AML/CTF Tranche 2: Appoint an AML/CTF Compliance Officer Now to Meet Deadlines

Australia’s upcoming Tranche 2 AML/CTF laws come into effect on 31 March 2026. They extend anti-money laundering and counter-terrorism financing (AML/CTF) obligations to lawyers, real estate professionals, accountants and trust and company service providers, and dealers in precious stones and metals.

If your business falls under this new AML/CTF regime, you should start preparing now for the deadline for new reporting entities. This includes understanding your new obligations, conducting AML risk assessments, and implementing appropriate AML/CTF compliance measures.

A recommended first step to ensure you are compliant with the due date is to appoint an AML/CTF Compliance Officer (AMLCO) as soon as possible. They will play a critical role in making sure you meet your anti-money laundering and counter-terrorism financing obligations. Their responsibilities include implementing and maintaining your AML/CTF Program, providing advice and training, ensuring timely reporting, and acting as the liaison with regulators.

Who can be an AML/CTF compliance officer?

Being an AMLCO is a highly responsible role that needs a strong technical knowledge of AML/CTF regulations, good interpersonal and risk management skills, and the authority to follow through on external auditors' recommendations. Your appointed AMLCO must have sufficient resources and empowerment to succeed in their role.

The Australian Transaction Records and Analysis Centre (AUSTRAC) advises that this should include:

• access to all relevant areas of your business
• access to all relevant employees
• the power to deal with any problems relating to your AML/CTF obligations
• any other resources needed to do their job.

Additionally, an AMLCO must be an Australian resident if you provide designated services within Australia, and they must be a fit and proper person. You must notify AUSTRAC of your appointment to the role within 14 days.

An independent and suitably qualified adviser can help you understand and meet your AML/CTF obligations; however, you remain responsible for AML/CTF compliance.

One AML helps Australian businesses of any size and across all industry sectors understand and meet their AML/CTF obligations. We offer consultancy services that will set you and your AMLCO up for success. We can guide you through choosing a suitable AMLCO, defining their role and responsibilities, and putting the support and structure they’ll need in place.

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Core AMLCO responsibilities

The duties and functions of your AMLCO are extensive, and they cover various critical areas:

• Develop and implement your AML/CTF Program: Your AMLCO is responsible for developing and continually improving your AML/CTF Program. This includes tailoring it to the unique and specific risks identified in your business. Their role also includes establishing and maintaining robust internal controls and monitoring systems, as well as overseeing customer due diligence (CDD) practices.
• Manage AML/CTF risks: A core task of your AMLCO is to conduct and update comprehensive AML risk assessments of money laundering, terrorism financing, and proliferation financing (ML/TF/PF) risks. Based on these assessments, they will make sure that appropriate risk mitigation measures are implemented across all relevant parts of your business.
• Reporting: Your AMLCO is responsible for delivering timely and accurate reports to AUSTRAC. This includes Suspicious Matter Reports (SMRs), Threshold Transaction Reports (TTRs), International Funds Transfer Instruction (IFTI) reports, and cross-border movement reports. They are also responsible for submitting annual compliance reports to AUSTRAC.
• Liaison and communication: Your AMLCO will be the primary contact point for AUSTRAC and other regulatory authorities and facilitate clear communication and cooperation with them. They’re responsible internally for communicating with senior management and your board, if applicable, and give them regular updates on AML/CTF matters and emerging risks.
• Training and awareness: Under the new AML/CTF regime, it’s essential to develop a strong AML/CTF compliance culture within your organisation. To do this, your AMLCO is responsible for developing and delivering regular, tailored AML/CTF training programmes for all relevant staff, to make sure they understand their obligations and the risks faced by your business.
• Record keeping: Meticulous record-keeping is critical for regulatory oversight. Your AMLCO is responsible for maintaining accurate and comprehensive records of all AML/CTF-related activities and making sure they’re kept for at least seven years.
• Continuous improvement: As the AML/CTF landscape is constantly shifting, your AMLCO must review and update your AML/CTF Program regularly, so it adapts to legislative and regulatory changes, emerging ML/TF/PF risks, and new typologies. They are also responsible for addressing any compliance shortfalls promptly.

Delegating responsibilities

Your AMLCO can delegate some duties to other employees in certain circumstances. For example, if a business has local branches or offices, it may delegate some activities that are only done in a local branch to make sure compliance procedures are implemented consistently.

AMLCO fit and proper requirements

AUSTRAC expects that anybody appointed to the role of AMLCO is competent and also ‘fit and proper’.  This concept of ‘fit and proper’ makes sure that those trusted with key compliance responsibilities have the integrity and capability to uphold the law and prevent abuse of the financial system.

