The Department of Home Affairs and AUSTRAC are working to finalise transitional rules to support a smooth implementation of the anti-money laundering and counter-terrorism financing (AML/CTF) reforms. The transitional rules will allow periods of time for reporting entities to adjust their business and processes to certain obligations, while still managing their ML/TF risk.

These transitional rules will ensure the reforms work effectively in practice and will allow additional time for certain reporting entities to develop systems and processes and to meet certain new obligations.

The transitional rules are made by the Minister for Home Affairs under Schedule 12 of the Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024. They are distinct from the Anti-Money Laundering and Counter-Terrorism Financing Rules 2025 made by the AUSTRAC CEO and also separate from any further amendments to the Anti-Money Laundering and Counter-Terrorism Financing Rules 2025 that may be made by AUSTRAC.

Over the coming weeks the Department of Home Affairs will publish an exposure draft of the transitional rules. Industry will have an opportunity to provide feedback at this stage. If you have any further questions about the transitional rules, please contact economiccrime@homeaffairs.gov.au.

The information below explains some key points about the transitional rules. Reporting entities can use this to prepare to transition to the reformed obligations before the transitional rules are finalised. 

On this page

• Transitional period for initial customer due diligence (CDD)
• Extended period for notifying AUSTRAC of an AML/CTF compliance officer
• Staggering initial independent evaluations
• Registration roll-over
• Deferred AML/CTF obligations for new VASP services
• Financial advisers becoming tranche 2 entities

Transitional period for initial customer due diligence (CDD)

The transitional rules will include a 3 year initial CDD transition period for existing reporting entities from 31 March 2026 to 30 March 2029. The initial CDD transitional rules will apply to existing reporting entities. This includes existing digital currency exchange providers (soon to be virtual asset service providers). 

During the transition period existing reporting entities may choose either to: 

• continue to use their existing applicable customer identification procedures (ACIP) when onboarding a new customer for a period of up to 3 years
• transition to the reformed initial CDD obligations at any time from 31 March 2026 to 30 March 2029.

The transitional arrangement will only apply for initial CDD. Current reporting entities must implement ongoing CDD as required by section 30 of the AML/CTF Act from 31 March 2026.

During the 3 year transition period, current reporting entities must comply fully with the single method they are using. This means they must:

• comply fully with pre-reform ACIP obligations for all new customers and all customer types until the date they choose to transition to the reformed initial CDD obligations
• comply fully with new section 28 initial CDD obligations for all new customers and all customer types from the date they choose to transition.

The reformed initial CDD obligations include new deemed compliance provisions and delayed CDD provisions. Current reporting entities cannot use these new provisions until they formally transition to the new initial CDD obligations. Delayed CDD provisions in Chapters 46 and 79 of the pre-reform AML/CTF Rules will remain available for ACIP.

Other CDD-related reforms will apply without exception from 31 March 2026. This includes lowering the initial CDD threshold for certain gambling services from $10,000 to $5,000.

This transitional period will not apply to newly regulated businesses (tranche 2) that commence enrolment from 31 March 2026.

Extended period for notifying AUSTRAC of an AML/CTF compliance officer

The transitional rules will extend the time period for reporting entities to notify AUSTRAC of their AML/CTF compliance officer.

Existing reporting entities will have until 30 May 2026 to notify AUSTRAC of their AML/CTF compliance officer.

Newly regulated businesses (tranche 2) and newly regulated virtual asset service providers will have until 29 July 2026 to notify AUSTRAC of their AML/CTF compliance officer.

Staggering initial independent evaluations

Newly regulated businesses will be able to set an extended deadline for their initial independent evaluation in their AML/CTF policies. Newly regulated businesses may take advantage of this extended deadline where it is appropriate to nature, size and complexity of their business.

The extended deadline will be determined by the AUSTRAC account number each reporting entity receives when they enrol. This mechanism avoids particular sectors (e.g. real estate agents), or particular types of businesses (e.g. small businesses), all being due for an independent evaluation around the same time.

The deadline for the first independent evaluation for newly regulated businesses will not be less than 3 years from the original commencement date. This means the first deadline for a newly regulated business will be required to complete an independent evaluation will be 1 July 2029. Further evaluation deadlines will be staggered at 6-month intervals from this date, depending on the AUSTRAC account number.

Existing reporting entities that have recently undertaken an independent review will also be granted an extended period for their first post-reform independent evaluation. This will be based on how recently they have undergone an independent review.

Registration roll-over

The transitional rules will confirm that the AML/CTF reforms:

• do not require re-registration of currently registered digital currency exchange provider as a virtual asset service provider
• do not affect a person’s status as a registered remittance network provider, remittance affiliate or independent remittance dealer.

Deferred AML/CTF obligations for new VASP services

The exchange of virtual assets (digital currency) for fiat currency, and vice versa, has been subject to AML/CTF regulation since 2018. The AML/CTF reforms introduced regulation for a number of new virtual asset services. The transitional rules will defer obligations for these new virtual asset services until 1 July 2026, in line with the tranche 2 reforms.

Providers of the new virtual asset services may still enrol and register with AUSTRAC from 31 March 2026. The deadline for enrolment and registration will be 29 July 2026, i.e. 28 days after obligations commence. This aligns with the enrolment deadline for newly regulated businesses (tranche 2).

Travel rule for virtual asset transfers

The deferral will apply to value transfer services involving virtual assets (only). This means that both existing and newly regulated virtual asset service providers must implement the ‘travel rule’ for virtual asset transfers from 1 July 2026. 

International value transfer service reporting

The reporting obligation for international value transfer services will also be deferred until 2029. Existing international funds transfer reporting obligations will continue to apply until then. 

Financial advisers becoming tranche 2 entities

Some current reporting entities have been eligible for pre-reform special AML/CTF programs. These reporting entities will not need to apply AML/CTF obligations to the new tranche 2 designated services until 1 July 2026, consistent with other tranche 2 entities.