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By granting organisations extra time to adapt to certain elements of the country’s overhauled anti-money laundering and counter-terrorism financing (AML/CTF) framework, AUSTRAC is acknowledging the scale and complexity of the reforms.
Announcing the change in mid-January 2026, the regulator stated that existing reporting entities will be granted an extended transition period to comply with initial customer due diligence (CDD) requirements.
Under these arrangements, relevant entities will have a three-year transition period to complete initial CDD checks required under the AML/CTF Amendment Act 2024.
The transition period will run from March 31, 2026 to March 30, 2029; during this time, firms may choose between two compliance paths when onboarding new customers.
Under the first option, firms may continue to apply their existing applicable customer identification procedures (ACIP) until the end of the transition period.
Alternatively, firms may transition early to the reformed initial CDD regime at any point during the transition period.
In effect, the first option allows firms to retain their current onboarding model for a further three years, while the second allows earlier compliance with the new initial CDD requirements, rather than adherence to the original fixed deadline.
Under the AML/CTF Amendment Act 2024 as enacted by the Australian parliament, the initial CDD requirements were due to take effect for existing reporting entities from March 31, 2026.
Although AUSTRAC has not publicly attributed the extension to compliance difficulties, Australian media have reported that regulators privately acknowledge widespread “implementation issues” across industry.
The change, as well as others detailed in AUSTRAC’s update, will be formalised in an exposure draft to be published by the Department of Home Affairs in the coming weeks.
Once the exposure draft is published, firms will be able to submit feedback on the changes.
The transitional rules will be enacted by the Minister for Home Affairs under Schedule 12 of the AML/CTF Amendment Act 2024.
Stability versus early alignment
For reporting entities, the choice between retaining ACIPs or moving early to the new CDD regime will be a strategic one, shaped by firm-specific factors.
Large, complex or multinational firms, particularly those with legacy onboarding systems and tightly integrated global compliance frameworks, may conclude that retaining ACIPs during the transition period offers greater stability.
Delaying major system changes can help spread implementation costs, preserve internal resources and reduce the risk of operational disruption.
In contrast, smaller firms, fast-growing fintechs or entities already undertaking broader compliance system upgrades may see advantages in early adoption.
Earlier transition allows firms to avoid running dual frameworks in parallel, reduces the risk of a last-minute compliance rush in 2029 and may provide closer alignment with international best practice, particularly on beneficial ownership-based CDD.
It is important to note that the transitional relief applies only to initial CDD. From March 31, 2026, existing reporting entities must still comply with the ongoing CDD obligations introduced by the AML/CTF Amendment Act.
This means that obligations such as ongoing monitoring, risk reassessment and suspicious matter reporting will apply regardless of which initial CDD option is chosen.
Other key changes in the AUSTRAC update
Although the initial CDD transition is the most prominent element of the update, AUSTRAC also confirmed several other timing adjustments to the implementation of the AML/CTF Amendment Act 2024.
For example, the deadline for compliance with new international value transfer services (IVTS) reporting obligations will be deferred until 2029, while existing international funds transfer instruction (IFTI) reporting will continue unchanged.
This avoids the need for firms to redesign cross-border reporting systems while simultaneously implementing the broader AML reforms.
AUSTRAC also confirmed that digital currency exchange providers and remitters will automatically roll over as virtual asset service providers (VASPs) without needing to re-apply for registration.
Some VASP-specific obligations, including the Travel Rule, will not come into effect until July 1, 2026, giving firms additional time to adapt systems and data-sharing arrangements.
For existing reporting entities, the deadline for notifying AUSTRAC of their compliance officers has been extended to May 30, 2026.
Similarly, newly regulated businesses and newly regulated VASPs will have until July 29, 2026 to notify AUSTRAC of their AML/CTF compliance officers.
Existing reporting entities that have recently undertaken an independent review of their AML/CTF policies will also be granted an extended period for their first post-reform independent evaluation.
The extension will be based on how recently the firm in question has undergone an independent review, in addition to other risk and proportionality factors.
Broader AML reforms driven by international pressure
These transitional measures sit within the context of the AML/CTF Amendment Act 2024 – the most significant change to Australia’s AML regime in almost two decades.
A key feature of the legislation is that it expands the AML regime to non-financial professions such as lawyers, accountants and real estate agents, so-called “tranche two” entities, for the first time.
These entities must register between March 31 and July 29, 2026, and must comply with reporting obligations from July 1, 2026.
The act also modernises Australia’s AML rules by simplifying core concepts, updating definitions to reflect modern business structures and embedding beneficial ownership-based CDD as a foundational requirement.
These reforms followed years of sustained criticism by the Financial Action Task Force (FATF) of weaknesses in Australia’s AML/CTF framework.
AUSTRAC’s National Risk Assessments reflected FATF’s concern that criminals are increasingly using non-financial businesses in Australia to conceal wealth and launder money.
The 2024 legislation was designed in part to address those shortcomings and to bring Australia in line with international standards.
Incremental change, not retreat
For compliance professionals, the latest AUSTRAC update should not be read as a retreat from reform, but rather as an acknowledgement of its scale and complexity.
The decision to grant additional time and optionality reflects early implementation frictions and a recognition that many firms, acting in good faith, were struggling to meet the original timelines.
