AML/CTF for Accountants: Your Step-by-Step Compliance Guide

Isabella Chen had built her Perth accounting practice over fifteen years, serving everyone from local tradie businesses to mid-sized manufacturing companies. When she opened her morning emails in March 2024, one subject line made her stomach drop: “AUSTRAC Tranche 2: Your Compliance Obligations Begin April 2024.”

As she read through the dense regulatory language, Isabella’s mind raced with questions that kept her awake that night: Which of her services actually triggered these obligations? How would she identify suspicious transactions in client accounts she’d managed for years? And most importantly, what would happen to her practice if she got this wrong?

If you’re an Australian accountant facing similar concerns about AML/CTF compliance under Tranche 2, this guide will walk you through every step of the process—from understanding your obligations to implementing practical systems that protect both your clients and your practice.

The Reality Check: What Tranche 2 Actually Means for Your Practice

Under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006, accountants become “reporting entities” when they provide designated services. This isn’t about your traditional tax preparation or bookkeeping services—it’s about activities that could potentially be exploited for money laundering or terrorism financing.

Services That Trigger AML/CTF Obligations

Your practice becomes subject to AML/CTF requirements when you provide any of these designated services:

Preparing or lodging documents for: Company incorporation, business name registration, trust establishment, or changes to company details with ASIC. This includes acting as a registered agent or providing incorporation services through third-party platforms.

Managing client affairs: Acting as a trustee, company secretary, or nominee director. This extends to situations where you hold client funds in trust accounts or manage business operations on behalf of clients.

Buying or selling business assets: Facilitating the purchase or sale of businesses, business assets, or real estate on behalf of clients. This includes acting as an intermediary in business transactions or property deals.

Think about Oliver, a Brisbane accountant who discovered that helping a long-term client purchase a commercial property triggered his AML/CTF obligations—not because of the property transaction itself, but because he acted as the client’s agent in the purchase process.

Your Five-Phase Compliance Implementation Strategy

Successfully implementing AML/CTF compliance isn’t about checking boxes—it’s about building systematic processes that become second nature to your practice operations.

Phase 1: Conduct Your Service Audit and Risk Assessment

Before you can build compliant systems, you need to understand exactly which of your current services trigger AML/CTF obligations and assess the money laundering and terrorism financing risks associated with your client base and service offerings.

Start by reviewing every service your practice provides. Create a simple spreadsheet listing each service type and whether it falls under the designated services categories. Pay particular attention to services that might seem routine but actually trigger obligations—like helping clients register new companies or trusts.

Phase 2: Develop Your AML/CTF Program

Part A of your program must include your risk assessment findings, customer identification procedures, ongoing monitoring processes, and reporting protocols. Think of it as your compliance blueprint that explains how your practice will identify, assess, and mitigate money laundering and terrorism financing risks.

Part B contains your customer identification procedures, including the specific documents you’ll collect, verification methods you’ll use, and record-keeping processes you’ll follow. This section must be detailed enough that any staff member can follow your procedures consistently.

Phase 3: Implement Customer Due Diligence Procedures

For individual clients, collect and verify government-issued photo identification, proof of address, and understand the source of their funds. For company clients, obtain ASIC registration details, verify beneficial ownership information, and understand the nature of their business operations.

Consider Charlotte, a Melbourne accountant who noticed a new client wanting help incorporating multiple companies with similar names but unclear business purposes. Her enhanced due diligence revealed potential structuring activities, leading her to decline the engagement rather than risk compliance issues.

Phase 4: Establish Monitoring and Reporting Systems

Ongoing monitoring isn’t about watching every client transaction—it’s about developing systems that flag unusual patterns or activities that warrant further investigation.

Create triggers for enhanced scrutiny, such as clients requesting services outside their normal business activities, unusual payment methods, or transactions involving high-risk jurisdictions. Document your monitoring activities and decisions, as AUSTRAC may review these during examinations.

Phase 5: Implement Record-Keeping and Training Systems

Train all staff members on their AML/CTF responsibilities, from front-desk personnel who interact with clients to senior professionals who make compliance decisions. Regular training ensures consistent application of your procedures and helps identify potential issues before they become problems.

Navigating Common Compliance Challenges

Every accounting practice faces unique compliance challenges based on their client base and service mix. Understanding these common issues helps you build more robust systems from the start.

The Existing Client Dilemma

Many accountants struggle with applying new CDD requirements to long-standing client relationships. While you may feel you “know” these clients well, AML/CTF compliance requires formal verification and documentation.

Approach existing clients proactively, explaining the regulatory changes and your need to collect additional documentation. Most clients understand regulatory compliance requirements, especially when you frame it as protecting both their interests and your practice.

Managing Beneficial Ownership Complexity

Identifying beneficial owners of complex corporate structures can be challenging, particularly for trusts and companies with multiple layers of ownership. Develop standardized procedures for mapping ownership structures and collecting beneficial ownership information.

When beneficial ownership information is unclear or incomplete, consider whether the engagement represents an acceptable risk level for your practice. Sometimes declining complex engagements is the most prudent compliance decision.

Balancing Client Privacy with Compliance Requirements

Some clients may resist providing detailed personal or business information, viewing it as invasive or unnecessary. Clear communication about regulatory requirements and your professional obligations usually resolves these concerns.

Explain that AML/CTF compliance protects both your practice and their business interests by ensuring legitimate transactions aren’t inadvertently flagged or delayed by regulatory authorities.

Your Decision Framework: Building Compliance Confidence

Successful AML/CTF compliance requires systematic decision-making at every stage of client engagement. Use this framework to evaluate your compliance readiness and make informed decisions about service provision.

Service Classification Assessment

Before engaging any new client or expanding services to existing clients, ask yourself: Does this service fall under AML/CTF designated services? If yes, do I have the systems and procedures in place to meet my compliance obligations?

For services that trigger AML/CTF obligations, ensure you can complete comprehensive customer due diligence, conduct appropriate risk assessments, and maintain required records before proceeding with the engagement.

Client Risk Evaluation

Assess each client’s risk profile based on their business activities, geographic exposure, transaction patterns, and beneficial ownership structure. Ask yourself: Does this client’s risk profile align with my practice’s risk tolerance and compliance capabilities?

High-risk clients aren’t necessarily unsuitable, but they require enhanced due diligence and ongoing monitoring that may not be practical for all accounting practices.

Ongoing Monitoring Capability

Consider whether your practice has the resources and systems to conduct appropriate ongoing monitoring for the client’s risk profile. This includes regular review of client activities, transaction monitoring, and timely identification of suspicious activities.

If you can’t commit to appropriate ongoing monitoring, it’s better to decline the engagement than risk compliance failures.

The Cost of Getting It Wrong: Why Compliance Matters

Beyond financial penalties, compliance failures can damage your professional reputation, impact your ability to provide services to clients, and result in increased regulatory scrutiny of your practice operations.

Building Your Compliance Support Network

AML/CTF compliance doesn’t have to be a solo journey. Building relationships with compliance professionals, legal advisors, and technology providers can significantly enhance your compliance capabilities.

Technology solutions can automate many compliance processes, from customer screening to transaction monitoring, allowing you to focus on serving clients rather than managing compliance paperwork.

Your Next Steps: From Compliance Obligation to Competitive Advantage

Remember Isabella from Perth? Six months after implementing her AML/CTF compliance program, she discovered something unexpected. Her systematic approach to client due diligence and risk assessment had actually improved her practice’s overall risk management and client selection processes.

She now views her compliance capabilities as a competitive advantage, confidently taking on complex engagements that less-prepared practices decline, while maintaining the highest standards of professional integrity.