Australia’s Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) regime will soon extend to legal professionals, including NSW family law practices. From 1 July 2026, any practice that handles client money or facilitates asset transfers in property settlements, spousal maintenance, or child support arrangements may become a reporting entity with obligations to AUSTRAC.
The core legislation is the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth), as amended in 2024. From 31 March 2026, practices providing a “designated service”, such as receiving or holding client funds, managing trust accounts, or assisting with real property transfer, must enrol with AUSTRAC. AML/CTF obligations will apply from 1 July 2026. Not all family law work is covered; pure advisory or litigation-only matters, where the firm does not handle funds or facilitate transactions, are generally excluded. However, the actual services provided will determine whether the regime applies.
Family law is particularly exposed to money laundering (ML) and terrorism financing (TF) risks because it often involves large, rapid asset reallocations, use of trust accounts, transfers of real property and interests in companies or trusts, third-party contributions, and cross-border elements. These features can be exploited to introduce or disguise illicit funds, conceal proceeds of crime, or legitimise high-risk or foreign-sourced funds.
Practitioners should be alert to red flags such as reluctance to provide identification, instructions from undisclosed third parties, disengagement after questions about funds, large or unusual deposits into trust, funds from high-risk jurisdictions, use of multiple accounts or cryptocurrencies, requests to refund money to different accounts, and complex or opaque asset structures. Procedural anomalies, such as urgency or frequent changes of solicitor, may also indicate risk.
From 1 July 2026, family law practices providing designated services must enrol with AUSTRAC, appoint an AML/CTF Compliance Officer, and implement a tailored, risk-based AML/CTF Program. This includes conducting customer due diligence (CDD), identifying beneficial owners, determining the source of funds, ongoing monitoring, and keeping records for at least seven years. Suspicious matters must be reported to AUSTRAC within three business days (or 24 hours for terrorism financing). “Tipping off” clients about reports is prohibited, and legal professional privilege is recognised in the reporting process. Trust accounting obligations under the Legal Profession Uniform Law will continue to apply.
Examples of in-scope services include receiving and disbursing settlement proceeds via trust, acting as a paying agent for spousal maintenance or child support, managing client funds pending sale or division, facilitating real property transfers as part of settlements, and establishing or restructuring family trusts or companies. Litigation-only matters or advice without handling funds are generally out of scope. If in doubt, firms should treat the matter as potentially covered and conduct risk assessment and CDD at the enquiry stage.
AML/CTF checks can be integrated with family law disclosure obligations, such as reconciling financial statements and bank records. Early checks for restraining or freezing orders are essential to avoid facilitating the dissipation of proceeds of crime. Consent orders do not legitimise tainted funds; suspicious inflows must still be reported.
To prepare, practices should review their services against AUSTRAC’s designated services tool, appoint a compliance officer, draft a risk-based AML/CTF Program, update client intake documents, build file-level checklists, and implement technology for CDD registers and bank detail verification. After 1 July 2026, practices must apply the new rules before handling funds or facilitating transfers, monitor for red flags, and report as required.
The expansion of the AML/CTF regime to legal professionals marks a significant shift for NSW family law practices. Early preparation, robust risk assessment, and integration of AML/CTF controls with existing professional obligations will be essential to ensure compliance and protect both clients and practitioners from ML/TF risks.