AUSTRAC issues further guidance on designated services

As at 1 July 2026, the start date for AML, practitioners are endeavouring to prepare themselves for this substantive compliance piece.

This involves ensuring that you enrol with AUSTRAC by 1 July, Technically, if you are providing a designated service on 1 July, you do have 28 days to enrol ie: no later than 29 July 2026 but we would suggest that earlier is preferable.

The definition of designated services for legal practitioners is found in section 6(5B) of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006. Section 6(5B) contains nine professional services (commonly referred to as Table 6 designated services) (designated services) with which all practitioners should become familiar.

This is important even for practices that currently consider themselves outside the AML/CTF regime, as service offerings can evolve over time and inadvertently bring the practice within the regime.

Please note that this is dependent on what you do, not your area of practice. AUSTRAC has provided some guidance on what a designated service is; a short (not all inclusive) summary can be found in our FAQ.

One of the more challenging aspects of the AML/CTF reforms has been determining whether a practice provides a designated service and therefore qualifies as a reporting entity requiring enrolment. If you do not provide designated services, you should consider our FAQ that outlines what you should document to support this decision.

AUSTRAC has provided useful guidance on the phrase ‘assisting in the planning or execution of a transaction,’ which appears in several designated services (items 1-4, 6). AUSTRAC’s guidance indicates that a practitioner must be ‘sufficiently linked’ to the outcome of the transaction and actively moving it forward. Two concepts are particularly relevant:

1. Who: A solicitor assists a customer (client) when they actively advance a relevant transaction, or the creation or restructuring of a body corporate or legal arrangement. Merely influencing how a client proceeds, such as by providing general legal advice or ancillary services is not a designated service.
2. When: A solicitor commences providing a designated service when they act on instructions and directly advance the relevant transaction or the creation or restructuring of a body corporate or a legal arrangement. This will typically be when two or more parties to a transaction exist or when preparatory steps are taken to create or restructure a corporate body or legal arrangement.

AUSTRAC has also observed that designated services generally concern current or prospective transactions, or the creation or restructuring of legal arrangements, rather than advice about an existing body corporate or legal arrangement. You must also provide these designated services to an external customer (client) who is a separate legal entity to the business (practice). In-house counsel providing legal advice solely to their employer will generally not be providing a designated service.

It should also be noted that table 6 designated services must be provided ‘in the course of carrying on a business’. AUSTRAC has made it clear that it does not matter whether it is the business’s principal activity,  or whether it is provided on a pro-bono basis.

In their most recent guidance, AUSTRAC has clarified that the customer is the person/entity to whom the professional service is provided. A person/entity does not become your customer merely because their funds pass through your trust account during  a transaction. For example, where a seller’s solicitor holds a deposit on trust under a contract, the customer (seller) is the solicitor’s client not the buyer (counterparty) who originally paid the deposit. Customer due diligence (CDD) is therefore not required on the buyer merely because the buyer’s funds passed through the trust account. However, the solicitor must still assess the AML/CTF risks associated with the transaction, including any source of funds concerns

AUSTRAC has further clarified the operation of the exemption in s6(5C)(b).

Where a practice does not provide any designated services other than holding monies in trust, and the money is held for payments reasonably incidental to providing a non-designated service, the trust account activity may fall within the exemption.

For example, a litigation practice receiving settlement funds into their trust account under a privately negotiated settlement agreement and distributing those funds in accordance with that agreement, would generally not be providing a designated service.

Please note that the exemption applies at the level of the legal practice as a whole, not by reference to individual practice areas. Accordingly, if the practice also provides designated services (eg: conveyancing) this s6(5C(b) exemption will not apply. Practitioners are also reminded that this particular exemption will not apply if you allow your client to use your trust account as a de facto bank account (ie: funds are not being held for incidental payments connected to your non-designated services).

The distinction between providing legal advice and actively advancing a transaction remain central to determining whether a designated service is being provided. Practitioners should continue to monitor AUSTRAC guidance as further examples and industry-specific guidance become available in the lead-up to commencement.