From 1 July 2026, significant changes to Australia’s Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) framework will apply to law firms for the first time. These reforms bring legal practitioners into a broader regulatory system designed to strengthen financial transparency and reduce the misuse of professional services.
This article explains what is changing, how it may affect your experience when engaging a lawyer, and what you can do to ensure your matter proceeds efficiently.
A shift in how legal services begin
The most noticeable change for clients will occur at the very start of a legal engagement. Law firms will now be required to carry out formal identification and verification processes before commencing certain types of work.
These requirements apply where a law firm is providing services that fall within the AML/CTF framework, known as “designated services.”
These obligations arise because lawyers, along with accountants, conveyancers and real estate professionals, are being included in what is often referred to as “Tranche 2” of Australia’s AML/CTF reforms. As a result, firms must implement structured compliance programs that include risk assessments, internal procedures, staff training, and reporting systems.
While these requirements introduce additional steps, firms are actively working to integrate them into their onboarding processes to minimise disruption.
When the rules apply
Importantly, not every legal service will be subject to these obligations. The AML/CTF framework applies only to specific categories of work known as “designated services,” which generally involve transactions or dealings with assets.
For example, services connected to property transactions, business or share transfers, or managing client funds are more likely to fall within scope. In contrast, litigation, dispute resolution, and certain advisory work may sit outside the regime.
However, some matters can move into scope as they progress. A matter that begins as advice or negotiation may later involve a transaction that triggers compliance obligations. When this happens, the required checks must be completed before proceeding further.
Where required customer due diligence cannot be completed, a law firm may be unable to provide the relevant legal service.
Information you may need to provide
Under the new framework, law firms must verify both the identity of their clients and the context of the work they are undertaking. This may include:
- Proof of identity, such as a passport or driver’s licence
- Confirmation of your authority to act (for example, under a power of attorney)
- Details of any company or trust structure involved
- Documents showing ownership, control, and governance of entities
- Information about where funds are coming from for a transaction
For some matters, particularly those involving higher risk, greater complexity, or unusual transaction patterns, additional information may be required to understand and, where appropriate, verify the source of funds or source of wealth.
While this may feel similar to processes used by banks and financial institutions, it is a new requirement for legal services in Australia.
Sharing information and confidentiality
In some circumstances, law firms may need to disclose information to third-party service providers or regulatory bodies where reasonably necessary to verify identity or comply with legal and reporting obligations.
These third parties are often based in Australia, although some may operate internationally.
Firms remain bound by strict confidentiality and privacy obligations. Reasonable steps are taken to ensure that any external recipients handle information securely and in accordance with applicable laws.
Law firms may also be required to report certain matters to AUSTRAC where there are legal obligations to do so.
Preparing for a smoother process
Although the additional checks are mandatory, there are practical steps clients can take to avoid delays:
- Have identification documents ready when engaging a lawyer
- Prepare relevant company or trust documents in advance
- Ensure consistency between records (for example, matching names across documents)
- Be ready to explain the source and purpose of funds where a transaction is involved
Early preparation can significantly reduce onboarding time and allow legal work to begin sooner.
Looking ahead
The introduction of AML/CTF obligations for law firms reflects a broader shift toward greater transparency across professional services. While the changes introduce new administrative steps, their purpose is to protect the integrity of financial systems and reduce the risk of misuse.
Law firms are continuing to refine their processes so that compliance requirements are met without unnecessarily complicating the client experience.
Common Questions
Why are these changes being introduced?
Australia is aligning its regulatory framework with international standards aimed at preventing money laundering and terrorism financing. Expanding the regime to additional professions is part of that effort.
Will I need to provide this information even if I am an existing client?
Yes. The requirements apply to both new and existing clients, particularly when a new matter begins or where updated information is needed, especially where customer due diligence is required for a designated service.
What if I am using a company or trust?
You will likely need to provide documents that confirm the structure, ownership, and control of the entity, along with details of those acting on its behalf.
Do I always need to provide information about my finances?
Not in every case. However, where a matter involves higher-risk factors, complex structures, or certain types of transactions, law firms may need to collect information about the source of funds or source of wealth.
Will these checks delay my matter?
They can if information is not readily available. Providing documents early and ensuring accuracy will help minimise any impact on timelines.
Will I need to provide the same information multiple times?
Often, verified information can be reused for future matters. However, updates may be required if circumstances change or if additional detail is needed for a specific transaction.
How will my information be protected?
Law firms are subject to strict confidentiality and privacy obligations. Information collected will be handled in accordance with applicable laws and professional standards.
Disclaimer
This article provides general information only and does not constitute legal advice. The AML/CTF regime is complex and continues to evolve. You should seek specific legal advice in relation to your particular circumstances.
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