Transitioning existing customers

You must complete initial CDD on a pre-commencement customer if either:

• a suspicious matter report (SMR) obligation arises in relation to the customer
• there’s a significant change in the nature and purpose of the business relationship, which results in the customer’s money laundering, terrorism financing and proliferation financing risk (we refer to these as ML/TF risks) being medium or high.

For example, you must complete initial CDD on a pre-commencement customer if: 

• they request a new service in a way that’s different from your existing business relationship
• this means the customer’s ML/TF risk will be medium or high (it doesn’t matter whether it was medium or high risk previously).

If this occurs, you must complete initial CDD before you start providing them with a designated service.

A customer stops being a pre-commencement customer when you complete initial CDD.

Learn more about initial CDD.

Ongoing CDD and pre-commencement customers

You have the following ongoing CDD obligations for pre-commencement customers:

• monitor for unusual transactions and behaviours that may give rise to an SMR obligation
• review, update and reverify know your customer (KYC) information relating to the customer at an appropriate frequency. This includes if you’ve doubts about the KYC information’s adequacy or veracity
• monitor for significant changes in the nature and purpose of the business relationship which results in the customer’s ML/TF risk being medium or high (it doesn’t matter whether it was medium or high risk previously).

Learn how to do this in ongoing CDD.

Customer is a transferred pre-commencement customer

You don’t need to do initial CDD on a person who is your customer because either:

• you took over all or part of another reporting entity’s business
• all or part of another reporting entity’s assets and liabilities have become yours because of a voluntary or compulsory transfer.

This only applies if you’ve received copies of the following records from the other reporting entity in relation to the customer:

• transaction records kept under sections 107 and 108 of the Act
• initial and ongoing CDD records kept under sections 111 and 114 of the Act. 

If you don’t receive these records, you must complete initial CDD before you start providing the customer with a designated service. 

You must also complete initial CDD before you provide the customer with a designated service if one of the following occurs during ongoing CDD:

• an unusual transaction or behaviour that may give rise to an SMR obligation
• a significant change in the nature and purpose of the business relationship that may change their ML/TF risk to medium or high (it doesn’t matter whether it was medium or high risk previously).

You must still conduct ongoing CDD on these customers. This includes reviewing and updating their KYC information if you’ve doubts about its adequacy or veracity.

You conducted applicable customer identification procedures

You’re considered compliant with your initial CDD obligations if, before 31 March 2026, you conducted the then applicable customer identification procedure (ACIP), on:

• a customer
• the trustee of a customer. Note: ACIP was previously required on a trustee. Under the new Rules, initial CDD must be conducted on a trust. 

You must still conduct ongoing CDD on these customers. 

You complied with relevant obligations in a foreign country

Designated service provided in another country

You’re considered compliant with your initial CDD obligations if all the following apply:

• you’re proposing to provide a designated service to a customer at or through your permanent establishment in a foreign country
• before 31 March 2026, you complied with the laws of that country giving effect to the Financial Action Task Force (FATF) recommendations relating to CDD and record keeping in relation to that customer.

You can identify if a country gives effect to the FATF recommendations relating to CDD and record keeping by considering comments on these standards in:

• mutual evaluation reports about the country published on the FATF website and the websites of FATF-style regional bodies
• public statements prepared by the FATF and FATF-style regional bodies published on their websites.

Previous compliance in a foreign country 

You’re considered compliant with your initial CDD obligations in relation to a customer if all the following apply:

• you intend to provide them with a designated service in Australia
• you, or another member of your reporting group, previously started providing them with a service (whether or not it’s a designated service) at or through a permanent establishment in a foreign country
• the laws of that country give effect to the FATF recommendations relating to CDD and record keeping
• you, or a member of your reporting group, established matters, if applicable, as required by the laws of that foreign country.

You must also either:

• hold the KYC information collected in relation to the customer, and the reliable and independent data used to verify the KYC information
• have an arrangement to get immediate access to this information from another member of your reporting group.

If you intend to provide designated services in Australia to these kinds of customers, your AML/CTF policies must set out how you’ll meet these requirements.

Related pages

• Initial customer due diligence
• Ongoing customer due diligence