Independent Evaluations Under the Reformed AML/CTF Act: What Has Changed

Since 31 March 2026, the familiar AML/CTF “independent review” has been replaced by a broader “independent evaluation”.

For newly regulated tranche 2 businesses, the obligation applies from 1 July 2026.

The change is more than a new label.

The evaluation now covers your whole AML/CTF program, the requirement sits in the AML/CTF Act itself, and there is a firm three-year limit between evaluations.

Below is a plain English comparison of the old and new rules, the relevant sections, and the practical steps to take now.

Interactive Tool: Find Out When Your First AML/CTF Evaluation Is Due

Where the obligation now sits

The requirement is in section 26F(4)(f) of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth), inserted by the AML/CTF Amendment Act 2024. It says a reporting entity’s AML/CTF policies must deal with:

(f) the conduct of independent evaluations of the reporting entity’s AML/CTF program, including the frequency with which such evaluations must be conducted, which must: (i) be appropriate to the nature, size, and complexity of the reporting entity’s business; and (ii) be at least once every 3 years;

The detail of what an evaluation must cover is in section 5-10 of the AML/CTF Rules 2025. AUSTRAC’s guidance, Step 5: Conduct an independent evaluation, explains how it expects this to work in practice.

Before and after: a side-by-side comparison

“Before” means the regime in force up to 30 March 2026, under the AML/CTF Rules Instrument 2007 (No. 1), Compilation No. 76. “Now” means the AML/CTF Act as amended and the AML/CTF Rules 2025.

What “moved from the Rules into the Act” means

AML/CTF law works at two levels:

• The Act is passed by Parliament. Changing it requires an amending Act.
• The Rules are made by the AUSTRAC CEO under section 229 of the Act. AUSTRAC can change them by issuing a new instrument.

Before 31 March 2026, the Act did not mention independent reviews. It required a Part A program that met the requirements in the Rules (former section 84(2)(c)). The review obligation itself sat only in the Rules, in Part 8.6.

From 31 March 2026, the Act itself requires evaluations and sets the 3-year minimum (section 26F(4)(f)). The Rules now fill in the detail. The old 2007 instrument has been renamed the AML/CTF (Class Exemptions and Other Matters) Rules 2007, and Part 8.6 is no longer in it.

In practice, this means three things:

1. More certainty. The 3-year limit is set by Parliament. AUSTRAC cannot change it alone.
2. Higher profile. Evaluations now sit alongside the other core program duties in Part 1A of the Act.
3. A clearer link to enforcement. The obligation connects directly to section 26G (complying with your AML/CTF policies), a civil penalty provision.

This does not mean independent reviews were optional before. The change is about where the rule sits, how firm it is, and how clearly it ties to the penalty provisions.

Your first evaluation deadline and what to do now

The AML/CTF Transitional Rules 2026 stagger the first round of evaluations:

• Existing reporting entities enrolled on 30 March 2026 that have had at least one independent review: the first evaluation is due by the later of 4 years after the most recent review, or 31 March 2027.
• Newly regulated (tranche 2) businesses: the first evaluation deadline is no earlier than 1 July 2029.

Practical steps

1. Find the date of your last independent review and work out your first evaluation deadline.
2. Update your AML/CTF policies to set the frequency of evaluations, with a short written rationale.
3. Record how you will select an evaluator who is independent and suitable for your business.
4. Set out how the report reaches your governing body and approving senior manager, and how findings will be fixed and documented within 14 days.
5. Book AML/CTF independent evaluation services early. AUSTRAC has noted demand for suitably qualified evaluators, which is one reason for the staggered deadlines.

If you are reviewing your AML/CTF documentation ahead of an independent evaluation, our AML/CTF Business Risk Assessment Template (Australia) can help you document your ML/TF risks and controls.

How Click Legal can help

Click Legal conducts AML/CTF independent evaluations for reporting entities across financial services, fintech, digital assets and funds management.

Our independent reviews (evaluations) are structured around section 26F(4)(f) of the Act, section 5-10 of the Rules and AUSTRAC’s published expectations.

Each evaluation covers your ML/TF risk assessment, the design of your AML/CTF policies, and sample testing of how they operate in practice.

You receive a written report for your governing body and approving senior manager, with clear findings you can act on.

If your first evaluation deadline is approaching, or you are unsure when it falls, please do not hesitate to contact our AML/CTF independent evaluation lawyers.

Frequently Asked Questions

Legislation, Rules and AUSTRAC guidance

Legislation

• Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth), current compilation (see Part 1A, sections 26B to 26P, and section 116)
• Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024 (Cth) (Schedule 1 inserts Part 1A)

Rules

• Anti-Money Laundering and Counter-Terrorism Financing Rules 2025 (section 5-10, independent evaluations)
• AML/CTF Rules Instrument 2007 (No. 1), Compilation No. 76, pre-reform version (Parts 8.4, 8.6 and 9.6)
• AML/CTF (Class Exemptions and Other Matters) Rules 2007, current version (the renamed 2007 instrument)

AUSTRAC guidance

• Step 5: Conduct an independent evaluation (Reform)
• Step 4: Review and update your AML/CTF program (Reform)
• AML/CTF Transitional Rules 2026 guidance

This article is general information only and is not legal advice. It reflects the law as at 8 October 2026. Please seek advice on your own circumstances.