These fit and proper requirements aren’t unique to AML/CTF; they align with criteria across Australia's financial services sector by regulators like the Australian Securities & Investment Commission (ASIC) and the Australian Prudential Regulation Authority (APRA). Fit and proper requirements are also a global standard backed by organisations like the Financial Action Task Force (FATF).

These fit and proper criteria are essential for safeguarding the integrity of Australia’s financial system by making sure that people in positions of trust have the necessary competence, honesty, and diligence to mitigate money laundering and terrorism financing risks. This is to prevent internal complicity or negligence that could undermine your organisation’s defences against financial crime.

Criteria for a fit and proper AML Compliance Officer

The 'fit and proper' criteria for an AMLCO cover their professional capabilities and their personal integrity.

Core elements of ‘fit’

Being ‘fit’ mainly relates to your AMLCO's professional capacity and suitability for the role:

• Competence and capability: An AMLCO must have the necessary skills, practical experience, and comprehensive knowledge of Australian AML/CTF laws, rules, and best practices. They must also have a deep understanding of your business’s operations and the ML/TF risks that come with this.  They must also be able to effectively implement, oversee, and continuously improve your organisation’s AML/CTF Program.
• Independence and authority: Your AMLCO must be given authority within your business to make decisions, implement controls, and report findings without undue influence from within your organisation. This independence is vital for objective AML risk assessment and reporting. They must also have unfettered access to your senior management and the necessary information and resources to perform their role effectively.
• Australian residency: AUSTRAC's guidance dictates that your AMLCO should be an Australian resident to make sure they have access and direct oversight within the Australian regulatory context.

Core elements of ‘proper’

Being ‘proper’ refers to your AMLCO's personal attributes and ethical standing:

• Character and integrity: Your AMLCO should demonstrate high ethical standards, honesty, and a strong sense of integrity. This includes having no criminal convictions, particularly any related to financial crime, fraud, or dishonesty.
• Diligence and judgement: Your AMLCO must demonstrate a commitment to carrying out their duties thoroughly, responsibly, and with strong attention to detail. They must also have sound judgment, so they can identify and respond appropriately to any AML/CTF risks.
• Financial standing: A stable financial background that’s free from bankruptcy or insolvency is considered an indication that someone conducts themselves responsibly and is suitable for a role that has significant financial oversight.
• No disqualifications: Your AMLCO mustn’t be subject to any banning or disqualification orders under Australian legislation, such as the Corporations Act or the National Consumer Credit Protection Act.
• Conflict of interest management: Your AMLCO must be able to manage any potential or actual conflicts of interest effectively, to prevent their duties from being compromised.

Ongoing monitoring and reporting of being ‘fit and proper’

Being fit and proper is not a static qualification. To make sure your AMLCO continues to meet the required thresholds, you must implement processes for:

• Self-declarations and reassessment: Ongoing self-declarations is a practical way to make sure your AMLCO remains fit and proper.
• Continuous professional development: Your AMLCO should undertake regular professional development to stay across legislative changes, new risks, and best practices.
• Obligation to report changes: You must set a clear obligation for your AMLCO to report any changes in their fitness and propriety status promptly to the appropriate people in your organisation and, where required, directly to AUSTRAC.

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Not a box-ticking exercise

In the context of Australia’s AML/CTF regime, being ‘fit and proper’ isn’t a box-ticking exercise – it’s a safeguard that protects your business and the financial system from criminal exploitation.

If you fail to comply with the new AML/CTF obligations, your organisation could face significant civil penalties, potential criminal prosecution, and severe reputational damage. Appointing an AMLCO that meets the 'fit and proper' requirements will help you set up robust compliance frameworks, navigate the shifting regulatory landscape, and contribute to safeguarding Australia's financial system.

One AML can remove the stress from achieving AML compliance

If you’re affected by the new Tranche 2 AML/CTF laws, you should start preparing now to make sure you comply with the new regulations from 31 March 2026, including the appointment of an AML Compliance Officer. You can benefit greatly from working with a leading independent AML/CTF compliance service provider like One AML to understand and meet your AML/CTF compliance programme obligations.

We’re qualified as AML consultants for all Phase 1 and 2 reporting entities across Australia, and we can help if you’re impacted by the new Tranche 2 AML/CTF regulations. We provide expert guidance to develop, review, and enhance AML/CTF policies and tailor them to cover your specific services and sector.

We also offer comprehensive training to educate your staff on AML/CTF obligations and ensure they’re equipped to identify and mitigate financial crime risks.

If you want robust, tailored, and cost-effective AML/CTF Risk Assessments and Policies for your business or organisation, get in touch with our team today. Advisory resources are limited, and time is short.

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