AUSTRAC’s AML guidance welcomed

AUSTRAC has released long-awaited new reforms guidance on the scope of ‘designated services’ in the AML legislation, a key foundational concept for legal practitioners grappling with the coming impact of AML regulation.

“The guidance includes welcome clarifications limiting the potential impact of the designated services definition,” QLS CEO Matt Dunn said.

“QLS acknowledges AUSTRAC’s willingness to work with stakeholders to develop guidance responding to the complexity of legal practice.

“The new guidance gives practical examples of when a designated service commences and what types of legal work are out of scope.

“QLS will now work through the detail of the guidance and update our members on any further clarification needed.”

Matt also recognised the work of the Law Council of Australia’s president Juliana Warner in advocating for pragmatic and transparent guidance.

QLS will continue engage with AUSTRAC, through the Law Council, to identify gaps and seek improvements in the guidance before the 1 July 2026 commencement.

The QLS website will continue to be updated with further background on the new regulatory obligations applying to the legal profession from 1 July 2026.

AUSTRAC is also preparing sector-specific guidance for the legal profession, including starter program kits primarily for SME tranche 2 entities, to be released at the end of January 2026.

Understanding the scope of designated services

From 1 July 2026, anti-money laundering and counter-terrorism financing (AML/CTF) law will be extended to lawyers who provide designated services listed under table 6 of subsection 6(5B) to the Anti-Money Laundering and Counter-Terrorism Financing Act 2006.

The AUSTRAC guidance on professional services addresses some of the detailed steps involved in transactions covered by the designated services definition. This guidance should assist you in determining whether you fall within the regime and when the designated service may begin.

The new guidance also covers the designated service of brokering the sale, purchase or transfer of real estate. This generally applies to real estate agents (both buyer and seller agents) and property developers or other businesses selling house and land packages, apartments off the plan, and blocks of land in new subdivisions.

What does ‘assisting’ mean?

Transactional lawyers will be interested in the explanation of assisting or otherwise acting for a person in certain transactions.

The guidance clarifies that the concepts of ‘assisting’, ‘planning’, ‘organising’ or ‘otherwise acting for on behalf of a person’ will only be regulated under table 6 when it’s sufficiently linked to the outcome of certain designated services such as:

• A transaction to sell or buy real estate (Item 1, table 6).
• A transaction to sell, buy or otherwise transfer a body corporate or legal arrangement (item 2, table 6).
• The creation or restructuring of a body corporate or legal arrangement.

AUSTRAC’s guidance then outlines how to assess whether the legal practitioner’s work is sufficiently linked to the outcome of the designated service:

• If the assistance directly advances a relevant transaction, then the AML regulatory obligations are triggered. Merely influencing how the client proceeds, or providing general advice or ancillary services is not sufficient.
• A practitioner will be considered to commence to provide the designated service when they act on instructions to implement the transaction or arrangement.

AUSTRAC has developed these principles to ensure regulation is confined to addressing the money laundering risks in table 6 of the legislation (for example the legal work for the transfer of real estate), not the ancillary services that may merely influence the transaction (for example, a solicitor engaged to provide advice on the legal effect of terms in a contract for sale.

Real estate transactions

A lawyer provides a designated service when they assist a person in the planning or execution of a transaction to sell, buy or otherwise transfer real estate from one person to another, when it is not pursuant to a court or tribunal order.

The designated service includes both the execution and planning of this transaction.

The definition of ‘real estate’ excludes:

• Leases of 30 years or less.
• Incorporeal hereditaments For example, easements and restrictive covenants.
• Mortgagee interests.
• Dwellings not attached to land, where the resident owns the dwelling but leases the land on which the dwelling is located such. This includes caravan parks and some retirement villages.

The guidance explains activities that fall under this designated service include the typical steps taken in the conveyancing process to transfer real property from one person to another, such as any of the following:

• Preparing, reviewing or lodging the contract of sale and transfer of land instrument.
• Researching property titles, strata documents, or land use specifications.
• Coordinating with financial institutions regarding payments and discharge of mortgage for the real estate transfer.
• Holding funds on behalf of a buyer and disbursing trust funds at settlement, or organising for release of deposit to the seller.
• Preparing for financial settlement.
• Preparing documents to be provided to a registry authority for transfer of real estate on behalf of a client.

These activities can start to be a designated service depending on when they occur.

The guidance also gives commentary on when a person ‘commences providing the designated service’ and when customer due diligence (CDD) obligations must be completed.

Useful examples consider the trigger events for a typical conveyancing transaction and how the principles apply to town agent services.

Transactions arising from a court or tribunal order

There is an exception that a designated service isn’t provided where a transaction to sell, buy or transfer real estate, a body corporate or a legal arrangement is pursuant to, or resulting from, an order of a court or tribunal (Items 1 and 2 of table 6).

The transaction must take place to comply with or give effect to an order that has been made by a court or tribunal.

The guidance draws a distinction between the exception which applies to the transfer of real estate after consent orders are issued and the transfer of a property pursuant to a binding financial agreement agreed by the parties.

In the second scenario:

• If the family lawyer provides work in drafting and executing the binding financial agreement, this wouldn’t be regulated, as this is not performed in connection to a transaction.
• The conveyancer’s services to directly advance the transfer of the property pursuant to the agreement would be regulated under item 1 of table 6.

Litigation services

The AUSTRAC guidance states that “legal dispute resolution services will generally not fall under the scope of table 6, as they’ll often:

• Not constitute assistance to the client that directly advances a relevant transaction.
• Only relate to determining legal questions on matters that have already occurred, not matters that are in progress or will occur in the future.

Testamentary trusts and drafting wills not within scope

The guidance also confirms that the drafting of a will, and the subsequent creation of a testamentary trust, won’t constitute a designated service.

Table 6 regulates certain services related to a body corporate or legal arrangement (items 2, 4 and 6–9) or shelf companies (item 5). Legal arrangement has its own definition and includes an express trust.

The guidance specifically identifies that an express trust includes a trust expressly or intentionally created in writing by a settlor. This doesn’t include trusts created solely by operation of law (not in writing) and explicitly doesn’t include a testamentary trust.