Scenario 01
Forming a Pty Ltd company for a new client
Beneficial-ownership identification applies to the company being formed, including the directors and the shareholders. The customer identification of the engaging client runs in parallel.
← AML/CTFTranche 2 · Accounting practices · 1 July 2026
Accountants enter the AUSTRAC regime on 1 July 2026.
When Tranche 2 commences, providing designated accounting services (company and trust formation, tax structuring with cross-border or entity-restructuring elements, audit of cash-intensive businesses, and acting as a trustee or nominee) becomes AUSTRAC-supervised. This page covers what changes for tax practices, company-formation work, and audit engagements.
01What changes
What changes for accountants.
The biggest change is at client onboarding. Where engagement letters historically focused on scope and fees, they now also drive an AML/CTF customer due diligence workflow: identity collection and verification, beneficial-ownership identification for any entity the firm forms or restructures, sanctions screening, and a documented risk rating. The Suspicious Matter Report obligation applies to patterns surfacing through routine accounting work, unexplained large cash transactions in a client business, structuring patterns to avoid thresholds, or beneficial-ownership opacity in cross-border structures.
02On the ground
What this looks like in the actual matters you handle.
Scenario 02
Tax structuring advice involving an off-shore trust
Enhanced customer due diligence on the client. Source of wealth and source of funds documentation, senior-partner sign-off, and tightened ongoing monitoring of the client relationship.
Scenario 03
Audit of a hospitality business with significant cash takings
Audit work is captured where the firm is performing audit-type services on a reporting entity. Patterns in the audited entity (unexplained cash, structuring) may engage the auditor’s SMR obligation, distinct from the audit opinion itself.
Scenario 04
Acting as a nominee director for a client company
This is one of the highest-risk designated services. Enhanced procedures apply throughout the engagement, including beneficial-ownership review at each material change.
03The obligations
Seven obligations, in operational order.
- I
AUSTRAC enrolment
Every firm providing designated accounting services must enrol. Sole practitioners enrol in their own name; partnerships enrol the firm.
- II
AML/CTF program covering designated services
Part A risk assessment + Part B customer identification, tailored to the firm’s service mix: tax, audit, advisory, company secretarial, trustee services.
- III
Customer due diligence at engagement
Identity + verification of every client at the start of an engagement for a designated service. Records sit in the matter file alongside the engagement letter.
- IV
Beneficial-ownership identification on entity formations
Every company, trust, or partnership the firm forms triggers beneficial-ownership identification at formation. Material changes (e.g., share transfers, trustee changes) require update.
- V
SMR for unusual patterns surfacing through routine work
Bookkeeping, tax, and audit work all surface ML/TF indicators. The Compliance Officer is the named point of escalation; the 3-business-day clock starts on formation of suspicion.
- VI
Enhanced procedures for higher-risk services
Acting as a nominee director, providing a registered office to a client, or facilitating cross-border structures all trigger enhanced due diligence. Senior-partner sign-off is the standard.
- VII
Annual compliance report + 7-year retention
Annual compliance report to AUSTRAC covering the calendar year. Client identification, transaction records, and training records retained 7 years.
04Where BackPro fits
Where BackPro fits
BackPro for accounting practice AML/CTF
Wires AML/CTF customer due diligence into the engagement-letter workflow so onboarding stays one step, captures beneficial-ownership at company formation, monitors for SMR-trigger patterns surfacing through bookkeeping and tax work, and prepares the AUSTRAC annual report. Runs inside your tenancy, client tax and financial records stay where they already live.
05Honest answers
Questions we keep getting.
- Does Tranche 2 apply to bookkeeping-only practices?
- Bookkeeping alone is generally not a designated service. The threshold is providing one of the listed designated services (company formation, trustee services, certain tax advisory work). A firm that adds any designated service to its bookkeeping practice falls into scope for that service.
- What about audit-only firms?
- Statutory audit of a reporting entity is in scope. The audit opinion itself remains a professional product unchanged by AML/CTF; the obligation is to file an SMR if the audit work surfaces suspicious patterns, and to maintain a program governing audit engagements.
- Can the AML/CTF Compliance Officer also be the firm Quality Partner?
- Yes. The Act requires seniority and independence, a Quality Partner with broader practice-review responsibilities is well-suited. The designation is documented in the program and notified to AUSTRAC.
- How does the customer due diligence interact with the engagement letter?
- Most firms will integrate CDD into the matter-acceptance workflow that produces the engagement letter, same intake, two outputs. The CDD outputs (identity verification, beneficial-ownership register, risk rating) sit in the matter file alongside the engagement letter.
Q01
Q02
Q03
Q04
06Sources
Every claim on this page draws on the AUSTRAC published guidance for Tranche 2 entities, plus the sector-specific commentary listed below.
07Where to go next
See where your firm stands in six minutes.
Twenty-five questions, an inline readiness percentage, and a personalised PDF report mapped to accountants obligations. Free, no commitment, no demo required.
This assessment provides general information about Tranche 2 obligations under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth). It is not legal advice. For your specific obligations, consult an AML/CTF compliance professional.