What every insolvency practitioner needs to know about Tranche 2 AML/CTF reforms

From 1 July 2026, Australia's anti-money laundering and counter-terrorism financing regime has been significantly expanded by Tranche 2 of the reforms introduced by the Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024 (Cth).

Insolvency practitioners – including liquidators, voluntary administrators, and receivers – will now be captured as "reporting entities" (and thus be subject to the statutory regime) where they provide "designated services" as defined in the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (AML/CTF Act). The compliance deadline is approaching fast, and practitioners should act promptly to ensure they have applied to enrol with AUSTRAC and have appropriate systems in place by 29 July 2026.

AUSTRAC, as the regulator responsible for administering the AML/CTF regime as it applies to insolvency practitioners, has been working closely with the Australian Restructuring Insolvency & Turnaround Association to provide guidance on how the new reforms apply to the insolvency profession. This includes AUSTRAC’s publication of specific guidance on how "designated services" apply to insolvency practitioners, with which practitioners should familiarise themselves.

What are "designated services" regulated by the AML/CTF Act?

The AML/CTF Act now brings certain "professional services" within the ambit of "designated services" that are regulated under the AML/CTF regime: see Table 6 in section 6(5B) of the AML/CTF Act. If a person provides a "designated service", they are a "reporting entity".

Items 1 to 6 of Table 6 are the services most likely to arise as part of insolvency and restructuring work and to trigger reporting entity status and associated compliance obligations:

1. assisting in the planning or execution of a transaction to sell, buy or transfer real estate;

2. assisting in the planning or execution of a transaction to sell, buy or transfer a body corporate or legal arrangement;

3. receiving, holding, controlling or managing a person's property to help in the planning or execution of a transaction;

4. assisting in organising, planning or executing a transaction for equity or debt financing relating to a body corporate or legal arrangement;

5. selling or transferring a shelf company; and

6. assisting in the planning or execution of the creation or restructuring of a body corporate or legal arrangement.

These categories are broad and may capture a significant portion of the work undertaken by insolvency practitioners in both informal and formal appointments. Whether you provide a professional designated service depends on what you do, not your appointment title – in other words, a matter of substance over form.

Informal appointments

Practitioners who provide designated services through informal appointments or engagement arrangements (such as pre-insolvency advisory work, informal restructuring, debt advisory, or services as part of a multi-disciplinary firm) fall within the scope of the new regime. If you are in this category, you should commence the online enrolment process with AUSTRAC as a priority, if not already actioned.

Formal insolvency appointments

AUSTRAC has very recently determined that formal insolvency appointments – including liquidations, voluntary administrations and receiverships – can provide designated services, such that the application of the new laws is attracted.

In a formal insolvency appointment, the reporting entity providing the designated service is usually:

• the practitioner appointed to a role, who has registered personally (for example, a liquidator, voluntary administrator or trustee); or

• a company appointed to a role (for example, a debt agreement administrator).

The reporting entity must enrol with AUSTRAC and comply with applicable AML/CTF obligations. Where the registered liquidator, trustee or other formally appointed insolvency practitioner is working in a firm structure, then the firm is also a reporting entity providing a designated service and must separately be enrolled for compliance. Where practitioners operate within a firm, consideration should be given to whether a "reporting group" structure is appropriate. A reporting group allows multiple reporting entities to centralise aspects of AML/CTF compliance, including delegating AML/CTF obligations to other members within the group, and may be relevant to joint and several appointments held by registered liquidators within the same firm.

In recognition of the recency of this guidance on formal insolvency appointments, AUSTRAC has suggested a willingness to provide relief to ensure practitioners have enough time to comply; however, the exact form of this relief is yet to be finalised. In the meantime, we encourage individual practitioners holding formal appointments, and associated firm structures operating in this category, to commence the online enrolment process with AUSTRAC as a priority, if not already actioned.

Practical examples of insolvency practitioners' activities that might trigger AML/CTF obligations

• A liquidator assisting in selling the company's real property or business assets (assisting in the planning or execution of a transaction to sell real estate or a body corporate: AML/CTF Act section 6(5B) items 1–2).

• A voluntary administrator who receives and manages company property pending a deed of company arrangement, or who facilitates the transfer of shares in the company, is likely providing a designated service (receiving, holding, controlling or managing property: AML/CTF Act section 6(5B) item 3; or assisting in the transfer of a body corporate: AML/CTF Act section 6(5B) item 2).

• An insolvency practitioner engaged informally to advise a board on options for restructuring a company's capital structure or executing a debt-for-equity swap (assisting in organising a transaction for equity or debt financing: AML/CTF Act section 6(5B) item 4; or assisting in the restructuring of a body corporate: AML/CTF Act section 6(5B) item 6(a)).

• An insolvency practitioner assisting their client to directly advance the restructure of a body corporate (assisting in organising a transaction for equity or debt financing, or assisting in the restructuring of a body corporate: AML/CTF Act section 6(5B) item 6), for example:

• changing a company limited by guarantee into a company limited by shares; or

• splitting one body corporate into multiple bodies corporate, or merging multiple bodies corporate.

This example would also extend to preparatory steps that are required in anticipation of restructuring a body corporate, such as drafting and reviewing business documents.

Not all professional services rendered by insolvency practitioners will constitute "designated services". For example:

• assisting a company to restructure its internal governance and business operations (such as organisational staffing profiles and IT systems) would not attract the provisions of the AML/CTF regime, as the legal structure of the company remains undisturbed. Nor does the definition include rendering professional services related to the creation or restructuring of testamentary trusts or trusts created by operation of law; or

• general or high-level advice, without taking steps to assist a person to carry out a transaction or to create or restructure a body corporate, will usually not constitute a designated service without more.

Firms who provide support services to reporting entities (such as accounting or law firms) do not provide designated services by virtue of that fact alone. A firm must provide a designated service in its own capacity to be captured by the AML/CTF regime.

Key compliance obligations

Insolvency practitioners who provide designated services, through either formal or informal appointments, must apply to enrol with AUSTRAC by 29 July 2026. Once enrolled, reporting entities must comply with the following key obligations under the new regime in the AML/CTF Act:

• AML/CTF programme: each reporting entity must develop, approve and implement an AML/CTF programme that identifies, assesses, manages and mitigates their money laundering, terrorism financing and proliferation financing risks. The programme should also identify how relevant staff will be trained in AML/CTF compliance and their respective responsibilities. AUSTRAC has published programme starter kits to assist practitioners in developing a compliant programme.

• Customer identification and verification: reporting entities must carry out applicable customer identification procedures before providing a designated service. For insolvency practitioners, this may involve identifying and verifying the identity of company directors, shareholders, or other relevant persons in the context of an engagement.

• Reporting obligations: an AML/CTF compliance report must be submitted for each reporting period specified under the AML/CTF Rules (currently on an annual basis).

• AML Compliance Officer: a nominated AML Compliance Officer must now be appointed: see AML/CTF Act sections 26J–26K. This person is responsible for overseeing the entity's AML/CTF compliance: see AML/CTF Act section 26L. The AML Compliance Officer can be the same person across multiple roles within a firm (eg., the compliance officer for the firm and for each individual insolvency practitioner may be the same person).