New AML/CTF Client Checks From July 2026

From 1 July 2026, new Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) obligations will apply to certain legal services in Australia.

The AML/CTF regime is regulated by AUSTRAC, Australia’s financial intelligence agency. These reforms are part of a broader national framework designed to prevent criminals from using professional services, property transactions, business structures and trust accounts to disguise the proceeds of crime or fund illegal activity.

Lawyers have historically remained outside much of Australia’s AML/CTF regime. From July 2026, that position will change for legal services involving particular types of transactions.

For clients, the most noticeable change will be that law firms may need to complete additional identity verification and client due diligence checks when opening a matter or dealing with client funds.

At ABKJ Lawyers, client due diligence checks will form part of our matter-opening and compliance processes from 1 July 2026. In some matters, clients may also be asked to provide information about the source of funds or source of wealth connected with a transaction.

These requirements are not a reflection on any particular client. They are part of a legal compliance process that will become a normal part of many property, business, company, trust and trust account matters.

We understand that these processes may feel unfamiliar to some clients, and our aim is to make the process as straightforward as possible. These are the same kinds of checks that banks and financial institutions carry out when establishing a new client relationship.

Key Takeaways

From 1 July 2026, additional AML/CTF obligations will apply to certain legal services.
ABKJ Lawyers will apply client due diligence checks as part of its matter-opening process from that date.
Clients may be asked to complete identity verification and provide information about the nature and purpose of their matter.
In some matters, clients may also be asked to provide information about the source of funds or source of wealth.
These checks are a legal requirement and do not mean that a client is suspected of wrongdoing.
Property transactions, business transactions, company and trust matters, and matters involving trust money are likely to be most affected.
Providing information and documents promptly will help avoid delays.
ABKJ Lawyers may be unable to commence or continue acting if required checks cannot be completed.

What Is Changing?

The AML/CTF regime already applies to many sectors, including banks, financial institutions and other reporting entities. From 1 July 2026, the regime will expand to include certain professional services, including legal services involving particular types of transactions.

For law firms, the changes are particularly relevant to services involving property transactions, business sales and acquisitions, transfers of interests in companies or trusts, the creation or restructuring of companies, trusts or other legal arrangements, and matters where a law firm receives, holds, controls or manages client money in connection with a transaction.

This means that, in addition to our usual matter-opening procedures, we may need to complete further checks before we can commence work, continue acting, or deal with money on behalf of a client.

ABKJ Lawyers will apply client due diligence as part of its onboarding process for new clients and matters. Not every matter will require the same level of information, but all clients should expect some form of identity and due diligence check from 1 July 2026.

Client Due Diligence

Client due diligence, often called CDD, is the process of identifying who a client is and understanding the nature and purpose of the matter.

For individual clients, this will usually involve confirming basic identifying information such as legal name, date of birth, residential address and identity documents. For companies, trusts, partnerships, bodies corporate and other entities, further information may be required to identify the entity, its authorised representatives and the people who ultimately own or control it.

CDD is not limited to confirming a client’s identity. In some matters, we may also need to understand the purpose of the engagement, how the transaction is structured, who is involved, and whether there are any circumstances requiring additional checks.

Clients may be asked to provide this information through a secure onboarding process. Completing that process promptly will help us open the matter, assess any required checks and avoid unnecessary delays.

Source of Funds and Source of Wealth

In some matters, clients may be asked to provide information about the source of funds or source of wealth.

These are related but different concepts.

Source of funds refers to where the money for a particular transaction is coming from. For example, funds may come from savings, a home loan, sale proceeds, inheritance, a family gift, business income or the sale of investments.

Source of wealth refers more broadly to how a person or entity accumulated their overall wealth. This may be relevant where a matter involves higher-risk features, complex structures, overseas funds, or circumstances requiring enhanced due diligence.

Not every matter will require the same level of information. A client seeking general legal advice may not need to provide the same documents as a client purchasing property, transferring company interests, using trust money, or acting through a complex entity structure.

