Good morning and thank you for inviting me to be part of the Law Society of New South Wales Annual Conference.

I would like to begin by acknowledging that we are meeting on the lands of the Gadigal people of the Eora Nation. I pay my respects to their elders past and present, and I extend that respect to any Aboriginal and Torres Strait Islander people here with us today.

My name is Brendan Thomas, and I am the Chief Executive Officer of AUSTRAC, Australia’s anti‑money laundering and counter‑terrorism financing regulator and financial intelligence unit.

I want to use our time today to step back from compliance and start with something more foundational.

I’d like to talk this morning about how money laundering actually works, why it causes real harm, and why the legal profession now has a formal role in preventing it.

Serious and organised crime is driven by profit.

Whether the underlying offence is drug trafficking, fraud, scams, child sexual exploitation or tax crime, the objective is the same: to generate money.

But illegal money is not useful unless it can be spent.

Criminals cannot openly spend large volumes of illicit funds, invest them, move them across borders, or purchase assets without attracting attention. To do that, they must disguise where the money came from and who controls it.

Money laundering is the process of hiding, disguising or legitimising the true origin and ownership of money or property derived from crime.

It is not a side activity. It is an essential enabler. Without laundering, organised crime cannot exist.

Money laundering is not victimless.

It enables crimes that cause profound harm. It also supports terrorism and the proliferation of weapons of mass destruction.

Beyond individual crimes, laundering damages the integrity of markets. It inflates asset prices, distorts competition, and erodes trust in institutions, including the legal system.

In Australia, the scale is significant. In 2023-24, our colleagues at the Australian Institute of Criminology estimated serious and organised crime cost Australia more than $80 billion. That’s over three per cent of our annual GDP. Globally, the figure is in the trillions. That money does not disappear. It is pushed into the legitimate economy. If we take one type of crime alone, drug dealing, we estimate that trade to be worth $19 billion each year. All of that money is illegal and all of it is laundered through the Australian economy. 

Money laundering typically follows three stages: placement, layering and integration.

Placement is the point at which illicit funds first enter the financial system. Historically this was often cash. Increasingly, it now involves proceeds from scams, fraud and cybercrime, often generated digitally and moved quickly.

Layering introduces complexity. Funds are moved through multiple transactions, accounts or entities to obscure their origin. Loans, consulting arrangements, property deposits, trust accounts and corporate structures are all commonly used. It's also often co-mingled with legitimate funds from business activity or property sales.

Integration is where the money re‑enters the legitimate economy, appearing lawful.

Criminals need access to trusted systems, professional services and lawful structures to succeed.

Australia is an attractive place to launder money precisely because it is a strong, open economy with respected institutions.

We have an independent legal system, a well‑developed financial sector, and a strong real estate market. We are deeply connected to the Asia‑Pacific region through trade, migration, education and finance.

Those legitimate connections are routinely exploited.

We are not only dealing with domestic criminals moving money offshore. We are seeing international criminal organisations laundering the proceeds of overseas crime through Australia.

In a joint ATO and AFP investigation into a large-scale tax fraud and money laundering scheme, an investigation involved a syndicate conspired to withhold and launder $105 million owed to the ATO.

Illicitly obtained funds were invested into luxury assets including a boat, cars, motorbikes and an aeroplane. A legitimate payroll company, run by the syndicate members, accepted money from legitimate clients to process payroll, transferring funds to sub-contracted companies, which made payroll payments to workers of their clients. Those companies were fronts, with straw directors, but controlled by syndicate members. These companies partially remitted tax obligations to the ATO but redirected remaining funds through a complex series of companies and trusts to accounts controlled by syndicate members. Their methods included the using separate foreign secrecy jurisdictions for banking and company incorporation; the use of corporate vehicles including trusts and shell companies; the use of multiple professional facilitators including solicitors, accountants and company service providers.

These are professional money laundering organisations. Laundering is their business model. Lawyers play a central role in the real economy. Property transactions, company formation, trust management and client funds handling are core legal services.

That role is essential. It also creates exposure.

Criminals target legal services not because lawyers are complicit, but because legal involvement confers credibility.

We consistently see criminals attempting to:

• move funds through legal trust accounts
• establish corporate or trust structures that obscure ownership
• creating distance between themselves and criminal proceeds
• and legitimising transactions that would otherwise attract scrutiny.

Domestic criminals often rely on lawyers working alongside other professionals (such as accountants, financial advisers and offshore service providers) to conceal illicit funds and hide beneficial ownership.

In many cases, lawyers are unknowingly drawn into this activity.

