Which legal work is a designated service
The obligations attach to the service, whatever the profession of the person providing it. Table 6 in s 6(5B) lists the professional services. A firm that provides one in the course of carrying on a business, with a geographical link to Australia, is a reporting entity.
| Table 6 item | The service | Typical legal work |
|---|---|---|
| Item 1 | Assisting in the planning or execution of a transaction to sell, buy or otherwise transfer real estate | Conveyancing, commercial property acquisitions, transfers between family members |
| Item 2 | Assisting in a transaction to sell, buy or transfer a body corporate or legal arrangement | Share sales and business sales by sale of the entity |
| Item 3 | Receiving, holding and controlling (including disbursing) or managing a person's money, accounts, securities, virtual assets or other property as part of a transaction | Holding purchase funds in trust and disbursing them |
| Item 4 | Assisting in a transaction for equity or debt financing relating to a body corporate or legal arrangement | Capital raisings, loan and security documents for a company or trust |
| Item 5 | Selling or transferring a shelf company | Supplying a pre-registered company |
| Item 6 | Assisting in the creation or restructuring of a body corporate or legal arrangement | Incorporating a company, drafting a trust deed, mergers and demergers |
| Items 7 and 8 | Acting as, or arranging for someone to act as, a director, secretary, trustee, partner, attorney of a body corporate or legal arrangement, or nominee shareholder | Nominee and trustee roles, arranging appointments |
| Item 9 | Providing a registered office address or principal place of business address | Letting a client company use the firm's address as its registered office |
What sits outside table 6
AUSTRAC guidance says the service must directly advance the transaction or the creation of the entity. General advice that only influences what the client decides is not enough. Its examples:
- Litigation generally falls outside table 6, because it usually concerns matters that have already happened.
- Transfers pursuant to, or resulting from, a court or tribunal order are excluded from items 1 and 2. AUSTRAC's examples are a transfer from a deceased estate after a grant of probate and a transfer under family law consent orders.
- Wills and testamentary trusts: AUSTRAC guidance says drafting a will, and the testamentary trust it creates, is not a designated service under the entity and trust items.
- Item 3 has carve-outs in s 6(5C) and (5D): money that is payment for your own fees, money payable under a court or tribunal order, and payments to or from a court, a government body or a licensed insurer, among others. A firm that provides no other designated service can also hold money for payments reasonably incidental to non-designated work (s 6(5C)(b)). AUSTRAC's example is a litigation practice holding settlement funds.
That last carve-out is applied to the whole firm. AUSTRAC guidance says you must consider all services the entity provides. A firm with a litigation team and a conveyancing team cannot rely on s 6(5C)(b) for its trust account.
The obligations in one page
- Enrol with AUSTRAC no later than 28 days after the day you start providing a designated service (s 51B). For a firm already providing one on 1 July 2026, the 28 days ran from that day.
- Have an AML/CTF program: a risk assessment (s 26C), policies (s 26F) and a compliance officer at management level (s 26J).
- Customer due diligence: initial, before you start the service (s 28); ongoing, while the relationship lasts (s 30); and enhanced for high-risk clients and foreign politically exposed persons (s 32).
- Report suspicious matters (s 41) and transfers of physical currency of $10,000 or more (s 43, within 10 business days).
- Keep records under Part 10 of the Act.
- Do not tip off (s 123).
AUSTRAC publishes a legal profession program starter kit for firms with 15 or fewer personnel that meet its suitability criteria, with onboarding forms, a customer due diligence form and worked client examples. AUSTRAC says you must assess whether it suits your practice, and that it is not a substitute for legal advice.
See what a finished file note looks like.
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What to record on the file
Section 111 requires records reasonably necessary to demonstrate compliance with your customer due diligence obligations. Under s 111(3) they must include the type and content of the data you collected and any analysis, risk assessment or decision making about the client. AUSTRAC guidance says the records must show what you collected, the steps you took to verify it, and why you applied the level of due diligence you did.
In practice that is a due diligence form plus file notes of the conversations the information came from. Working from s 28(2), record each of these:
- The service and when it started. Which table 6 item applies and the date you began acting on instructions. AUSTRAC guidance says the service starts when you act on instructions and directly advance the transaction or the creation of the entity.
- The client's identity and the steps taken to establish that an individual is who they claim to be (s 28(2)(a), s 28(3)(a)).
- Anyone the client is acting for (s 28(2)(b)). Ask the question and write down the answer, including when the answer is no one.
- Anyone acting for the client, and their authority (s 28(2)(c)). An accountant, family member or agent giving instructions belongs in the note by name.
- Beneficial owners if the client is a company, trust or other non-individual (s 28(2)(d)).
- Politically exposed person and sanctions status of the client, beneficial owners and anyone acting (s 28(2)(e)).
