AML/CTF Tranche 2 Compliance 2026: The Australia-India Corridor Guide

The grace period is over. Since 1 July 2026, Australian lawyers, accountants, trust and company service providers, real estate professionals, and dealers in precious metals and stones have been regulated by AUSTRAC. If your clients include Indian-resident investors, NRIs buying Australian property, or Indian-owned companies setting up here, your compliance risk is higher than most. Here is what Tranche 2 means for you and how to handle the Australia-India corridor.

What Is AML/CTF Tranche 2?

Tranche 2 is the second stage of Australia's anti-money laundering and counter-terrorism financing (AML/CTF) reforms, introduced by the AML/CTF Amendment Act 2024. Tranche 1 covered banks, remittance providers and casinos. Tranche 2 extends the regime to "gatekeeper" professions that help clients move, structure or hold value.

Who Is Now Regulated?

• Lawyers and conveyancers providing certain designated services, such as buying and selling real estate, creating or managing companies and trusts, and handling client funds
• Accountants and bookkeepers performing equivalent designated services
• Trust and company service providers, including those who form companies, act as nominee directors or supply registered offices
• Real estate agents and property developers involved in property transactions
• Dealers in precious metals and stones

Not every service you offer is a designated service. Work out which of your activities fall inside the regime before you build your program. Check the current AUSTRAC guidance for your sector.

Why the Australia-India Corridor Needs Extra Attention

Australia and India have deep trade, education, migration and investment ties. That is good for business, but it also means regulators expect firms to manage the specific risks of the corridor. Common risk factors include:

• Complex ownership structures: Indian family groups often hold assets through layered companies, HUFs (Hindu Undivided Families), trusts and overseas holding entities.
• Source of funds and wealth: Funds may come from Indian business income, property sales, agricultural income or gifts from relatives, and these are not always easy to document.
• Indian currency controls: Resident Indians face limits under the Liberalised Remittance Scheme (LRS) and FEMA rules. Transfers that look designed to get around these limits are a red flag.
• Third-party payments: Relatives or unrelated companies in India paying a deposit or fees on a client's behalf should prompt questions.
• Politically exposed persons (PEPs): Clients may be linked to Indian public officials, state-owned enterprises or politically connected business groups.
• Informal value transfer: Hawala-style arrangements are a known risk in some South Asian corridors.

None of this means you should avoid Indian clients. It means your risk assessment should address these factors directly instead of treating every client the same way.

Your Core Tranche 2 Obligations

1. Enrol with AUSTRAC

You must enrol as a reporting entity before providing designated services. If you have not done so, do it now. Operating unenrolled is a serious breach.

2. Conduct an ML/TF Risk Assessment

Your risk assessment is the foundation of your program. For corridor work, it should cover:

• Customer types (individuals, NRIs, Indian companies, trusts, HUFs)
• Delivery channels (remote onboarding, introducers, referral partners in India)
• Products and services (property purchases, company formation, nominee arrangements)
• Jurisdictions (India, and any intermediate jurisdictions such as Singapore, Dubai or Mauritius that funds may pass through)

3. Build and Maintain an AML/CTF Program

Your program must set out how you identify, mitigate and manage risk. Under the reformed regime, it needs governance, board or senior-management oversight, and a designated AML/CTF compliance officer. A template downloaded from the internet will not satisfy AUSTRAC. It has to reflect your actual clients and services.

4. Customer Due Diligence (CDD)

Verify who the client is, who ultimately owns or controls them, and why they are transacting. For Indian clients, practical steps include:

• Collecting a valid passport and, where relevant, Australian visa details
• Requesting Indian identity and tax documents such as a PAN card, where appropriate to the risk
• Obtaining certified or apostilled corporate documents, such as the certificate of incorporation, MCA records, shareholder registers and director details
• Mapping beneficial owners through every layer of the structure down to the natural persons
• Using certified translations if documents are not in English

5. Ongoing Due Diligence and Monitoring

CDD does not stop at onboarding. Review client profiles regularly and watch for changes, such as a sudden new funding source, a shift in ownership or an unexplained jump in transaction size.

6. Reporting to AUSTRAC

• Suspicious matter reports (SMRs): Lodge within the required timeframe once you form a suspicion. This is generally 3 business days, and 24 hours for terrorism financing.
• Threshold transaction reports: Required for cash transactions of A$10,000 or more.
• International funds transfer instructions: May apply depending on your services.
• Annual compliance reports

Never tip off a client that you have filed or are considering an SMR.

7. Keep Records

Retain CDD records, transaction records and program documents for at least seven years. Keep copies of Indian documents in a form that can be produced quickly on request.

Red Flags in Australia-India Transactions

Train your team to recognise these warning signs:

• Funds arriving from third parties with no clear connection to the client
• Reluctance to explain the source of wealth or provide supporting documents
• Ownership structures that are more complex than the commercial purpose requires
• Property purchased well above or below market value, or quickly resold
• Payments split into smaller amounts to stay under reporting thresholds
• Cash deposits or payments that do not fit the client's profile
• Pressure to complete quickly or bypass normal verification
• Funds routed through unrelated jurisdictions before reaching Australia

A Practical 30-Day Action Plan

1. Week 1: Confirm which of your services are designated and check your AUSTRAC enrolment.
2. Week 2: Complete your ML/TF risk assessment, including a section on India and related corridor jurisdictions.
3. Week 3: Draft or update your AML/CTF program. Appoint a compliance officer and set up a CDD checklist for Indian individuals and entities.
4. Week 4: Train your staff, test your SMR escalation process and set up secure record storage.

Common Mistakes to Avoid

• Treating compliance as a one-off project. The regime requires continuous monitoring and periodic program review.
• Relying on the client's word. Evidence of source of funds should be independent and documented.
• Ignoring referral channels. If an introducer in India sends you clients, assess that relationship as part of your risk.
• Leaving staff untrained. Your program is only as strong as the people applying it.

Stay Ahead of the Regulator

AUSTRAC has signalled that it will focus on newly regulated sectors as the regime beds in. Firms with a documented, risk-based program are in a much stronger position than those scrambling after a notice arrives. Obligations and guidance continue to be updated, so confirm details against current AUSTRAC materials and seek professional advice for your circumstances.

Get Your Tranche 2 Compliance Right with CorpArray

Tranche 2 is now a day-to-day operating requirement, and the Australia-India corridor adds layers of complexity that generic compliance tools do not handle well. CorpArray helps Australian professional firms and Indian-linked businesses build practical, AUSTRAC-ready programs. Book your free compliance check today at https://cal.com/corparray/free-compliance-consultation, and find out where your gaps are before AUSTRAC does.

This article is general information only and does not constitute legal advice. Refer to AUSTRAC guidance and seek professional advice for your specific obligations.

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