Issue 25# - Australia’s Tranche 2 AML Reforms: Closing the Gatekeeper Loophole
Polar Insider | Issue #25 | Week of 20 August 2025
🧊 Introduction
Hi there,
Welcome to this week’s edition of Polar Insider! In this issue, we dive into Australia’s Tranche 2 AML Reforms: Closing the Gatekeeper Loophole – a long-awaited expansion of anti-money laundering laws to include lawyers, accountants, real estate agents, and other professional “gatekeepers.” We’ll explore how Australia is catching up to global peers like the UK and US, the challenges these professions face, and what it all means for compliance teams.
Here’s what you’ll find inside this issue:
📌 Top Story – Australia’s Tranche 2 AML Reforms: Closing the Gatekeeper Loophole
🔎 Case Study – Operation Elbrus: Gatekeeper Turned Enabler in $105m Fraud
🌍 Regulatory Roundup – Key updates from North America, Europe, and Asia-Pacific on expanding AML to gatekeepers
🧰 Compliance Toolkit – Resources to prepare for DNFBP (Tranche 2) AML compliance
💬 Quote of the Week – A timely insight on gatekeeper responsibility
📌 Top Story
Australia’s Tranche 2 AML Reforms: Closing the Gatekeeper Loophole
Australia is finally stepping up to regulate its “gatekeeper” professions under anti-money laundering (AML) laws. After years of delay, the government passed reforms in late 2024 to extend AML/CTF obligations to lawyers, accountants, real estate agents, and other non-financial businesses that facilitate high-value transactions. These Tranche 2 reforms aim to close a major regulatory gap and align Australia with global standards.
What’s Happening
Starting 1 July 2026, designated non-financial professions in Australia will need to:
Implement AML programs
Conduct customer due diligence (CDD)
Report suspicious activity
Maintain records
This expansion targets sectors long considered high-risk for money laundering, such as real estate dealings, legal trust accounts, and company formation services. It’s the most significant update to Australia’s AML regime since 2006, addressing a key vulnerability that criminals have exploited for years.
Regulatory Lag vs. UK/US
Australia’s delay in regulating gatekeepers left it trailing behind peers. The UK has long subjected solicitors, accountants, and estate agents to robust AML laws, while the US has taken targeted steps like beneficial ownership registries and Geographic Targeting Orders. However, Australia now has the chance to leapfrog the US by swiftly implementing a gatekeeper regime that meets FATF standards.
The Risk to Gatekeeper Professions
Gatekeepers have been a weak link in Australia’s defenses, with organized crime laundering billions through legal trust accounts, shell companies, and property purchases. The new law recognizes these sectors as critical “gatekeepers” against financial crime. However, many small firms face a steep learning curve, and non-compliance could result in penalties once enforcement begins.
What You Can Do:
🧠 Pro Tip: View compliance as a value-add. Strong AML controls protect your reputation and attract quality clients.
🔎 Case Study
Operation Elbrus: Gatekeeper Turned Enabler in $105m Fraud
This case study underscores why gatekeeper professions are now being brought under AML laws. Operation Elbrus was a landmark Australian investigation into a $105 million tax fraud and money laundering scheme, with a trusted gatekeeper—a Sydney solicitor—at its core.
What Happened
Between 2014 and 2017, a criminal syndicate defrauded the Australian Taxation Office of over $100 million through false payroll tax schemes, known as the Plutus Payroll scandal. To hide the illicit funds, the conspirators enlisted a lawyer in Rose Bay. This 52-year-old solicitor turned his law firm’s trust account into a laundering machine, funneling over $24 million in dirty money through the account and transferring it to various beneficiaries to obscure its origins.
Because solicitors’ trust accounts are designed to hold client funds, these transactions appeared routine and didn’t initially raise suspicion. The lawyer charged a fee for his “services,” effectively becoming a professional money launderer within the legal system.
Discovery & Aftermath
The scheme unraveled thanks to the relentless efforts of the AFP-led Serious Financial Crime Taskforce. Forensic analysis of financial flows revealed the solicitor’s trust account as a key conduit. In June 2022, the lawyer was convicted of dealing in proceeds of crime and sentenced to 12 years in prison. The court described him as “an indispensable participant in laundering the proceeds” of the fraud, exploiting his professional status and trust account to provide cover for criminal activity. His assets were seized, and his law license was permanently revoked.
This case exposed how easily a complicit gatekeeper can enable large-scale financial crime under the radar.
Key Red Flags from Operation Elbrus
Unusually large sums moving through a solicitor’s trust account.
Multiple rapid transfers to unrelated beneficiaries.
Lack of clear business purpose for transactions.
Solicitor charging fees inconsistent with standard legal services.
Intermingling of client funds in ways that obscure audit trails.
Key Lessons for Compliance Teams
Gatekeepers Can Be Weak Links
Operation Elbrus highlights how professional firms, without AML oversight, can become tools for criminals. Lawyers and accountants often handle or transfer client funds with minimal scrutiny. Compliance teams should closely monitor transactions involving professional trust accounts and investigate unusual patterns, such as intermingling of client funds.Abuse Can Be Both Witting and Unwitting
While this lawyer knowingly facilitated laundering, gatekeepers can also be exploited unwittingly. Without proper AML training, well-meaning professionals like accountants or real estate agents may fail to recognize when they’re being used by criminals. This underscores the need for reporting obligations and red-flag education in these sectors. Financial institutions should also exercise caution with funds from gatekeeper firms—large transfers from a law firm’s trust account, for example, shouldn’t automatically be assumed “clean.”Regulation and Training Are Essential
If Australia’s Tranche 2 reforms had been in place earlier, this solicitor might have thought twice. Mandatory AML programs create accountability and act as a deterrent. Moving forward, gatekeeper professions implementing robust controls—such as client verification and suspicious matter reporting—will make it harder for schemes like Plutus Payroll to thrive.
