Insolvency Sector
Insolvency practitioners with appointments involving designated services are captured under Tranche 2. Here's what you need to know before 1 July 2026.
From 1 July 2026, new AML/CTF compliance obligations (called Tranche 2) will apply to the Insolvency Sector. AUSTRAC enrolment opens 31 March 2026.
The path to 1 July 2026 is defined by clear legislative and regulatory milestones
AML/CTF Amendment Act Passed
Nov 2024
Finalisation of AML/CTF Rules
Aug 2025
Core Guidance from AUSTRAC
Oct 2025
Sector-Specific Guidance for Real Estate
Early 2026
AUSTRAC Enrolment Opens
31 Mar 2026
Mandatory Compliance Commences
1 Jul 2026
The Australian real estate sector has been assessed as having a high money laundering risk. Professionals are viewed as critical gatekeepers.
These reforms are driven by
FATF Standards
The primary driver is the Financial Action Task Force (FATF), the global standard-setter for combating financial crime. Australia is a founding member and subject to its peer reviews.
2015 Evaluation Gap
Australia's 2015 FATF evaluation highlighted a key deficiency: the lack of regulation for "gatekeeper" professions like lawyers, accountants and real estate agents.
Criminal Exploitation
Criminals exploit these professional services to conceal illicit funds, hide beneficial ownership through complex structures and add a veneer of legality to the proceeds of crime.
Tranche 2 Reforms
The Tranche 2 reforms close this long-standing vulnerability, strengthening the integrity of Australia's financial system.
ML/TF/PF Risks in the Insolvency Sector
The insolvency sector faces unique money laundering (ML), terrorism financing (TF) and proliferation financing (PF) risks. If an entity offers designated services, they will need to be aware of and assess the risks in relation to their business and services offered.
Identity Verification
Customer due diligence
Inadequate verification of customer identity leading to onboarding of high-risk clients.
Unusual Transactions
Transaction monitoring
Failure to detect structured payments or unusual transaction patterns.
Sanctions Exposure
Prohibited dealings
Risk of inadvertently dealing with sanctioned entities or persons.
Beneficial Ownership
Ownership opacity
Complex ownership structures obscuring the true beneficial owners of assets or entities.
Who May Be Captured?
The key trigger is designated services. If you are unsure whether you are covered, please take advice. Even if you are not covered, you may consider implementing guardrails.
Registered liquidators
ASIC-registered practitioners
Bankruptcy trustees
Personal insolvency administration
Voluntary administrators
Corporate restructuring specialists
Deed administrators
DOCA administration services
Receivers and managers
Secured creditor appointments
Whether you are captured depends on the designated services you provide. If unsure whether you're covered, please seek legal advice. Even if you are not covered, you may consider implementing guardrails to ensure you don't accidentally cross lines.
Once you are a reporting entity, you have six fundamental compliance obligations
1. Enrol with AUSTRAC
Formally register your practice as a reporting entity.
2. Develop & Maintain an AML/CTF Program
Create a written, risk-based program tailored to your firm's specific ML/TF risks. This is the cornerstone of your compliance.
3. Conduct Customer Due Diligence (CDD)
Identify and verify your clients and their beneficial owners before providing a designated service, and monitor them on an ongoing basis.
4. Report to AUSTRAC
Submit Suspicious Matter Reports (SMRs) and Threshold Transaction Reports (TTRs) as required.
5. Keep Records
Maintain all relevant records of CDD, transactions and your AML/CTF program for prescribed periods.
6. Appoint an AML/CTF Compliance Officer
Designate a senior individual responsible for the oversight of your program.
Key AML/CTF Areas for Insolvency Practitioners
Under Tranche 2, insolvency practitioners face new obligations when providing designated services. Our documentation helps you navigate these requirements with confidence.
Administration & Liquidation Compliance
Procedures for AML/CTF compliance during voluntary administrations, liquidations and receiverships.
Trust Account Management
AML/CTF controls for trust accounts holding company funds, including monitoring and suspicious activity detection.
Stakeholder Identity Verification
Verification of creditors, directors and beneficial owners involved in insolvency proceedings.
Asset Tracing Procedures
Procedures for verifying the source and legitimacy of company assets under management.
Beneficial Ownership Records
Requirements for identifying and verifying beneficial owners of entities in administration.
Suspicious Matter Reporting
Workflows for identifying, escalating and reporting suspicious matters to AUSTRAC.
Compliance Officer Duties
Appointment requirements, role description and ongoing responsibilities for AML/CTF compliance.
Building an AML Program
Building an AML/CTF program for an insolvency practice requires multiple steps.
- AML/CTF program framework for insolvency practices
- Risk assessment worksheet (ML/TF/PF risks)
- Stakeholder identification and verification procedures
- Trust account AML controls and monitoring
- Asset tracing compliance workflows
- Suspicious matter reporting procedures
- Staff Training Register for tracking completion
- Compliance officer role description
Ready to Get Started?
We can help you get a headstart on your AML/CTF program. Program packs from $249, licensed to you permanently. Portal is free with managed CDD, or run your own CDD on BYO-API plans from $20/month.
A HeadStart on Compliance
Sector-specific compliance documents to help you build your AML/CTF program.
Ready-to-Customise Resources
Lawyer-ready to review for your business.
Training & Record-Keeping
Staff Training Register, Compliance Officer appointment documents and portal-based training record-keeping.
From $249 inc GST · or bring your own program
HeadStart Docs™ products are developed with reference to publicly available regulatory guidance. This is general information only and does not constitute legal or professional advice. You should seek advice specific to your circumstances before making compliance decisions.