:quality(82))
PROPERTY professionals, lawyers and accountants need to register with AUSTRAC, develop an anti-money laundering (AML) program, appoint a compliance officer, vet and train staff, conduct due diligence on clients and be prepared to report suspicious activity.
Professional bodies have generally welcomed the new regime but question the cost, complexity and workload involved. According to one government estimate, complying with the proposals could cost affected businesses a total of $1.85 billion annually over the next 10 years.
Chris Tyler, CEO of the Australian Institute of Conveyancers NSW, says we can only guess for now, but he’s hearing of maybe $5000 a year for a small firm. “One member I’ve spoken to has six staff,” he says. “They’ll all need training. At the top end you could be talking millions. I know of one large law firm putting on 20 people to handle its AML program.” Then there are the mandatory independent reviews of your program, taking place once every three years, with $1000 floated as a likely cost.
“For sole practitioners and small businesses, the thought of implementing full AML programs is daunting,” says AIC Victoria President Shakila Maclean. “Some feel like they’re being asked to build the plane mid-flight.”
AML advisory firms insist the financial impost should be reasonable. “We’ve seen suggestions that the starting cost for AML compliance is $30,000 and up to $60,000, which is nonsense,” says WhiteLight AML’s Mike Kossenberg. ONE AML’s Akash Khushal agrees, saying, “we have seen small firms quoted upwards of $25,000 just for an initial program, which is frankly unjustifiable in most cases”.
The Law Society of NSW says it and the Law Council are “actively engaged” in talks with AUSTRAC over the compliance burden. “These consultations will help ensure that AUSTRAC understands the impact of these reforms on the solicitor professions,” a spokesperson said.
AIC state branches and the Law Society are among many professional bodies gearing up to provide advice and training.
§ DIY – or call a plumber?
In considering their AML compliance duties, many conveyancers and other practitioners will wonder: ‘am I up to the job?’
Conveyancers typically have prior experience in law or real estate, tertiary qualifications, a licence and the necessary insurances.
They’re well equipped for the work they do. But do they have the skills to handle AUSTRAC’s strict requirements? These include:
Enrolling and registering with AUSTRAC Developing and maintaining an AML/CTF program Conducting initial and ongoing customer due diligence Reporting suspicious transactions and activities Making and keeping records.
Some are time-consuming but not onerous. However, writing an AML program specific to your business has the potential to be a real head-scratcher. Likewise, investigating the bona fides of new clients.
Professional bodies will help with advice, training and online tutorials. As has AUSTRAC, which is developing AML starter kits and is already hosting webinars.
Experts who have already been through the process in Tranche 1 – advising banks, pubs, clubs and money lenders – say it’s time to develop a culture of compliance. “Education and awareness should be front and centre,” says Neil Browne, founder of AML consultancy Interlock R&C.
Practitioners who feel they can’t cope might consider merging with other small firms, to better shoulder the workload. Some lawyers are said to be considering early retirement or ceasing to provide regulated services.
“We are concerned that the workload will be untenable for micro practices and sole practitioners,” says Law Council of Australia President Juliana Warner.
Chris Tyler, CEO of the Australian Institute of Conveyancers NSW, agrees that “the oft-quoted response to major changes in conveyancing is ‘I’m going to retire’.” But, he says, in his experience, few do. “Conveyancers are an extremely resilient breed, and they just get on with it.”
“There’s talk of early exits,” says AIC Vic’s Shakila Maclean. “But I think most conveyancers are determined to meet this head-on.”
One concept considered by AUSTRAC is to allow practitioners to form a “reporting group” of similar businesses. “Entities in a reporting group share some or all risk management and compliance arrangements,” AUSTRAC says. However, Tyler believes the group idea is more suited to larger organisations like real estate franchises.
Or you could outsource your AML compliance to a specialist. One that advertises online offers starter packs from around $4000 for a small firm. Ongoing management, if desired, ranges from $100 to $500 a month.
“A reputable consultant will take the time to understand your business, clarify your needs, and tailor a solution that delivers value,” says Neil Browne.
WhiteLight AML’s Mike Kossenberg adds that “trying to do it in-house without the right skills can result in costly remediations”.
Whatever approach you take, help is at hand. “Don’t be part of the negativity,” Browne says. “Work with the regulatory body and professionals, and you will find a cost and risk-effective solution.” “We’re here to support our members,” says Tyler. “Helping them to cope with the coming changes is a key effort.”
There are several third-party consultants, like ONE AML and WhiteLight, offering to shoulder the workload.
“For most smaller firms, outsourcing is the safer and more time and cost-efficient option,” says ONE AML’s Khushal. His estimate for a small firm is $4500-$6500 for an initial program and risk assessment, plus an optional $300-$500 a month for ongoing support, such as reporting templates, training, updates, periodic reviews and ad hoc advice.
AUSTRAC acknowledges the potential benefits and efficiencies of outsourcing, but cautions “it is ultimately your responsibility to ensure that any third parties your business engages are suitably qualified and experienced.”
In other words, the buck stops with your firm. It could all be overwhelming. A recent survey found 78 per cent of conveyancers and lawyers felt unprepared for the changes. But the good news is the conveyancing and legal industries’ tech partners are working on automated solutions, much like the software already used for title searches. Those tools could include financial background checks on new clients and screening of PEPs or politically exposed persons.
The government agency administering the new regime has lots of useful information on its website, but “AUSTRAC does not provide AML/CTF program templates”.
