Overview
The Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024 (Cth) was passed by Parliament in November 2024. It updates the existing AML/CTF Act 2006 to strengthen Australia’s ability to prevent and respond to money laundering and terrorism financing, and to align with international standards set by the Financial Action Task Force (FATF).
From 1 July 2026, the amended law will come into effect, and legal practitioners will be included in the AML/CTF regime. Lawyers, along with conveyancers and accountants, will have new obligations under the law and can begin registering with AUSTRAC from 31 March 2026.
While some requirements apply across industries, others depend on the type of service provider. This article focuses on what these changes mean for law firms specifically.
While many articles focus on how these changes impact professionals, this piece takes a different approach: what do these reforms mean for you as a client? Whether you’re an individual or a business, what will your lawyer or accountant now be required to ask you?
In this short article, we break down what the new legislation means for you as a client of a law firm. First, we’ll outline your responsibilities under the updated rules, then take a look at the types of legal services that will now fall under the legislation.
New Obligations of Client to Law Firm
The first thing that a law firm will have to do is to identify you, as an individual or legal entity, and to ask you to fill out a “Know Your Client” (KYC) form. This form will include the basic types of information, such as name, date of birth, address, phone number and email address. It will also include questions about your employment, source of funds – whether those funds are coming from overseas and if so, from which country – your occupation, and whether you are a holder of a public office or related to someone in public office, among other details.
These types of questions are similar to those that banks have long asked of new clients or when large deposits are made. Chances are, you’ve completed a similar questionnaire before.
One of the essential new obligations is the duty to identify the Ultimate Beneficial Owner of the funds or property. This refers not only to legal entities but also to transactions involving trustees, charities, complex legal structures, and offshore companies.
The law will also require your lawyer or law firm to update this KYC information periodically, typically every few years, for clients who regularly work with the law firm, based on the associated risk.
So, who will be considered a high-risk client and who is not?
The answer is quite straightforward – under the AML Act, several factors may classify someone as a high-risk client. This could include being a public figure, such as a member of parliament, a local councillor, or a union leader. It may also relate to the nature of their occupation or business, particularly if it involves high-risk industries like gambling, or trading in precious stones or metals. Another key factor is the source of the client’s funds, especially if they originate from high-risk jurisdictions such as Iran, North Korea, or countries under international sanctions like Russia. These risk indicators require additional scrutiny to help prevent money laundering and ensure compliance with legal obligations.
Services covered by this legislation
So how does this impact you as a client?
As a law firm, we’re required to ask certain questions as part of our obligations. We understand that some of these may feel a little personal, but please know they’re essential in helping us support you properly and provide the service you deserve. It’s also important to note that these requirements only apply to specific types of legal services that we offer.
Examples of services that will be covered by the new legislation:
- Services relating to the sale, purchase, and transfer of real estate, although some transactions in this category are exempt – such as leases for periods of less than 30 years.
- Assisting in the planning or execution of a transaction to buy, sell, or transfer a body corporate or legal arrangement where the client:
- Holds an ownership stake of 25% or more, or
- Exercises control over the body corporate or legal arrangement.
- Managing trusts or exercising control over money, accounts, securities, virtual assets, or other property while assisting a client with transaction planning or execution.
- Assisting with the organisation, planning, or execution of transactions involving equity or debt financing for a company or legal entity. This includes situations where a person is acting as a director or secretary of a company, holds power of attorney for a corporate body or legal arrangement, is a partner in a partnership, serves as a trustee of an express trust, or holds any similar position on behalf of another person.
- Advising on or acting in the transaction of shelf companies.
- Acting in roles such as director or secretary of a company, holding power of attorney for a corporate body or legal arrangement, serving as a partner in a partnership, acting as a trustee of a trust, or fulfilling any similar role on behalf of another person.
- Acting as a nominee shareholder for a company or legal structure on behalf of someone else.
- Providing assistance with various agreements and transactions related to virtual assets, including but not limited to NFTs and cryptocurrencies.
Some requirements under the Act apply to specific services regardless of which industry is delivering them. For example, as seen from the list of services, the most common are conveyancing transactions, such as buying and selling property. These types of transactions are covered by the new legislation, regardless of who is handling them – a lawyer, a law firm, or a conveyancer. The same can be said of other services, such as buying and selling a business or acting as a nominee shareholder. Regardless of whether you are a lawyer, an accountant, or a trust company, the law imposes the same obligation on all service providers.
Under the new legislation, you – as a client, whether acting personally or on behalf of a legal entity – may be required to provide more information to your lawyers than in the past. Generally, the more complex the legal structure, the more detailed the information we’ll need to collect. One of the most common situations where this will apply is in real estate transactions.
Rest assured that these questions are asked due to legal obligations – they are part of ensuring compliance with the law and protecting all parties involved.
Get in touch with Warlows Legal today using the contact information below.