An investigation into the purchase of a commercial property in NSW worth several million dollars revealed it was purchased with proceeds of crime. An offshore service provider facilitated its purchase by transferring several million dollars from an offshore jurisdiction to the accounts of a domestic law firm. The law firm settled the property, with the total amount of funds settled for the purchase exceeding $5 million. Settlement documentation obfuscated the source of funds by indicating they were obtained from a loan arrangement.

In another case, an investigation into persons of interest allegedly involved in importing illicit drugs identified a property likely belonging to the individuals of interest. However, it was held by a family trust that appeared to be unrelated to them. The trust deed indicated the beneficiaries were the person of interest’s brother, his children and spouse. It was determined the trust was established with the sole purpose of concealing assets and avoiding proceeds of crime proceedings.

These examples are not about wrongdoing by lawyers. They are about unmanaged risk. For many years, Australia’s AML/CTF regime focused primarily on banks, casinos and traditional financial institutions.

That made sense at the time.

But as controls tightened in those sectors, criminal activity shifted. Gaps in parts of the non‑financial sector became attractive pathways.

The reforms passed in November 2024 respond to that reality. They align Australia’s framework with international standards set by the Global Financial Action Task Force.

They are not about questioning professional ethics. They are about closing vulnerabilities that criminals exploit.

From 31 March 2026, legal practices that provide services designated under the Anti Money Laundering and Counter Terrorism Financing Act will become reporting entities under the that Act.

From 1 July 2026, new obligations will apply.

Designated services include assisting with transactions involving the creation, transfer or restructuring of companies, trusts and other legal arrangements. Designated services include:

• assisting in the planning or execution of a transaction to sell, buy or transfer real estate, a body corporate or a legal arrangement
• receiving, holding, controlling or managing a person’s property to help in the planning or execution of a transaction
• assisting in organising, planning, or executing a transaction for equity or debt financing relating to a body corporate or legal arrangement
• selling or transferring a shelf company
• assisting in the planning or execution of the creation or restructuring a body corporate or legal arrangement
• acting, or arranging for someone to act on behalf of a person in particular positions in a body corporate or legal arrangement
• providing a registered office address or principal place of business address of a body corporate or legal arrangement.

Legal practices will need to:

• enrol with AUSTRAC
• have an AML/CTF program and risk assessment
• appoint a compliance officer
• train staff
• conduct customer due diligence; and
• report suspicious matters and certain transactions

The law might appear complex but at its heart this regime is straightforward. It asks that you satisfy yourself that you know who your client is and why they are doing business with you, and that if you can’t satisfy yourself of that, to make some reasonable inquiries. If you’re still suspicious then report that suspicion to us. 

The information generated from these Suspicious Matter Reports plays a crucial role in identifying potential illegal activity and assists in the detection and prevention of the flow of illegal funds through our financial system. High-quality, accurate and timely reports give us the best chance to detect, deter and disrupt criminal and terrorist activity.

These reports help inform financial intelligence products that help build a clearer picture of criminal activity, rather than looking at transactions in isolation. Where appropriate, this intelligence is shared with law enforcement and other partner agencies to support investigations and disruption activities.

For many firms, elements of this will already be familiar. What changes is consistency, documentation and regulatory accountability. A central feature of the regime is proportionality.

Most legal clients will be low risk. In those cases, this regime requires minimal effort, what we call simplified due diligence.

Where risk is higher, more oversight is required, 

We do not expect lawyers to act as investigators. We do not expect you to stop transactions. We expect you to apply professional judgement, identify red flags, and report suspicions to us.

We are also conscious of duplication. The law allows reliance arrangements so that verified information can be shared between businesses involved in the same transaction.

We recognise that these obligations are new for the legal profession.

Our regulatory approach is outcomes‑focused, risk‑based and collaborative.

We are committed to working with industry, through peak representative bodies and we have worked very closely with the NSW Law Society, to build understanding and capability, supported by ongoing education and engagement and I think them very much for their strong engagement.

We do not expect perfection from day one. We do expect genuine effort to comply with the law and engagement with the regime.

We have developed sector‑specific starter kits, guidance materials, webinars and practical tools to support compliance. We have increased the capacity of our contact centre so that when you need help, it is available.

After July, our focus will be on entities that fail to enrol, fail to engage, or are wilfully blind or complicit in money laundering.

Money laundering enables harm at scale.

It funds exploitation, distorts markets, and undermines trust in institutions, including the legal profession.

The reforms you are preparing for are not about burden for burden’s sake. They are about protecting the integrity of the system you serve.

The legal profession has always played a central role in upholding the rule of law. These reforms recognise that role and rely on it.

AUSTRAC is committed to working with you as partners in that task.

Together, disrupt money laundering, terrorism financing and other serious crime. Thank you.