- The nature and purpose of the business relationship or one-off transaction (s 28(2)(f)). Record why the client wants the company, the trust or the property, in their words.
- The risk rating and the reasons for it (s 28(3)(b), s 111(3)(b)). AUSTRAC's starter kit uses low, medium and high with listed risk factors.
- Source of funds and source of wealth where your policies call for it. AUSTRAC's worked examples apply this check to higher-risk clients.
- Changes during the matter. New parties, a change in how the purchase is funded, a change of purpose, and what you did about it (s 30).
- The date the matter ended. The 7-year period in s 111(2) runs from the end of the business relationship or the completion of the occasional (one-off) transaction.
On identity documents, AUSTRAC guidance says the Act does not require copies. You keep records of what you did to identify the client and the information they provided, for example the details of the passport used. Those details belong in the due diligence form. The file note records that the check was done, when, and by whom.
What to record, when, and how long to keep it
| What to record | When | How long to keep it |
|---|---|---|
| Customer due diligence records: information collected, verification steps, risk rating and reasons, ongoing reviews | Before you start the designated service, then as things change | 7 years from when the business relationship ends or the one-off transaction is complete (s 111(2)) |
| Records sufficient to reconstruct each transaction relating to the service | As the transaction happens | 7 years from the day the record is made (s 107(3)) |
| Documents the client gives you about the service, or copies | When you receive them | 7 years after the document is given (s 108(2)) |
| AML/CTF program records: risk assessment, policies, approvals, training, reviews | As you build and run the program | From when the record is made until 7 years after it is no longer relevant to your Part 1A obligations (s 116(3)) |
| Suspicious matter decision records and copies of reports | When a concern is escalated and decided | Kept as program records under s 116, stored securely with restricted access |
Records under ss 111 and 116 must be in English or readily convertible into English. Your professional file retention rules run separately from the Act. See how long to keep file notes in Australia and legal file note requirements in Australia.
Example file note: onboarding conversation
Fictional client and facts. A first call on a matter that will involve item 6 (creating a company and an express trust) and later item 1 (buying real estate). Identity and screening results sit in the firm's due diligence form. The note records the conversation.
- What the client wants
Daniel wants a discretionary family trust with a company as trustee. The trust will buy a commercial unit in Dandenong that his cabinet-making business will rent. He expects to sign a contract within two months.
- Who we are acting for
Daniel confirmed he is instructing us for himself and is not acting for anyone else. He and his wife, Elena M., will be the directors and shareholders of the trustee company. The beneficiaries will be Daniel, Elena and their two children. His accountant suggested the structure but will not be giving us instructions.
- Purpose
Daniel said the purpose is to hold the business premises separately from the trading company and to plan for the children. He currently leases a smaller unit and the lease ends in March 2027.
- How the purchase will be funded
Expected price is about $1.1 million. Daniel said the deposit of about $330,000 will come from business savings held with his bank, and the balance from a commercial loan he has applied for with the same bank. No funds are coming from overseas or from third parties. He offered to send bank statements if needed.
- Checks
- Explained that we must identify him and Elena and ask some standard questions before we start work, under anti-money laundering law.
- Asked whether either of them holds, or is closely related to someone who holds, a prominent public position in Australia or overseas. Daniel said no.
- Onboarding forms sent to Daniel and Elena after the call. Identity verification and screening to be completed on the due diligence form.
- What we told the client
We will not incorporate the company or prepare the trust deed until the checks are complete. Costs disclosure and costs agreement to follow by email.
- Next steps
- Daniel and Elena: return onboarding forms and identity documents by 7 August 2026.
- Us: complete due diligence form and risk rating, then confirm in writing that we can start.
- Follow-up call once the contract for the unit is issued, to confirm the funding has not changed.
If the deposit later arrives from an unrelated overseas company, the difference from this note is the trigger to ask more questions under s 30.
What stays out of the general file note
A suspicion, a decision about whether to report, and the report itself need different handling from an ordinary file note. Section 123 covers the fact that a report has been given or is required, the report, any copy, and any document setting out information contained in it, including the formation or existence of a suspicion (s 123(2)). Disclosing that information is an offence where the disclosure would or could reasonably be expected to prejudice an investigation (s 123(1)). The maximum penalty is imprisonment for 2 years or 120 penalty units, or both.
AUSTRAC guidance says it expects sensitive records such as suspicious matter reports to be stored securely with access limited to authorised staff. So keep escalation forms, the compliance officer's reasoning and report copies in a restricted location, away from the matter file that the whole team can open.
Asking questions is not tipping off by itself. AUSTRAC guidance says you can tell a client you need more information to comply with your obligation to know your customer. In its worked example the business documents the interaction and the reason it gave. Section 123(4) has an exception for legal practitioners who disclose information about a client's affairs in good faith to dissuade the client from conduct that could be an offence. AUSTRAC guidance says that even then you should not disclose that a report exists or is required. On ending a retainer in these circumstances, see file notes when terminating a retainer.
