The long-anticipated Tranche 2 anti-money laundering and counter-terrorism financing (AML/CTF) reforms are scheduled to come into force on 1 July 2026, meaning that accounting firms will face new compliance obligations that extend well beyond their traditional scope.
While Tranche 2 has been discussed for many years, its implementation is now firmly on the horizon. For accounting firms, particularly those that provide advisory, structuring, tax, or company formation services, the changes will require new systems, new thinking and new approaches to risk management.
For firms that outsource parts of their accounting or compliance operations, the implications are even more nuanced. Understanding what Tranche 2 is, how it will affect your firm, and how you can prepare well in advance will be critical to maintaining compliance without disrupting service delivery or profitability.
This guide gives a practical overview of what Tranche 2 means for accounting firms, the potential consequences of getting it wrong, and how outsourcing, when managed correctly, can form part of a proactive compliance strategy.
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Australia’s AML/CTF framework has traditionally focused on financial institutions such as banks and insurers. They have long been subject to customer due diligence, transaction monitoring, reporting, and record-keeping obligations overseen by AUSTRAC.
Tranche 2 represents the next expansion of this framework. It brings a range of “designated non-financial businesses and professions” (DNFBPs) into scope, including:
The rationale for this change is straightforward: criminals increasingly rely on professional services to establish structures, move funds and obscure beneficial ownership. International bodies such as the Financial Action Task Force (FATF) have, in the past, criticised Australia for lagging behind many other countries in regulating these gatekeeper professions to help prevent these types of financial crimes.
From 1 July 2026, many accounting firms operating in Australia will be considered reporting entities under the AML/CTF Act, depending on the services they provide.
Accounting firms that fall under Tranche 2 will be required to implement a full AML/CTF compliance program. This includes:
These requirements represent a substantial shift for many firms that have never operated under a regulatory regime of this nature before.
One of the most challenging aspects of Tranche 2 is determining which services trigger obligations. In the accounting industry, activities such as:
may all fall within scope, even if they are not the firm’s core offering.
For accounting firms that outsource bookkeeping, tax preparation, payroll, or compliance support—whether offshore or onshore, Tranche 2 introduces additional layers of responsibility.
Importantly, outsourcing does not transfer regulatory accountability. The Australian accounting firm remains ultimately responsible for:
This makes governance, documentation and provider oversight more important than ever. Choosing the right accounting outsourcing partner is key.
The risks associated with failing to comply with Tranche 2 are significant and go beyond the financial penalties often associated with regulatory issues.
Regulators will have the power to impose:
For small and mid-sized accounting firms, even a moderate enforcement action could have a huge financial impact.
Accountants trade on trust. Being publicly linked to AML/CTF breaches can severely damage a firm’s reputation with clients, referrers, banks and regulators.
Reputational harm often outlasts the initial penalty and can potentially limit growth opportunities for years to come.
Non-compliance can also affect an accounting firm’s relationships with:
Increased scrutiny from some of these parties may result in delayed transactions, loss of clients, or higher operating costs.
For firms with services and activities that fall under the jurisdiction of Tranche 2, preparing early will be far less disruptive, and usually far more cost-effective, than a last-minute rush for compliance. We’ve outlined some key steps you can take to ensure that you’re ready for the changes.
Start by auditing all of the services your firm provides, including advisory and “one-off” engagements. Identify which activities qualify as designated services and may trigger AML/CTF obligations and document your reasoning.
This exercise alone often reveals potential areas that firms were previously unaware of.
Assess your current systems, policies, and processes against the expected AML/CTF requirements. Key questions you may want to ask yourselves include:
A structured gap analysis helps prioritise the actions you can take to ensure compliance.
If you don’t already have one, appointing a compliance officer to have responsibility for AML/CTF compliance is a great move to help ensure that all necessary boxes are ticked. A dedicated resource with time set aside for this will reduce the risk of anything slipping through the net and provide a point of contact for all other staff if there are any questions or concerns.
AML/CTF compliance is not purely an operational issue, it requires leadership oversight and ensuring that all staff are aware of their role in compliance too, even if you have a dedicated officer. Partners and senior managers should understand:
Good communication to all staff, along with early education and preparation, will help to reduce resistance and build internal capability. All staff should receive training on customer due diligence and reporting obligations to significantly reduce the risk of any errors.
It’s important to ensure that the tools and tech you are using meet the necessary monitoring and reporting requirements. It might be that you need to upgrade or switch in some areas to be able to track and report on the elements needed.
Doing any tech and tool changes as far in advance as possible helps to ensure any teething problems are resolved and staff can be properly trained on new processes and systems by the time they become critical.
Firms that outsource should review contracts, workflows and controls to ensure they support AML/CTF compliance. This includes:
While Tranche 2 introduces an extra layer of complexity in terms of compliance, outsourcing can still play a positive role when approached strategically. Some of the ways it can help include:
AML/CTF compliance adds administrative and monitoring tasks that can put a real strain on internal teams. Outsourcing routine accounting, bookkeeping or payroll functions can free up key staff to focus on:
This helps firms absorb new obligations without increasing burnout or headcount unnecessarily.
Well-structured outsourcing models will often put in place very clear documented processes, checklists and workflows. This is exactly what AML/CTF frameworks require, which means much of the preparation for Tranche 2 is already being done when you work with a trusted outsourcing partner.
Accounting firms that invest in standardised outsourced processes may find it easier to:
A good outsourcing provider will already be investing in AML-aware training, documentation, and quality assurance. While ultimate compliance responsibility always remains with your firm, working with providers who understand regulated environments can reduce implementation friction and give you peace of mind.
Outsourcing can help firms adapt to Tranche 2 without dramatically increasing fixed costs. Rather than building large in-house teams, firms can scale operational support in line with growth and regulatory demands.If you want to find out more about how outsourcing can help your accounting firm to navigate the Tranche 2 changes, boost your capacity and support sustainable growth, we’d love to talk. Book a call with our team today.