Supporting Documents

Where source of funds or source of wealth information is required, supporting documents may include:

bank statements;
loan documents;
sale contracts;
settlement statements;
gift letters;
inheritance documents;
tax records;
financial statements; or
trust documents

The documents required will depend on the circumstances of the matter.

Trust Account Payments and Third-Party Funds

The new requirements are especially relevant where client money is paid into or out of a law firm trust account.

Before accepting, holding or transferring funds, we may need to confirm where the money has come from and the purpose of the payment.

Clients should tell us as early as possible if funds will come from someone other than the client, from a company or trust account, from overseas, from multiple accounts, or from any source that may not be immediately clear from the transaction.

Unexplained third-party payments, sudden changes to payment instructions, overpayments, refund requests to different accounts, or funds coming from unclear sources may require further checks before we can proceed.

This is not because those arrangements are automatically improper. However, they may require additional documentation so that we can comply with our legal obligations.

When Additional Checks May Be Required

Some matters may require enhanced due diligence. This means that further information or documents may be needed before work can continue.

Additional checks may be required where a client is based overseas, funds are coming from overseas, a company or trust structure is complex, the matter involves a politically exposed person, the transaction is unusually large or complex, payment instructions change suddenly, or information provided is incomplete or inconsistent.

A politically exposed person generally includes a person who holds, or has held, a prominent public position, such as a senior government official, senior executive of a government-owned entity, senior politician, judicial officer, military official, or a close family member or associate of such a person.

In these circumstances, we may need to ask follow-up questions, request further documents, or obtain internal approval before proceeding.

Time-Sensitive Matters

In some matters, particularly property transactions, timing can be important.

In some circumstances, work may be able to commence before all checks are finalised, subject to restrictions — particularly on receiving, holding or transferring funds. We will advise you if this applies to your matter.

Clients should not assume that work can proceed, or that settlement funds can be handled, until required checks have been completed or the firm has confirmed that it is able to proceed.

The safest approach is to complete all requested identity and due diligence steps as early as possible.

How to Avoid Delays

The best way to avoid delays is to provide requested information as early as possible.

Clients can assist by:

completing identity verification promptly;
providing clear and accurate information at the start of the matter;
telling us early if funds will come from another person, company, trust or overseas account;
keeping records showing where transaction funds have come from;
avoiding last-minute changes to payment instructions; and
responding promptly to requests for further information.

In property and business transactions, delays in completing due diligence may affect important deadlines, including finance dates, settlement dates and completion obligations.

If Checks Cannot Be Completed

In some cases, ABKJ Lawyers may be unable to commence or continue acting unless the required checks are completed.

This may occur where a client’s identity cannot be verified, required information is not provided, the source of funds cannot be properly explained, or the firm is otherwise unable to meet its legal obligations.

Privacy

Your privacy and confidentiality remain a core part of our professional obligations. We continue to protect your personal information in accordance with our legal and ethical duties.

The AML/CTF regime introduces mandatory reporting obligations in certain circumstances. Where those obligations apply, we are required to report to AUSTRAC without notifying the client. This is a legal requirement and does not affect our broader commitment to protecting your personal information.

When to Seek Advice

It may be appropriate to seek advice early if:

you are buying or selling property;
you are purchasing through a company, trust or self-managed superannuation fund;
your deposit or settlement funds are coming from a family member or third party;
funds are coming from overseas;
you are buying or selling a business;
you are restructuring a company, trust or other legal arrangement; or
you are unsure what documents may be required.

Early preparation can help ensure that identity, due diligence and funding checks are completed in time.

ABKJ Lawyers is committed to helping clients navigate these new requirements with minimal disruption, so that your matter can proceed as smoothly as possible.

Should you require advice in relation to a property transaction, business transaction, trust or company matter, or the documents required for client due diligence, please do not hesitate to contact our team.

Call (07) 5532 3199 or submit an online enquiry.