Compliance officers should proactively engage with their legal, accounting, and real estate partners to ensure they’re preparing for the new regime. Early adoption of best practices, even before the 2026 deadline, could prevent your firm from becoming the next cautionary tale.
🌍 Regulatory Roundup
🎥 Prefer to watch? Catch the 90-sec explainer:
North America:
🇺🇸 U.S. Gatekeeper Rules in Limbo – The ENABLERS Act stalled in the Senate, but measures like the Corporate Transparency Act and Geographic Targeting Orders are tightening the net around misuse of legal entities and real estate.
🇨🇦 Canada – Most gatekeeper sectors are covered, but lawyers remain exempt due to attorney–client privilege concerns. Authorities are reviewing this gap.
Europe:
EU/UK: Stricter Enforcement
🇬🇧 UK: Gatekeepers like lawyers and accountants have been regulated for years, but enforcement is now tougher. The Solicitors Regulation Authority (SRA) can issue unlimited fines for serious AML breaches, and several firms have been penalized for poor compliance.
🇪🇺 EU: A new Anti-Money Laundering Authority (AMLA) will oversee high-risk entities, and updated rules will standardize due diligence across member states. The focus is on action, not just laws.
· 🇨🇭 Switzerland Closing Loopholes: Swiss authorities plan to extend AML rules to lawyers and advisors involved in company and trust creation. This follows scandals showing how professionals were used to launder money.
Asia-Pacific:
🇳🇿 New Zealand: A Head Start on AML Compliance
New Zealand implemented AML rules for lawyers, accountants, real estate agents, and high-value dealers between 2018 and 2019.
Today, around 7,600 entities comply with these rules, making AML checks like ID verification routine. Professionals now file Suspicious Activity Reports (SARs) just like banks.
NZ’s early adoption earned praise from FATF, while Australia faced criticism for delays.
Lessons for Australia: NZ’s phased enforcement and practical guidance from the NZ Law Society helped small firms adapt smoothly. This collaborative approach could serve as a model for Australia’s transition.
Asia: Cracking Down on Gatekeepers
🇸🇬 Singapore: A 2023 money laundering scandal (S$3 billion) led to stricter oversight of accountants, luxury car dealers, and family offices handling offshore wealth.
🇲🇾 Malaysia: Authorities are pushing for broader AML rules for non-bank professionals after cases of lawyers aiding kleptocrats.
🇭🇰 Hong Kong: New guidelines emphasize risk-based due diligence and reporting suspicious transactions, aligning with FATF standards.
✅ Takeaway: New Zealand’s success shows how early adoption and collaboration ease AML transitions, while Asia’s crackdowns highlight the growing global focus on gatekeeper accountability. No profession is exempt from the fight against financial crime.
🧰 Compliance Toolkit
Equip yourself with these resources to help your team prepare for DNFBP AML compliance under Tranche 2 and beyond:
🔐 Digital Identity Verification (KYC/eKYC)
• AU10TIX – Automated ID verification & fraud prevention.
📎 Link → au10tix.com
• GBG – Global ID verification & fraud solutions.
📎 Link → gbgplc.com
• Jumio – Global eKYC, biometrics, and ID verification.
📎 Link → jumio.com
• Trulioo – Global identity verification & KYB.
📎 Link → trulioo.com
• IDEMIA – Biometric & trusted identity solutions.
📎 Link → idemia.com
📊 Transaction Monitoring Software
• ComplyAdvantage – Real-time monitoring, sanctions & PEP screening.
📎 Link → complyadvantage.com
• Napier – AI-driven AML transaction monitoring.
📎 Link → napier.ai
• Fenergo – Client lifecycle management, AML/KYC compliance.
📎 Link → fenergo.com
• NICE Actimize – Enterprise-grade AML monitoring.
📎 Link → niceactimize.com
• Silent Eight – AI-powered name screening & alert remediation.
📎 Link → silenteight.com
🛠 RegTech & Screening Solutions
• Refinitiv World-Check – PEPs, sanctions, adverse media database.
📎 Link → refinitiv.com/world-check
• Dow Jones Risk & Compliance – Due diligence & sanctions screening.
📎 Link → professional.dowjones.com/risk-compliance
• LexisNexis Bridger Insight – Sanctions and PEP screening.
📎 Link → risk.lexisnexis.com/bridger
• Encompass – KYB automation and beneficial ownership mapping.
📎 Link → encompasscorporation.com
• KYC360 – AML screening & training for SMEs.
📎 Link → kyc360.com
📚 Guidance & Industry Resources
• AUSTRAC “Tranche Two” Obligations Summary – Official outline of new AML/CTF requirements.
📎 Link → austrac.gov.au
• Law Society of NSW – AML/CTF guidance for legal professionals.
📎 Link → lawsociety.com.au
• CPA Australia – AML/CTF resources for accountants.
📎 Link → cpaaustralia.com.au
• Real Estate Institute of Australia – AML/CTF resources for real estate.
📎 Link → reia.asn.au
• ACAMS – Global AML certifications & resources.
📎 Link → acams.org
• ICAEW – AML compliance resources for accountants.
📎 Link → icaew.com
• UK Law Society AML Practice Note – Practical compliance guidance for solicitors.
📎 Link → lawsociety.org.uk
💬 Quote of the Week
“These reforms are a critical and long overdue step in ensuring Australia’s compliance with international standards so that Australia does not become an international ‘back door’ for illicit funds.”
– Mark Dreyfus, Australian Attorney-General
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