Important Clarification
Having no employees does not exempt you from Tranche 2 obligations. If you provide designated services, you must have an AML/CTF program regardless of business size or structure.
Why the Program is Still Required
The AML/CTF Act applies to reporting entities that provide designated services. The definition of a reporting entity is based on the services you provide, not on how many people work in your business.
As a sole practitioner providing designated services (such as legal services, accounting services, real estate agency services or others covered by Tranche 2), you are a reporting entity. This means you must:
- Enrol with AUSTRAC
- Have an AML/CTF program
- Conduct customer due diligence
- Report suspicious matters and threshold transactions where applicable
- Keep records as required by the legislation
What "No Staff" Changes
While the obligation exists regardless of staff numbers, the practical implementation of your program can be simpler when you operate solo. Here is what changes:
Simplified Elements for Solo Operators
You only need to train yourself. No need for staff training programs, induction procedures or ongoing training registers for multiple employees.
No employee due diligence procedures required if you have no employees.
You are both the person identifying suspicious matters and the Compliance Officer. No complex escalation procedures needed.
Simplified oversight structure since you are accountable for all aspects of compliance.
What Still Applies in Full
Certain program elements apply regardless of business size:
- Customer identification and verification procedures
- Risk assessment of your business and customers
- Ongoing customer due diligence and transaction monitoring
- Record keeping requirements (7 years in most cases)
- Reporting obligations (SMRs, TTRs where applicable)
- Program reviews to ensure your program remains current
Proportionality Principle
AUSTRAC recognises that AML/CTF programs should be proportionate to the nature, size and complexity of the business. This is sometimes called the "risk-based approach" or "proportionality principle."
For a sole practitioner with a small client base and straightforward services, this means:
- Your risk assessment can focus on the specific services you actually provide
- Your procedures can be streamlined for solo operation
- Your documentation does not need to replicate large-firm complexity
- Your training obligations are limited to yourself
Practical Example
A sole practitioner conveyancer handling residential property settlements does not need the same level of AML/CTF program complexity as a multinational law firm. The program should reflect the actual risks and scale of your practice.
Common Questions from Solo Operators
Can I use a simplified program?
Yes, as long as your program addresses all the required elements and is appropriate to your business risks. "Simplified" does not mean incomplete. It means proportionate.
Do I need policies for staff if I have no staff?
You should have procedures in place, but they can be written for your own reference rather than for staff instruction. If you later take on staff, you will need to update your program accordingly.
What if I use contractors or outsource work?
If you engage contractors or outsource certain functions, you may need to consider how this affects your AML/CTF obligations. You remain responsible for compliance, even if tasks are delegated. Note that while you can outsource AML functions (such as customer verification), you cannot outsource the Compliance Officer role itself.
Getting Started as a Solo Operator
If you are a sole practitioner preparing for Tranche 2:
- Confirm your designated services to understand which obligations apply
- Enrol with AUSTRAC (required from 31 March 2026)
- Obtain an AML/CTF program appropriate to your practice
- Appoint yourself as the AML/CTF Compliance Officer (you must be senior management)
- Complete training on your obligations
- Implement your procedures before 1 July 2026