Playing by new rules: AUSTRAC’s growing reach in 2026

Over the past year, AUSTRAC has been busy on several fronts (making good use of its largest budget and staffing numbers to date). Key areas of focus have included: 

• finalising, and preparing industry for, the suite of regulatory reforms that are being introduced through the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (Amended AML/CTF Act) and Anti-Money Laundering and Counter-Terrorism Financing Rules 2025 (New Rules); 
• releasing a suite of guidance notes in relation to compliance with key areas of reform; 
• continuing to pursue a range of enforcement actions, including those aligned with its latest Fintech and cash intensive sector regulatory priorities; and 
• seeking new powers to ban high-risk services.

Regulatory reform

The reforms being introduced to the Australian AML/CTF landscape as a consequence of the Amended AML/CTF Act and Rules promise to be one of the most significant regulatory developments to be rolled out in the coming year, for both existing and new reporting entities alike. 

In early 2026, AUSTRAC announced that it is working with the Department of Home Affairs to finalise transitional rules designed to provide reporting entities with additional time to comply with certain new obligations.

Most notably, the proposed transitional rules are expected to include:

• a three-year transitional period for existing reporting entities to comply with the new ICDD requirements. During this period, such reporting entities may continue to use their existing applicable customer identification procedures; 
• a deferral of new international value transfer service reporting requirements until 2029, with existing IFTI obligations continuing in the interim;
• extended timeframes for notifying AUSTRAC of AML/CTF compliance officers;
• staggered deadlines for initial independent evaluations for Tranche 2 reporting entities; and
• clarification of registration arrangements for remittance providers and virtual asset service providers.

As industry prepares for implementation, final updates to regulatory guidance and timing requirements should be kept under review.

Increased enforcement and expanded power

In July 2025, AUSTRAC released its regulatory priorities for the 2025-26 financial year that included improving risk management within the digital currency exchange sector, virtual asset service providers, and by entities whose exposure to cash creates particular vulnerabilities. This has subsequently translated into various recent enforcement actions including:

In October, the Australian government announced it will seek to introduce a new power which will enable the AUSTRAC CEO to restrict or prohibit certain high-risk products, services and delivery channels. This power is proposed to be aimed at reducing money laundering risk associated with perceived high-risk products such as Crypto ATMs.

In December, the government released a consultation paper seeking feedback on the proposed new framework. The new framework will be introduced as an amendment to the AML/CTF Act, although the exposure draft has not yet been released.

Under the proposal, the AUSTRAC CEO would be able to exercise the new power having regard to a non‑exhaustive list of factors, including whether the exercise of the power is in the public interest to prevent or disrupt serious financial crime, and whether there are viable alternatives that would allow the relevant designated services to continue to be provided.

The proposed framework would require the AUSTRAC CEO to undertake mandatory consultation with persons reasonably likely to be affected by a decision before exercising the power. However, the consultation paper notes that there may be circumstances in which consultation is not practicable, such as if a decision must be made urgently. In those circumstances (which the consultation paper does not further define or explain), a failure to consult would not invalidate a decision made by the AUSTRAC CEO. 

These powers, if enacted, would represent a significant regulatory intervention into otherwise lawful activities and could materially impact business models in high-risk sectors.

Looking ahead to 2026

As AUSTRAC enters 2026 with a new regime, expanded powers and a clear focus on high-risk sectors, reporting entities should expect a regulatory environment that is both assertive and strategic. The introduction of the Amended AML/CTF Act and New Rules marks a significant shift, requiring entities to overhaul compliance frameworks, strengthen governance, and embed sanctions and proliferation financing considerations into their risk programs. While AUSTRAC’s enforcement actions in 2025 signal a willingness to act decisively, we anticipate its approach in 2026 will be increasingly targeted, by zeroing in on vulnerabilities in digital assets, cash-intensive businesses, and complex transfer-of-value arrangements. For reporting entities, proactive preparation and robust internal engagement will be critical to navigating this evolving landscape.