What it does provide, are stern warnings against non-compliance. Maximum penalties for breaches of the Anti-Money Laundering and Counter-Terrorism Financing Act can be huge. In 2020, Westpac agreed to pay $1.3 billion, the highest civil penalty in Australian history.
Casinos, clubs, betting companies, pawnbrokers, money remitters and currency exchanges have also been hammered with fines, enforceable undertakings and infringement notices.
The maximum penalties are 20,000 units for an individual, 100,000 units for a corporation. That’s currently $6.6 million or $33 million per offence. (Westpac copped to 23 million breaches.) Firms could face fines of $19,000 per day if they provide a service before enrolling.
So while the costs of compliance might be high, the costs of non-compliance can be far greater. Industry leaders urge practitioners to keep calm – but start planning now.
Conveyancers are about to join the fight against money laundering and terrorism financing – but what does this mean for you?
§ AUSTRAC’s Tranche 2 Reporting Entities
Tranche is a French word meaning slice or portion, sometimes applied to a dessert like a slice of pie. But for many conveyancers, being included in AUSTRAC’s Tranche 2 Reporting Entities is hardly a mouth-watering prospect.
Along with lawyers, real estate agents, bullion dealers and accountants, they’ll join Australia’s fight against terrorism financing and money laundering: the AML/CTF reforms.
The following advice draws on current AUSTRAC guidelines, found at
§ Key obligations
First up, conveyancers must enrol online with AUSTRAC from July 1, 2026. They must do so within 28 days of providing the service, so typically July 29 will be the due date. But businesses providing ‘virtual asset-related services’ will be regulated even earlier: from March 31, with enrolment by April 28. You can check your category online.
They must provide details of their business structure, the services provided, key personnel and contact details. If there’s a change in those details, you have 14 days to update them.
§ The AML/CTF program
Each business must develop and maintain an AML/CTF program to firstly assess the risks it faces and secondly, establish policies and procedures to mitigate those risks.
§ Governance and oversight
The program must be overseen by your governing body, approved by senior management and administered by an AML/CTF compliance officer.
Happily for one-person shops, the compliance officer, senior manager and governing body can all be the same person.
§ Due diligence
You need to know who your customers are and understand any associated risk of money laundering and/or terrorism financing, conducting due diligence both before and throughout your relationship.
§ Reporting obligations
You must report suspicious activity if, for example, you suspect the client is not who they claim to be, is linked to criminal activity, or attempts to transact with $10,000 or more in cash. This report must be made within 24 hours in some cases.
§ Record keeping
You must make accurate and complete records of your AML/CTF program and activities including staff training, and keep those records for at least seven years. You must also submit an annual report to AUSTRAC. Heavy fines apply for non-compliance.
Many conveyancers will wonder how they can recognise dodgy clients. AUSTRAC has promised conveyancer-specific advice, which was yet to be delivered at the time of writing. But it’s worth reading its ‘Risks and indicators of suspicious activity’ for similar professionals such as financial planners.
Red flags include unverifiable ID, unexplained wealth and use of a Post Office box as a residential address.
Meanwhile, keep up to date with the latest information via austrac.gov.au/
§ THE EXPERTS
One solution to the AML/CTF workload is for Tranche 2 entities to engage an outside consultancy, ideally with extensive Tranche 1 experience.
WhiteLight AML helped banks and gambling concerns get compliance back on track after some copped big penalties. “We’re now using that experience to help the smaller Tranche 2 entities,” says its head of financial crime outsource services Mike Kossenberg.
It’s Catch-22 for many conveyancers. A small practice is more likely to need outside help. And maybe less likely to be able to afford it.
But experienced providers swear they save time, stress and money by getting it right first time. “This is all we do,” says ONE AML managing director Akash Khushal. Kossenberg agrees. “Outsourcing will not only be the safer option, it will also be cheaper,” he says.
Shop around: do your research and seek recommendations. If you do decide to outsource, get in early. There are some 90,000 Tranche 2 entities but only a handful of highly qualified advisers.
“The New Zealand experience is that many who left seeking advice to the last minute missed out,” says Kossenberg.
Khushal agrees. “If you wait until next year, you’ve almost missed the boat.”
Most offer a free initial consultation. AUSTRAC has a list of questions to ask. Search “AML/CTF advisers” on their site.
Remember that you, not they, are responsible for compliance.
“Our members will be responsible for their programs and how they are administered,” says AIC NSW CEO Chris Tyler. “Any mistakes, oversights or errors are not able to be outsourced.”
Tyler is also concerned that outside providers might not yet be fully equipped. “My response to them is that the AUSTRAC Guidance, Rules, and Starter Programs have still not been developed or finalised,” he says.
Providers insist they’ll be ready: “We are 99.9 per cent certain of what is coming,” one said.
Firm AML Sorted pointed to its expert staff, global experience, and grateful clients: “as industry experts, we can help you achieve and maintain compliance with confidence.”
§ A CAUTIOUS CONVEYANCER
Australian Institute of Conveyancers Victoria President Shakila Maclean runs her own Melbourne practice, All Hours Conveyancing.
We asked whether she had considered outsourcing her firm’s AML compliance.
“At All Hours, we’ve consciously decided to hold off for now,” she replied. “There’s active discussion among the industry bodies about a coordinated solution, and we’d rather avoid duplicating effort or heading in the wrong direction.
“It’s not inaction, it’s a deliberate pause while the landscape becomes clearer. No point racing ahead only to realise you’ve set up a compliance regime that doesn’t comply - or paid a premium for a glorified checklist.”