The recent legislature updates regarding the conduct of NSW Family Law practitioners create new potential consequences for a practitioner if they fail to identify or report suspicious activity connected with money laundering. The recent updates stress upon the importance of legal practitioner’s duty towards the law and rules.
Consequences under the AML & CTF Act (Cth)
Under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 Cth ( AML Act), from the 1 July 2026, failing to report a suspicious matter via a Suspicious Matter Report with 3 business days or 24 hours for terrorism-financing suspicions may incur civil penalty contraventions and proceedings. This may include infringement notices, enforceable undertakings, and remedial directions as well as a large penalty fine. Furthermore, failure in maintaining an adequate Anti-Money Laundering Program, or record‑keeping may provide grounds for systemic breaches of the legislation- therefore increasing the possibility of civil proceedings being taken against you.
Consequences under Legal Profession Uniform Law and ASCR
Unsatisfactory professional conduct or professional misconduct where the practitioner:
- fails or is wilfully blind to the use of the client’s or their trust account for purposes unconnected to legal services,
- Or fails in maintaining competence and diligence in verifying client’s identity with relation to transactions
- Or breaches statutory duties
may amount to reprimand, conditions on practice, fines, suspension or cancellation of a practising certificate, and costs orders lodged against the practitioner. It can also trigger regulator audits, external examiner qualifications, personal liability for trust deficits and compensation orders and disciplinary actions.
Criminal Proceedings
Under the Criminal Code (Cth), if a practitioner knows, is reckless to, or believes there is a substantial risk that the property is a proceed of crime and deals with it (including by facilitating transactions or handling funds), they risk criminal prosecution. They may be charged with accessory liability, conspiracy, procuring or obstructing justice. However, mere negligence is insufficient to prove criminal liability.
Key Steps to take if you are a family-law practitioner:
- Create an proportionate Anti Money Laundering Program Program by:
- Completing beneficial‑ownership checks
- Documenting source‑of‑funds/wealth for settlement monies.
- Implement trust‑account “purpose tests,” by:
- Funds‑flow mapping,
- Embedding dual‑control verification for bank‑detail changes,
- Prohibiting unverified third‑party payments.
- Escalate red flags to the AMLCO by:
- documenting suspicion analyses
- lodging SMRs within time when required
- avoiding tipping‑off; and record any LPP assessments.
- And finally, please use family‑law tools (subpoenas, preservation orders, s 106B/s 90AE applications) to counteract dissipation and interrogate doubtful transactions.