AML/CTF Tranche 2 Compliance in 2026: A Guide for Australia-India Businesses

If you advise, incorporate, or move money for clients between Australia and India, AML/CTF compliance is no longer someone else's problem. Tranche 2 of Australia's anti-money laundering reforms has brought lawyers, accountants, company and trust service providers, real estate professionals, and dealers in precious metals and stones into the regime for the first time. The reforms commenced for these professions on 1 July 2026, so AUSTRAC now expects to see your program, your enrolment, and your customer records. Cross-border work between Australia and India sits in the risk category regulators look at hardest.

This article is general information, not legal advice. Check your specific obligations against AUSTRAC guidance and the AML/CTF Rules.

What Is AML/CTF Tranche 2?

Tranche 2 is the second stage of Australia's reform of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006. The first stage covered banks, remittance providers, and gambling operators. The AML/CTF Amendment Act 2024 extends the regime to "gatekeeper" professions, and also tightens requirements for businesses that were already regulated.

Gatekeepers are in scope because they can unintentionally enable money laundering. They set up companies and trusts, hold funds, buy property, and structure transactions. International standard-setters, including the Financial Action Task Force (FATF), have long criticised Australia for leaving these sectors unregulated.

Who Is Now Covered?

• Lawyers, conveyancers and accountants providing certain designated services, such as helping clients buy or sell real estate, creating or restructuring legal entities, or managing client money and assets.
• Trust and company service providers that form companies, act as nominee directors or shareholders, or provide registered office or business addresses.
• Real estate professionals acting in property sales and purchases.
• Dealers in precious metals and stones in certain cash and high-value transactions.

Coverage depends on the services you provide, not your job title. An accountant who only prepares tax returns may be outside the regime. One who also sets up companies for incoming Indian investors probably is not.

Why the Australia-India Corridor Needs Extra Attention

The corridor is one of Australia's most active. Indian founders establish Australian subsidiaries, Australian companies set up operations in India, and families move capital in both directions through property, education, and investment. Most of this activity is legitimate, but several features raise the risk profile an AML/CTF program must address:

• Layered ownership. Structures with Indian holding companies, Singapore or Mauritius intermediaries, and Australian operating entities make beneficial ownership harder to trace.
• Exchange control interactions. Indian outbound investment and remittance rules mean funds may arrive through specific channels and with specific documentation. Unusual routing or reluctance to explain it is a red flag.
• Politically exposed persons (PEPs). Clients connected to Indian government, state-owned enterprises, or senior political figures need enhanced due diligence.
• Documentation differences. Indian identity and corporate documents (PAN, Aadhaar-linked records, MCA filings) differ from Australian equivalents, so verification takes a deliberate process.
• Third-party payments. Funds arriving from a relative, associate, or unrelated company rather than the client are a classic warning sign.

The Core Obligations You Need to Meet

1. Enrol With AUSTRAC

Newly regulated entities must enrol with AUSTRAC before providing designated services. If you started providing in-scope services after commencement without enrolling, address that now rather than waiting for AUSTRAC to find it.

2. Conduct a Money Laundering and Terrorism Financing Risk Assessment

Under the reformed regime, your AML/CTF program must be built on a documented risk assessment covering your customers, services, delivery channels, and the countries you deal with. For an Australia-India practice, document how you rate:

• Clients who are Indian residents or have Indian beneficial owners;
• Structures involving offshore holding entities;
• Transactions that move through multiple jurisdictions; and
• Referrals from overseas introducers you cannot verify.

3. Build and Maintain an AML/CTF Program

Your program must set out policies, procedures, and controls proportionate to your risk. It needs a designated AML/CTF compliance officer and a board or senior management that approves and oversees it. A generic template downloaded online will not satisfy AUSTRAC if it ignores how your business actually works.

4. Customer Due Diligence (CDD)

You must identify and verify your customer, understand the nature and purpose of the relationship, and identify the beneficial owners. For corridor clients, practical steps include:

• Obtaining certified copies of Indian incorporation documents and checking them against the Ministry of Corporate Affairs register where possible;
• Asking for a clear ownership chart showing every layer up to the natural persons who ultimately own or control the entity;
• Recording the source of funds and source of wealth for higher-risk clients; and
• Screening all parties against sanctions lists and PEP databases.

Keep translated documents alongside originals, and record who performed each verification and when.

5. Ongoing Monitoring and Reporting

Due diligence does not end at onboarding. You must monitor the relationship and report to AUSTRAC when required, including suspicious matter reports (SMRs) and threshold transaction reports for cash transactions of $10,000 or more. Staff must know what suspicious looks like in your context, and that they must never tip off the client that a report has been made.

6. Record Keeping

Keep identification records, transaction records, and program documents for the required retention periods. Store them so you can retrieve them quickly if AUSTRAC asks.

A Practical Compliance Checklist for 2026

1. Confirm whether you are a reporting entity. List every service you provide and map it against the designated services in the Act.
2. Enrol with AUSTRAC and nominate your compliance officer.
3. Complete a written risk assessment that specifically addresses India-linked clients and structures.
4. Adopt a tailored AML/CTF program and have senior management formally approve it.
5. Update client onboarding with beneficial ownership forms, PEP and sanctions screening, and source-of-funds questions.
6. Train your team and keep a record of attendance and content.
7. Test and review. Schedule an independent review of your program and update it whenever your services or client base change.

Common Mistakes to Avoid

• Assuming a long-standing client is low risk. Existing clients are caught too. Re-assess them against your new framework.
• Relying on a client's own bank or another adviser without a documented basis for doing so.
• Treating beneficial ownership as a tick-box. A name on a form is not verification.
• Letting records live in personal email or messaging apps. AUSTRAC expects structured, retrievable evidence.
• Waiting for an incident. Penalties for non-compliance can be severe, and the cost of building a program early is far lower than the cost of defending a breach.

How This Connects to Your Corporate Structure

AML/CTF obligations do not sit in isolation. Many corridor clients are also dealing with ASIC registration, foreign company registration, director and shareholder records, and annual obligations at the same time. Clean, accurate corporate records make due diligence faster, because beneficial ownership is already documented and current. Messy structures slow onboarding and raise your risk rating.

Frequently Asked Questions

Does Tranche 2 apply to a small practice?

Yes. Obligations turn on the services you provide, not on your size. The program can be proportionate to your risk, but you cannot opt out.

Can I rely on an Indian lawyer or chartered accountant to verify my client?

Possibly, but only under the reliance and agent arrangements the rules permit, and you remain responsible for the outcome. Document the arrangement and the reasons for relying on it.

What if a client refuses to disclose the source of funds?

Treat this as a red flag. You may need to decline the work, and you should consider whether you must lodge a suspicious matter report.

Get Ahead of AUSTRAC, Not Behind It

Tranche 2 is now live, and the businesses that fare best are those that built their programs deliberately rather than in a rush after an AUSTRAC inquiry. If you work across the Australia-India corridor, your risk assessment, due diligence process, and corporate records all need to reflect the realities of cross-border work. CorpArray helps businesses align their corporate structures and compliance processes so that onboarding is smooth and audit-ready. Book a free compliance check and find out where your business stands today.

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