Understanding designated services: when legal services trigger Tranche 2 AML/CTF obligations

Align

Right

By Carol Prasad - Feb 25, 2026 11:40 am AEDT

From 1 July 2026, Australia’s anti-money laundering and counter-terrorism financing regime will capture new categories of professional activity. The amended Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) extends beyond traditional reporting entities, such as banks, financial institutions and casinos, to a range of industries and services including lawyers, accountants, real estate professionals, conveyancers, trust and company service providers, and dealers in precious metals and stones.

These changes are known as the Tranche 2 reforms. For lawyers, a fundamental concept is designated services. The regime does not regulate “lawyers” as a profession; it regulates a subset of what they do. Whether a legal practice is inside or outside the AML/CTF net depends on whether the practice provides one or more designated services.

This article:

unpacks the new Professional services table in subsection 6(5B) of the AML/CTF Act (Table 6) that is relevant for lawyers, and
explores how legal work can become designated services in a legal practice which handles money, facilitates transactions, or creates legal structures (for example).

This article is general information only and should not be treated as legal advice. Law practices that are unsure as to whether they come under the remit of the AML/CTF Act may need to obtain independent advice.

What designated services are relevant for lawyers?

While Table 6 is profession-neutral, a number of its items describe services commonly provided by lawyers. The items in Table 6 pose a money laundering and terrorism financing risk.

If a lawyer provides one or more designated services with a geographical link to Australia, and does so in the course of carrying on a business, it will be an AUSTRAC reporting entity and must comply with AML/CTF obligations from 1 July 2026 (with enrolment with AUSTRAC commencing on 31 March 2026).

In summary, the designated services are:

assisting clients to buy, sell or transfer real estate (item 1),
assisting clients to buy, sell or transfer entities or legal arrangements (item 2),
receiving, holding, controlling or managing property when assisting clients in planning or executing a transaction (item 3),
assisting clients with equity or debt financing transactions (item 4),
selling or transferring a shelf company (item 5),
assisting clients tocreate or restructure entities or legal arrangement (item 6),
acting as, or arranging for someone else to act as, a director, secretary, attorney of non-natural persons, trustee, partner or similar (item 7),
acting as, or arranging for someone else to act as, a nominee shareholder (item 8), and
providing a registered office address or principal place of business address for an entity (item 9).

It is important to note that AML/CTF obligations can arise before any of the above transaction occurs, including during preparatory or organisational steps that directly advance a transaction.

Threshold concepts in AUSTRAC’s guidance

Table 6, as described above, is broad and, helpfully, AUSTRAC has issued guidance to assist with interpreting that table. Whether a lawyer provides designated services will depend on the facts of each case.

The guidance sets out a number of principles that explain when a professional service may become a Table 6 designated service. These are discussed below.

1. Assisting or otherwise acting for or on behalf of a person (items 1-4 and 6)
The central organising concept is whether a professional (such as a lawyer) assists or otherwise acts for or on behalf of a person, in connection with a Table 6 (items 1-4 and 6) service. These are distinct concepts, either of which can give rise to a designated service.

Importantly, the question is when the assistance is provided and who provides it.

A service is captured only where it is sufficiently linked to bring about a relevant outcome such as the creation, transfer or restructuring of assets, entities or legal arrangements. That is, the assistance has to directly advance the outcome. Assistance that merely influences a client’s thinking, for example, strategic advice, background analysis, or advice on the legal consequences will generally not be enough.

The designated service typically begins once the professional acts on instructions or takes steps to directly advance the transaction, and can include preparatory steps.

2. In relation to a matter in Table 6 (all items)
The assistance or action must be provided in relation to a Table 6 matter. This requires a real and substantive connection to a transaction or arrangement that is planned or in progress, rather than something that is hypothetical or historical. The service should be connected to the advancement of a relevant activity, not merely its discussion.

Take, for example, a litigation practice. Work that merely looks back at a completed transaction, for example, advising on whether a past transaction was valid, typically will not be in relation to a matter in Table 6, because the relevant creation, transfer or restructuring is not in progress or is not prospective. Ultimately however, whether this is captured will depend on the facts.

3. Provided to a customer
Under the AML/CTF Act, the designated service must be provided to a customer, as defined in the relevant Table 6 item. Identifying the customer is a fact specific exercise, and is central to determining when AML/CTF obligations attach, including for example, customer due diligence processes.

A customer can include the person, the buyer or transferee, the nominator, a beneficial owner, and others (see Table 6) and also a prospective customer (see section 5, AML/CTF Act). In addition, the guidance indicates that captured services are those that are provided to external customers who are separate legal persons (in other words, in-house legal services provided to internal persons or intra-group services are generally not considered to be a designated service).

This has obvious implications for in-house lawyers. Internal legal teams advising their own employer typically will not themselves be reporting entities under Table 6, although their employer themselves may be a reporting entity. For example, a law firm or accounting firm will be a reporting entity where they provide designated services. Their internal or in-house legal team, on the other hand, providing services that could be captured as designated services to the firm, will not be separately captured. However, it is important to consider the firm structure in case the in-house legal team sits outside the firm, including, if relevant, considering the meaning of ‘control’ in section 11 of the AML/CTF Act.

4. Provided in the course of carrying on a business
The service must be provided in the course of carrying on a business where ‘business’ includes any venture or concern in trade or commerce. AUSTRAC adopts a broad view of this concept. A service may be captured even if it is provided on a one-off basis, infrequently, or without a separate fee, provided it is connected to the conduct of a business.

