Australian sanctions laws place restrictions on dealing with certain people, organisations and assets. In the past, these rules mainly affected banks and other financial institutions. However, recent changes mean sanctions compliance is now much more relevant to legal practice.
Lawyers may be exposed to sanctions risks when providing services that involve transactions, the movement of assets, or handling client funds. As a result, sanctions compliance is no longer something that can be left to financial intermediaries, it is becoming a direct responsibility for legal professionals.
In March 2026, the Australian Sanctions Office (ASO) released new guidance aimed specifically at the provision of legal services. This guidance aligns with broader reforms to Australia’s anti‑money laundering and counter‑terrorism financing (AML/CTF) laws. From 1 July 2026, these reforms will extend customer due diligence and sanctions screening requirements to certain legal services.
Australian sanctions laws – a brief overview
Sanctions are measures imposed by the Australian Government, either autonomously or pursuant to United Nations Security Council decisions, in response to situations of international concern. They are administered under the Autonomous Sanctions Act 2011 and the Charter of the United Nations Act 1945.
Sanctions measures may include:
- targeted financial sanctions (TFS);
- restrictions on dealing with assets;
- prohibitions on certain services or commercial activities;
- trade and travel restrictions.
Contraventions can involve both direct and indirect dealings, and offences carry serious criminal penalties.
Designated persons and controlled assets
A designated person or entity is one listed under Australian sanctions laws and subject to targeted financial sanctions. The Department of Foreign Affairs and Trade maintains a Consolidated List of all persons and entities currently designated under Australian sanctions frameworks.
An asset is broadly defined and may include money, property, securities, contractual rights and other tangible or intangible interests. Assets are considered controlled assets if they are owned or controlled, directly or indirectly, by a designated person or entity.
Australian sanctions laws prohibit:
- using or dealing with controlled assets;
- allowing or facilitating others to deal with those assets; or
- making assets available to, or for the benefit of, designated persons or entities.
For legal practitioners, these risks most commonly arise in matters involving trust accounts, property or business transactions, and the creation or transfer of legal entities or arrangements.
Providing legal services to sanctioned persons
Australian sanctions laws recognise the importance of access to legal representation. For this reason, the ASO has issued a class‑based Legal Services Permit (SAN‑2024‑00138).
The permit authorises, in defined circumstances:
- the provision of legal advice;
- legal representation in Australian courts and tribunals; and
- ancillary legal services
to persons or entities designated under Australia’s autonomous sanctions framework, where the matter relates to Australian law.
The permit also allows certain dealings with assets in connection with legal proceedings and payment of legal costs.
However, the permit:
- does not apply to sanctions imposed under UN Security Council frameworks;
- applies only to specified legal services; and
- does not remove obligations under AML/CTF laws.
Certain users of the permit must notify the ASO before relying on it. Please see: SAN-2024-00138 – Legal services permit | Australian Government Department of Foreign Affairs and Trade
AML/CTF reforms and sanctions screening
In November 2024, Parliament passed the Anti‑Money Laundering and Counter‑Terrorism Financing Amendment Act 2024, modernising and expanding Australia’s AML/CTF framework. From 1 July 2026, these obligations apply to legal practices providing specified designated services.
Designated services commonly provided by legal professionals may include:
- buying, selling or transferring real estate or businesses;
- buying, selling or transferring companies, trusts or other legal arrangements;
- receiving, holding or disbursing funds or property; and
- transactional work relating to equity or debt financing.
Legal practices that provide designated services may be reporting entities and must undertake customer due diligence, including identifying whether clients, beneficial owners, authorised representatives or trust beneficiaries are subject to targeted financial sanctions.
Reporting entities must also implement AML/CTF policies to ensure that, in providing designated services, they do not contravene Australian sanctions laws.
Managing sanctions risk in practice
Sanctions risks may arise even where a legal practitioner does not act for a designated person directly. Indirect benefit to a designated person, for example, through complex ownership structures or intermediaries, may still result in a contravention.
Before accepting instructions, practitioners should consider:
- whether the client or associated persons appear on the Consolidated List;
- the nature of the services being provided;
- whether funds or assets will be handled; and
- whether ownership or control structures are transparent.
Higher‑risk matters may require enhanced due diligence, including further enquiries or independent legal advice.
Red flags
The ASO identifies a range of common indicators associated with sanctions risk, including:
- complex or opaque corporate or trust structures;
- nominee arrangements obscuring beneficial ownership;
- links to high‑risk jurisdictions or sanctioned entities;
- instructions or documentation that conceal the true purpose of a transaction; and
- contractual terms designed to guard against sanctions breaches.
Where uncertainty cannot be resolved, it may be necessary to decline or cease acting.
What to do if a sanctions issue is identified
Assets owned or controlled by a designated person must be frozen. A person who holds such assets must not deal with them or assist others to do so without a sanctions permit.
Any attempt to deal with controlled assets should be reported to the Australian Sanctions Office. Where relevant, reporting entities must also consider whether a suspicious matter report to AUSTRAC is required.
Penalties
Sanctions offences carry significant penalties, including:
- imprisonment and substantial fines for individuals; and
- large civil and criminal penalties for corporations.
For bodies corporate, offences are generally of strict liability, although a defence may be available where reasonable precautions and due diligence can be demonstrated.
Key points for practitioners
- Sanctions laws apply directly to many forms of legal work.
- From 1 July 2026, AML/CTF obligations link sanctions screening to designated legal services.
- Legal services permits preserve access to legal representation but operate within defined limits.
- Indirect dealings and trust account activity present particular risk.
- Documented due diligence remains central to managing exposure.
Sanctions compliance requires ongoing attention but can be managed through proportionate, risk‑based processes aligned with existing professional obligations.
This article is general information only and does not constitute legal advice.
Key sanctions and AML/CTF milestones for legal practitioners
Pre‑2024
• Australian sanctions laws apply broadly, including to legal services
• Sanctions risks primarily considered in limited, high‑risk matters
29 November 2024
• Anti‑Money Laundering and Counter‑Terrorism Financing Amendment Act 2024 passed
• Legal services identified as higher‑risk for misuse in financial crime
30 October 2024
• ASO undertakes sector‑specific engagement and guidance development
• Class‑based Legal Services Permit SAN‑2024‑00138 issued and takes effect from that date for 2 years
March 2026
• ASO publishes guidance note on sanctions compliance for legal professionals due to 1 July start date for AML/CTF
1 July 2026
• AML/CTF obligations commence for legal practices providing designated services
• Mandatory sanctions screening linked to customer due diligence requirements begins
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