and refined definitions of bearer negotiable instruments.
By 30 June 2026, AUSTRAC states that it will have published guidance and conducted educational activities to help existing reporting entities understand the changes. The regulator aims to ensure these entities have updated their internal systems, trained staff accordingly, and made meaningful adjustments in line with their revised obligations by this date.
Sectoral Risk Prioritisation
Key sectors that are under increased scrutiny this year from AUSTRAC include digital currencies and cash-intensive businesses. As Thomas explains, “We are also focussing efforts where the risk of harm is greatest, for example in digital currencies, which allow funds to move across borders quickly, cheaply and virtually anonymously.”
Despite a nationwide decline in cash usage, AUSTRAC notes that over $100 billion remains in circulation, presenting a persistent money laundering risk. “Cash is also highly susceptible to money laundering because it is anonymous, accessible and widely accepted,” notes Thomas. “We see money laundering risks play out in cash intensive businesses as well as through digital currency exchanges and other virtual asset service providers.”
Clarity, Guidance and Enforcement
AUSTRAC notes that it is committed to enhancing its intelligence capabilities to better identify underperforming sectors and guide enforcement priorities. Importantly, AUSTRAC has published information of regulatory expectations to clarify its expectations across both tranches of entities. See its regulatory priorities document for further detail.
“Whether you’re already part of the regime or preparing to come into it, we want you to be proactive in preparing and making sustained progress towards compliance,” adds Thomas. “We’re about to embark on the most ambitious overhaul of Australia’s anti-money laundering laws in a generation and we’re determined to get it right.”
The message for financial firms and newly regulated sectors is that AUSTRAC is not merely monitoring for “tick-box” compliance processes. The regulator is now firmly fixed on closing the gaps, educating reporting entities, and actively reducing the risk of financial crime across Australia’s economy.
Read more in the latest information from AUSTRAC.
Also, read more about why AUSTRAC is introducing these changes and what firms can do immediately in our previous article, AUSTRAC’s AML/CFT Rules Expectations: Is Your Firm Prepared?
Why Firms Are Turning to MCO’s AML/CFT Capabilities
Criminals can often exploit complex legal structures and industries outside the financial sector to move and conceal funds. VASPs, including crypto exchanges and digital wallet services, add to the risk due to their decentralised nature and anonymity of transactions. Coupled with growing international threats, financial institutions in Australia and worldwide face increasing pressure to ensure their AML/CFT frameworks are not just compliant but genuinely effective. To prevent economic losses, reputational harm, and regulatory enforcement, firms are adopting end-to-end RegTech solutions, like MCO.
MCO delivers more than AML/CFT controls. The complete compliance platform covers all aspects of compliance, including Employee Conflicts of Interest, MNPI and Control Room Compliance, and Compliance Program Management. This integrated approach allows firms to maintain oversight, respond to evolving risks, and demonstrate effectiveness across their entire compliance program.
