The Expanded AML/CTF Regime: Navigating New Compliance Realities for Finance Professionals

Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) reforms that took effect on 1 July 2026 represent the most significant overhaul of Australia's financial crime enforcement framework in nearly 20 years. Whilst only indirectly affecting mortgage brokers, several related industries now fall within AUSTRAC’s remit.

What’s Changed, and Why it Matters

The reforms apply the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (“the Act”) to so-called "tranche two" entities including lawyers, accountants, and real estate professionals. Consequently, thousands of businesses to which the Act did not previously apply have been incorporated into AUSTRAC’s enforcement net.

Demand for training, technology, and specialist expertise will increase. The reforms simplify and modernise the AML/CTF framework, ensuring Australia meets international standards set by the Financial Action Task Force (FATF). Australia was under pressure from the FATF for many years to bring professional services into its regulatory fold.

The Asset Finance Question

While residential mortgage brokers are not directly impacted by the reforms, questions exist over whether commercial asset finance broking has been captured inadvertently.

There are concerns asset finance broking may satisfy the definition of "debt financing" as a designated service under the Act. AUSTRAC’s guidance states that debt financing includes "all capital and debt raising methods," including "secured or unsecured bonds, bills or notes, asset financing, loans (including government loans) and debentures."

The breadth of this definition creates ambiguity over whether commercial brokers arranging finance for business asset purchases could be caught in the expanded regulatory net.

Finance Brokers Association of Australia (FBAA) regulatory compliance specialist David Carson said the association sought clarification from AUSTRAC, because its guidance suggested commercial asset finance broking could be defined as a designated service. "We are not convinced it was ever the legislative intent to capture this activity, so we remain hopeful we can obtain clarification that this is not the case," he said.

AUSTRAC has acknowledged the concern and is reviewing it, advising the FBAA it does not expect finance brokers to begin working towards compliance until it publishes its position on debt financing. "If the outcome is that finance broking activities fall within scope of (the Act), we recognise that affected businesses will need time to work towards compliance, including establishing AML/CTF programs and training staff," a spokesman said.

Commercial asset finance brokers should – for now – not make compliance changes until AUSTRAC publishes its determination.

What the Reforms Mean for Referral Networks

Brokerages may not be directly captured by Tranche Two obligations, but professionals they work with almost certainly are. Accountants, conveyancers, solicitors, and real estate agents now operate under the new framework. Businesses providing designated services must have an AML/CTF program and AML compliance officer in place, be training staff, and be ready to report. Failure to comply may result in significant penalties.

In practice, these professionals will ask more questions about their clients before referring them. They will collect more documentation, verify identities more rigorously, and in some cases flag transactions to AUSTRAC. This is a positive for market integrity, but fundamentally alters the nature of referral relationships.

Existing Obligations Have Been Tightened

Residential mortgage brokers were already regulated under the Act as “existing reporting entities,” brokers and brokerage firms, while already regulated, face enhanced compliance obligations. The reform marks a fundamental shift from a prescriptive, rules-based model to an outcomes-focused, risk-driven approach.

Significantly, this means AUSTRAC will assess the effectiveness of a reporting entity's systems in detecting and disrupting money laundering and terrorism financing. Previously, simply having policies and procedures in place was largely sufficient. Now, AUSTRAC requires evidence that these actually work.

Thus, the focus shifts from the presence of controls to the demonstrable effectiveness of those controls. For brokers, this means AML/CTF programs must be embedded in day-to-day operations, regularly reviewed, and genuinely capable of detecting suspicious activity.

Firms must observe other stricter requirements, including customer due diligence, more rigorous monitoring of client behaviour and transaction patterns, and dynamic, explicitly risk-based onboarding processes.

A Defensible Audit Trail

The shift to outcomes-based assessment means audit trails have never been more important. AUSTRAC will not merely ask whether affected businesses have compliance programs, but require evidence they work.

For mortgage brokers, a defensible audit trail now includes:

• Customer due diligence records. Every client file should contain documented evidence of identity verification, source of funds checks where relevant, and an assessment of the client's risk profile. Digital identity solutions that timestamp and store verification results are more defensible than manual processes.
• Ongoing monitoring records. Ongoing relationship monitoring is required, not just one-off onboarding checks. The reforms set clear, structured requirements for initial, ongoing, and enhanced due diligence. Institutions face stricter expectations around beneficial ownership, requiring identification and verification of beneficial owners and senior managers across corporates, partnerships, trusts, and associations.
• Suspicious matter reporting. If a client's source of funds or the purpose of a transaction raise concerns, these must be documented and, where appropriate, reported. AUSTRAC's reporting rules outline when to file Suspicious Matter Reports, Threshold Transaction Reports, and AML/CTF compliance reports.
• Staff training records. Broker teams must know what to look for, and what to do when they see it. Training records are a basic but often overlooked component of a defensible compliance program.

The Broader Picture: Why This is Good for Brokers

Any new compliance obligation can make regulatory burdens seem heavier. But there are upsides for brokers.

AUSTRAC has estimated more than $1bn is laundered through Australian property annually. Professionals who facilitate property transactions, including mortgage brokers, are at the forefront of that risk.

A stronger AML/CTF framework across the property and lending ecosystem makes the market cleaner, reduces the risk of unwitting brokers being used to commit financial crime, and ultimately protects the reputation of the broking profession.

AML/CTF reporting obligations expanding to include professionals such as real estate agents, lawyers and accountants may also foster greater consistency across the property and lending landscape.

What to Do Immediately

• Review AML/CTF programs. The shift to outcomes-based assessment means programs must demonstrate effectiveness, not just exist. Programs that have not been revised in the past year should be reviewed.
• Audit customer due diligence processes. Are identity verification and source of funds checks consistent, documented, and defensible? Tools automating and timestamping these processes are sound investments.
• Stay close to aggregators and industry associations. Questions about commercial finance broking remain unresolved. FBAA Chief Executive Officer Leo Gagic said brokers should not make compliance changes at this stage despite uncertainty over whether commercial broking is captured by the reforms. Aggregators and industry associations will update members when AUSTRAC publishes its determination.
• Brief referral partners. Accountants, conveyancers, and real estate referral partners now operate under new obligations. Understanding these will strengthen relationships and help facilitate compliance.

For a Compliance-ready Brokerage

builureAI is built specifically for Australian mortgage brokers, with tools to automate due diligence, maintain defensible audit trails, and stay abreast of evolving compliance obligations. Book your builureAI demo today to see how brokers across Australia are using intelligent compliance tools at sales@builure.com.au.