Tranche 2
AML/CTF glossary for Australian professionals: the terms that matter, in plain English
The AML/CTF regime comes with its own vocabulary. These are the terms your practice will meet first, defined the way a professional would explain them to a colleague.
The regime
- AML/CTF — anti-money laundering and counter-terrorism financing: the body of law, led by the AML/CTF Act 2006, that requires reporting entities to detect and deter financial crime
- AUSTRAC — the Australian Transaction Reports and Analysis Centre: the regulator and financial intelligence unit that administers the regime
- Tranche 2 — the 2024-2026 expansion of the regime to lawyers, accountants, real estate agents, conveyancers, TCSPs and dealers in precious metals and stones
- Reporting entity — a business that provides a designated service and is therefore enrolled with, and regulated by, AUSTRAC
- FATF — the Financial Action Task Force, the global standard-setter whose recommendations drive Australia's reforms
Clients and risk
- Designated service — a category of work that triggers AML/CTF obligations, such as forming companies or trusts, handling client money for transactions, or assisting with business or real estate transfers
- Customer due diligence (CDD) — identifying and verifying your client, understanding the relationship and rating its risk, before providing a designated service
- Beneficial owner (UBO) — an individual who ultimately owns or controls a client: typically 25% or more ownership, or control through other means such as a trustee or appointor role
- Enhanced due diligence (EDD) — deeper verification and approval required for higher-risk relationships
- Politically exposed person (PEP) — someone holding prominent public office (and their close associates and family); allowed as clients, but always enhanced due diligence
- Sanctions screening — checking clients against the DFAT consolidated list of sanctioned persons and entities
- ML/TF/PF risk assessment — the documented assessment of money laundering, terrorism financing and proliferation financing risk that anchors your program
Programs and reporting
- AML/CTF program — the written, risk-based document describing how your practice meets its obligations, approved by senior management and kept current
- AML/CTF compliance officer — the management-level person responsible for the program, notified to AUSTRAC
- Suspicious matter report (SMR) — a report to AUSTRAC when you suspect a person or transaction may be connected to crime; due in 3 business days (24 hours for terrorism financing)
- Threshold transaction report (TTR) — a report of cash transactions of A$10,000 or more, due within 10 business days
- Tipping off — the criminal offence (section 123) of revealing that an SMR exists or is being considered
- AUSTRAC Online — the portal for enrolment and report lodgement
- Seven-year retention — the minimum period AML/CTF records must be kept
Frequently asked questions
What is the difference between KYC and CDD?
KYC ('know your customer') is the industry shorthand for identity verification. CDD is the legal term and is broader: it includes verification, but also understanding the purpose of the relationship, screening, and rating the risk. KYC is a part of CDD, not a synonym.
What does 'risk-based' actually mean?
That your effort follows your risk. High-risk clients get deeper verification, senior approval and frequent review; low-risk clients get a proportionate, lighter touch. What is never acceptable is no touch: every client in scope gets identified, verified, screened and rated.
Put it into practice
Cassandra AML turns these obligations into a working system: designated-service decisions, customer due diligence, screening, monitoring and reporting records — hosted in Sydney, free to start.
This guide is general information for Australian professionals. It is not legal advice and does not replace the AML/CTF Act, the AML/CTF Rules or AUSTRAC guidance. Confirm your specific obligations with AUSTRAC or a qualified legal adviser.