Second Exposure Draft AML/CTF Rules
Submission Date: 7 July 2025
The Law Council of Australia provided a submission to the Australian Transaction Reports and Analysis Centre in response to its ‘Consultation on the new AML/CTF Rules: Public Consultation on Second Exposure Draft Rules’, published on 19 May 2025.
The Law Council notes that this consultation is the second consultation AUSTRAC has conducted on the Exposure Draft Anti-Money Laundering and Counter-Terrorism Financing Rules 2025 (Cth) (Draft Rules), with the first round commencing late last year regarding an earlier version of the Draft Rules, or the ED1 Rules. The Law Council acknowledges that AUSTRAC has made significant amendments to the Draft Rules following stakeholder feedback, including that of the Law Council, it received in response to that first round of consultation on the ED1 Rules.
General comments
As a preliminary matter, the Law Council wishes to note that our capacity to provide comprehensive, constructive feedback on these Draft Rules has been limited by uncertainty regarding the scope of application of the Anti-Money Laundering and Counter Terrorism Financing legislative regime (AML/CTF Regime), arising because the meaning of key parts of the definition of ‘designated services’ is still unsettled. Until authoritative guidance—or, if necessary, exemption—is provided, the practical operation of the Draft Rules cannot be fully understood nor appreciated. For this reason, it is critical that AUSTRAC conduct further consultation on the Draft Rules before they are finalised once the meaning of designated services is suitably clarified.
The uncertainty on the scope of application of the AML Act gives rise to another issue about which we are deeply concerned. The AML/CTF Regime is dense, complex, and difficult to navigate, and it imposes broad-based obligations of general application that must be tailored by legal professionals for application to their particular circumstances. Because its scope is far from finalised, it will be very difficult for legal professionals to work out with certainty if it will apply to them, and by extension, the obligations they may be subject to, or how those obligations would apply in practice. These difficulties are exacerbated by the fact that sector specific guidance for the legal profession will not be available until later this year.
Accordingly, the Law Council is increasingly convinced that there is not enough time for the legal profession to be in a position to comply by 1 July 2026, and so the Law Council reiterates our recommendation that AUSTRAC implement a transitional compliance period of at least 24 months following 1 July 2026.
Another issue that the Law Council wishes to raise relevant to the development of the AML/CTF Draft Rules is the need for several specific exemptions. The Law Council reiterates our view that AUSTRAC should consider several exemptions, including those listed in our April 2025 submission to AUSTRAC, ‘Submission in relation to additional Rules, Exemptions and Guidance’. The Law Council expresses its eagerness to work with AUSTRAC in relation to the formulation of necessary exemptions.
Related to the development of the Draft Rules is AUSTRAC’s development of Guidance materials explaining the operation of the AML/CTF Regime. In this regard, the Law Council emphasises the need for AUSTRAC to provide authoritative guidance to the legal profession on the interaction between the obligations in the Privacy Act 1988 (Cth) and the AML/CTF Regime, and how tensions between obligations are to be navigated—particularly regarding client due diligence and reporting obligations.
Finally, the Law Council takes this opportunity to emphasise the need for guidelines regarding legal professional privilege to be developed by the Minister. The Law Council notes that draft guidelines and forms were circulated for comment by the Attorney-General’s Department on Friday, 4 July 2025, which the Law Council will respond to separately.
Last Updated on 28/11/2025