Why "Part A" and "Part B" Programs are Out of Date in 2026
For 15 years, AML/CTF programs were split into Part A (General) and Part B (Customer Identification). That structure is now obsolete. If your program still uses this terminology, it does not comply with the reformed legislation.
The old structure: Part A and Part B
Under the original AML/CTF Act 2006, reporting entities were required to have an AML/CTF program with two distinct parts:
Part A: General Program
Covered risk assessment, transaction monitoring, employee training and general compliance procedures.
Part B: Customer Identification
Covered customer due diligence, identity verification and beneficial ownership identification.
This structure served its purpose for Tranche 1 entities (financial services, gambling, bullion dealers). However, the reformed legislation takes a fundamentally different approach.
The change: Section 26B unified program
Under Section 26B of the reformed Anti-Money Laundering and Counter-Terrorism Financing Act 2006, the Act no longer uses "Part A" and "Part B" terminology. Instead, it mandates a unified AML/CTF program with integrated components.
Section 26B: AML/CTF Program Requirements
The new legislation requires a single, integrated program consisting of:
- ML/TF/PF Risk Assessment (Section 26C) - now including Proliferation Financing
- AML/CTF Policies (Section 26F) - covering all operational requirements
- Customer Due Diligence - integrated within the policies, not separate
- Ongoing Compliance - unified monitoring and reporting framework
Why old documents fail
If you purchase or use an AML/CTF program document that still references "Part A" and "Part B," you face several problems:
Structural non-compliance
The program structure itself does not match what the Act requires. AUSTRAC expects to see programs aligned with Sections 26B-26F, not the old Part A/B framework.
Missing PF risk assessment
Old documents do not address Proliferation Financing, which is now a mandatory component under Section 26C(1). This alone makes any pre-reform document non-compliant.
Incorrect section references
Documents referencing old section numbers create confusion and demonstrate the program was not updated for the reformed legislation.
The new unified structure
Under Section 26C, your risk assessment must now address:
- Money Laundering (ML) risks specific to your designated services
- Terrorism Financing (TF) risks applicable to your business
- Proliferation Financing (PF) risks - the new mandatory category
Under Section 26F, your AML/CTF policies must include:
Section 26F Policy Requirements
- Customer due diligence procedures (integrated, not separate)
- Ongoing customer due diligence
- Beneficial ownership identification
- Transaction monitoring appropriate to your business
- Suspicious matter identification and reporting
- Record keeping procedures
- Employee due diligence (Section 26F(4)(d))
- AML/CTF Compliance Officer appointment
- Training for relevant employees
What you need to do
- Audit your current program: Check whether it uses Part A/B terminology. If it does, it needs replacement, not just updating.
- Verify section references: Ensure all legislative references point to the current sections (26B, 26C, 26F, etc.), not the old framework.
- Check for PF coverage: Confirm your risk assessment explicitly addresses Proliferation Financing as required by Section 26C(1).
- Adopt unified structure: Your program should present an integrated approach, not artificially separated "parts."
Key Takeaway
Any AML/CTF program that still uses "Part A" and "Part B" terminology is based on obsolete legislation. The reformed Act requires a unified program structure under Sections 26B-26F, including mandatory Proliferation Financing risk assessment under Section 26C(1).
Read our complete Tranche 2 Guide
Key dates, affected sectors, obligations and how to prepare
Disclaimer: This article is general information only. It is not legal, financial or compliance advice. HeadStart Docs™ provides free compliance documents, not legal services.
We do not guarantee the accuracy of information provided. Obligations may apply depending on your designated services. Always confirm your specific requirements with a qualified adviser.
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