The guidance reinforces that even boutique or low-volume practices can be caught, and that free work is not automatically low-risk or out of scope. As an example, providing conveyancing services (item 1) to a family member, for no fees, even as a one-off, will arguably be captured.

5. The Exceptions – Court and tribunal orders [1]
AUSTRAC, in its guidance, discusses limited exceptions relating to certain services carried out pursuant to court or tribunal order for Table 6 (items 1 and 2).

Care should be taken, as the exception only applies to services provided after the court order has been made. According to AUSTRAC guidance, the exception “doesn’t apply to services that are provided to obtain a court or tribunal order, if those services fall within the scope of table 6”.

The guidance also discusses legal dispute resolution as a service that will generally not fall under the scope of table 6, as they often do “not constitute assistance to the client that directly advances a relevant transaction” or “only relate to determining legal questions on matters that have already occurred, not matters that are in progress or will occur in the future.”

Some Examples for Legal Practices – in or out?

The table below sets out some non-exhaustive examples that may be relevant for legal practices. However, these must be considered in context of the facts available, the principles set out above, and the AML/CTF Act.

Table 6 item	Examples – LIKELY IN (likely designated services)	Examples – LIKELY OUT (generally, not designated services)
Item 1 – Real estate transactions	acting in conveyancing or settlements holding deposit or settlement funds in relation to the conveyance implementing property transfers (other than purely court-ordered transfers)	advising on general property law issues acting in property litigation property disposals as part of probate leases of 30 years or less
Item 2 – Buying or selling an entity	acting for a seller or buyer in a share or unit trust sale transferring ownership of a trust interest preparing and executing transfer documents obtaining regulatory approvals or waivers, eg Foreign Investment Review Board approvals	advising on options for a deal structure, without implementing transfers court ordered transfers sale or shares and minor interests (less than 25%)
Item 3 – Receiving, holding controlling or managing property	receiving, holding, and transferring client funds through the firm’s trust account as part of a transaction having authority over a customer’s bank account, and making payments on behalf of a customer, eg making loan repayments to a financial institution relating to a transaction managing escrow funds to enable a transaction	holding funds solely for legal fees and disbursements holding funds under a court order for non-transaction purposes Merely operating a trust account, in the absence of providing other designated services
Item 4 – equity or debt financing transactions	drafting and implementing loan documents for a company (or equity fund raising documents, including initial public offerings, venture capital, share purchase plans etc) coordinating drawdowns on a financing arrangement executing steps that directly advance a financing transaction	providing strategic advice on financing options, including equity and debt financing preparing briefing papers without implementing a finance transaction
Item 5 – selling or transferring a shelf company	facilitating the transfer of a company that the practice pre-incorporated that has not traded	advising on whether to acquire a company that has not traded
Item 6 – Creating or restructuring a body corporate or legal arrangement	preparatory steps in anticipation of creating a body corporate or legal arrangement, such as drafting, reviewing or negotiating corporate agreements and business documents drafting and reviewing trust deeds in relation to the creation or restructure of a trust drafting documents to create an association or co-operative	high level organisational structure advice, without preparing any instruments dealing with matters unrelated to the legal form or structure of the company or legal arrangement, eg dealing with IT systems drafting of a will, and the subsequent creation of a testamentary trust
Item 7 – Acting in or arranging specified roles (directors, powers of attorney for non-natural persons, partners etc)	acting as company director on behalf of a customer arranging for someone to act in a specified role drafting a power of attorney for a corporation	acting for a natural person under a power of attorney acting under a court-appointed fiduciary role acting as the trustee of a regulated debtor’s estate
Item 8 – Acting as or arranging a nominee shareholder	holding shares on behalf of another under instruction arranging a nominee shareholder to act for a client	advising on nominee structures without acting as nominee acting as a nominee due solely to a court order
Item 9 – providing a registered office or principal place of business	providing your firms address as the registered office of a client company	providing office space unrelated to registration offering a postal address not serving as a registered office or principal place of business

Practical next steps for legal practices

With the release of the guidance and AUSTRAC program starter kits, the next step for law practices is to assess, in practical terms, where their services could trigger AML/CTF obligations commencing 1 July 2026.

Some suggested practical steps are:

Map out the firms’ services
Take a realistic look at what your practice actually does, and compare it to the services set out in Table 6. Include ‘one-off’ or low-volume services.
Trace each service through to its real-world outcomes. Does this result in money moving or an entity being created or ownership changing? Include, where relevant, work done by non-legal staff.
Check if your firm will be captured
Only practices that provide one or more designated service will be regulated by the AML/CTF Act, so, after the exercise above, check these alongside the AML/CTF Act, the AUSTRAC tool, and guidance.
Who is the designated service being provided to?
For each captured service, clarify who the customer is and whether the service is provided to external clients, or internally within a corporate or business group.
Maintain records
Keep records of your considerations. Even if your review concludes that your practice is not captured, documenting your reasoning will help with dealing with future changes to your business and regulatory expectations.

Not sure where to start?

The Law Society of NSW has prepared a range of resources available on the AML/CTF Hub including suggested steps for compliance, FAQs and a series of on-demand webinars.

Endnotes

[1] See sub-sections (5C) and 5(D) of the AML/CTF Act for other carve-outs for item 3 and sub-section (5E) includes a carve out for Item 7.

Carol Prasad is a Professional Support Solicitor (AML) at the Law Society of NSW. Her background includes experience in AML/CTF, sanctions and privacy

This article originally appeared on LSJ Online, and in the Law Society of New South Wales Ethics and Standards Quarterly Newsletter. It is reproduced with permission.

Image size

large