New AML/CTF Rules for Law Firms: What SME Owners Need to Know
From 1 July 2026, Australia's anti-money laundering and counter-terrorism financing (AML/CTF) regime has been extended to cover law firms for the first time, along with real estate professionals, conveyancers, accountants and other "gatekeeper" professions. The change follows the Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024, which brings roughly 80,000 new businesses into the AUSTRAC regulatory net.
If you're an SME owner who works with a law firm to buy, sell or restructure a business, here's what's actually changing — and what isn't.
It's not "lawyers" that are regulated — it's specific services
A common misconception is that every law firm, and every matter, is now subject to AML/CTF obligations. That's not how the law works. The regime regulates a defined list of "designated services," and a firm is only a regulated entity for the matters that fall within that list.
For a commercial practice like ours, the designated services that typically apply are:
Business sales and purchases — acting for a client buying, selling or transferring a business or company
Company and trust structuring — setting up, restructuring, or making changes to companies, trusts and other legal arrangements, including shareholder agreements tied to a change in ownership or control
Handling settlement or transaction funds — holding or managing funds through a trust account as part of completing a deal
Work outside these categories — general commercial advice, most estate planning (including drafting wills), and employment advice — generally sits outside the new regime.
What changes if your matter is a designated service
If we're assisting you with a business sale, acquisition, or company/trust restructure, you can expect:
Certified identification documents (such as a driver's licence and passport) requested earlier in the process than before
For companies and trusts, more detailed information about directors, shareholders and beneficial owners
Longer record-keeping periods for some file information
In some cases, screening to check whether a party is a politically exposed person
None of this is about suspicion of wrongdoing — it's standard due diligence now required across the sector, the same way it's long applied to banks.
Existing clients: transitional arrangements apply
If you were already a client of the firm as at 30 June 2026, transitional rules mean you won't automatically be asked to re-verify your identity for every new matter. Full verification is generally only triggered in specific circumstances — for example, starting a new designated-service matter or a material change in your ownership structure. We'll let you know directly if and when that applies to you.
Your privilege is protected
The reforms preserve legal professional privilege in full. Confidential communications between you and your lawyer remain protected — that hasn't changed.
What you need to do right now
Nothing, unless we contact you. If a matter you're working on with us requires updated identification or company/trust information, we'll request it directly and explain why.
If you're planning a business sale, acquisition, or a company or trust restructure and want to understand how the new rules will affect your timeline, get in touch with our commercial team.
This article is general information only and is not legal advice. If you have questions about how the AML/CTF reforms apply to your specific matter, please contact Connected Legal & Commercial.