Privilege and suspicious matter reports
Section 242 says nothing in the Act affects the right to refuse to give information or produce a document that is privileged on the ground of legal professional privilege. The reporting rules were written around that:
- A report is due within 3 business days after the day you form the suspicion, or within 24 hours if it relates to terrorism financing (s 41(2)).
- If you reasonably believe all of the information that makes up the grounds for the suspicion is privileged, you may refuse to give the report (s 41(2A)). AUSTRAC guidance says no LPP form is needed in that case.
- If you reasonably believe some but not all of the information may be privileged, and the privilege belongs to someone other than the firm, the period is 5 business days (s 41(2)(aa)). The report goes in without the privileged material, accompanied by an LPP form (s 41(3)(aa)).
- Describing privileged information on the form does not, of itself, waive the privilege (s 242(2)).
AUSTRAC guidance says privilege is narrower than the duty of confidentiality, which gives way where disclosure is compelled by law, and that a communication made for an illegal or improper purpose does not attract privilege. Whether a particular note is privileged turns on why the communication was made. See are attendance notes privileged?
Existing clients
Section 36 treats a client as a pre-commencement customer if, at the start of 1 July 2026, the business relationship involved only services in table 5, table 6 or item 2 of table 2. Initial customer due diligence under s 28(1) does not apply to that client until a suspicious matter reporting obligation arises, or a significant change in the nature and purpose of the relationship results in medium or high risk (s 36(3) and (4)). You must still monitor for unusual transactions and behaviour (s 30(2)(a)) and for those changes (s 30(2)(d)).
Where a file note tool fits
To be plain about scope: CallNote is not an AML/CTF program, an identity verification tool or a reporting system. It does not check documents, screen names or lodge anything with AUSTRAC. It helps you keep a consistent record of client conversations, which is where the purpose, the people involved and the funding explanation usually come out.
CallNote turns a call or meeting transcript that already exists into a structured file note in your firm's format. Transcripts arrive automatically from Aircall, Dialpad and Microsoft Teams, or you paste or upload one, or dictate a voice memo after an in-person meeting. You can build a template from one of your own past notes, so an onboarding note can carry the headings in the example above. After review the note is sealed with a checksum and locked, and later changes are append-only amendments. We never record calls or join meetings, and data is hosted in Sydney.
CallNote delivers notes to Clio, HubSpot and Microsoft Dynamics 365. It has no native integration with LEAP, Smokeball or Actionstep, so there the note goes to the matter by PDF or copy and paste. More at CallNote for law firms.
We have written the same guide for conveyancers and for accountants and bookkeepers.
Common questions
When did Tranche 2 AML/CTF obligations start for lawyers?
On 1 July 2026. From that date a law firm that provides a designated service in table 6 of section 6 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 is a reporting entity. It must apply to enrol with AUSTRAC no later than 28 days after the day it starts providing a designated service (s 51B).
Does every law firm have to comply with Tranche 2?
No. The obligations apply only to firms that provide a designated service, such as acting on real estate transactions, buying or selling entities, creating companies or trusts, equity or debt financing, nominee and trustee roles, or providing a registered office address. AUSTRAC guidance says litigation generally falls outside table 6, as do transfers made under a court or tribunal order.
What must a law firm record for customer due diligence?
Records reasonably necessary to demonstrate compliance, including the type and content of the data collected and any analysis, risk assessment or decision making about the client (s 111). In practice: identity and how it was verified, who the client acts for, who acts for the client, beneficial owners, politically exposed person and sanctions status, the nature and purpose of the matter, the risk rating and the reasons.
How long must AML/CTF records be kept?
Customer due diligence records: 7 years from when the business relationship ends or the one-off transaction is complete (s 111(2)). Transaction records: 7 years from the day the record is made (s 107). Documents given by the client: 7 years after they are given (s 108). Program records: until 7 years after they are no longer relevant to compliance (s 116).
Does legal professional privilege apply to suspicious matter reports?
Yes. Section 242 preserves privilege. A firm may refuse to give a report if it reasonably believes all of the information grounding the suspicion is privileged (s 41(2A)). If only some is privileged and the privilege belongs to someone else, the firm reports the rest within 5 business days with an LPP form. AUSTRAC guidance notes privilege is narrower than confidentiality.
Should a suspicion be written in the client's file note?
Keep it out of the general matter file. Disclosing that a suspicious matter report has been given or is required is an offence under s 123 where it would or could reasonably be expected to prejudice an investigation. AUSTRAC guidance says it expects sensitive records such as suspicious matter reports to be stored securely with access limited to authorised staff. Record the escalation and decision in restricted compliance records.