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A “reporting group” will replace the concept of a Designated Business Group (DBG) designated business group and will be more flexible. Under the new AML/CTF reforms effective 31 March 2026.
Moving from a Designated Business Group (DBG) to a reporting group under the new AML/CTF regime offers opportunities for efficiency and consistency but may bring significant governance, liability, and change management risk and challenges. Careful planning, early action, and robust oversight by the lead entity are essential for a successful transition.
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The Core Pillar: The Lead Entity and Its Critical Role
The introduction of the Lead Entity is the most significant operational change. This entity becomes the central point of accountability.
The Lead Entity is legally responsible for:
- Developing and maintaining the group-wide AML/CTF program.
- Overseeing the group’s ML/TF risk assessment.
- Ensuring all members comply with the AML/CTF Act and Rules.
- Having the authority to control and enforce compliance across the group.
Crucial Point: While tasks can be delegated, ultimate liability rests with the Lead Entity, which could face civil penalties for non-compliance by any group member.
What’s Changing?
The Old: Designated Business Group (DBG)
- Structure: Primarily for related companies (e.g., holding companies and subsidiaries as defined by the Corporations Act).
- Scope: Only reporting entities could be members.
- Key Feature: Members could share a joint AML/CTF program and delegate tasks, but each entity remained ultimately liable for its own compliance.
The New: Reporting Group (From 31 March 2026)
- Structure: Can include both related and unrelated entities (e.g., franchises, joint ventures, professional networks) that share similar ML/TF risks.
- Scope: Can include non-reporting entities within the group structure.
- Key Feature: A nominated Lead Entity assumes legal responsibility for group-wide compliance, including developing the AML/CTF program and ensuring all members meet obligations.
Who Can Form a Reporting Group? Two Primary Pathways
The new model provides two main avenues for formation, offering flexibility for different business structures.
1. Business Group Reporting Groups (Based on Control)
This is the closest analogue to the old DBG but with a "control" focus beyond strict corporate ownership.
- Formation Principle: Based on a control structure. One person (e.g., a parent company, a trustee, a general partner) controls one or more others.
- Key Rule: If a designated service is provided by any person in that control structure, all persons in the structure are part of the business group.
- Forming the Reporting Group: All members must agree in writing on a single Lead Entity. If they cannot agree, a reporting group cannot be formed.
Example: An Australian parent company (non-reporting) controls a trust and four subsidiary companies that are reporting entities. The entire control structure—parent, trust, and all four subsidiaries—forms the business group. They must all agree on whether the parent or the trust will act as the Lead Entity.
2. Elective Reporting Groups (Based on Agreement)
This is the new, flexible pathway for entities that wish to coordinate compliance without a strict control relationship.
- Formation Principle: Two or more reporting entities elect to form a group by agreement.
- Key Rule: A whole business group (as defined above) can join an elective group, but it must join or leave as a single unit.
- Perfect For: Franchise networks (e.g., a real estate franchisor and its franchisees), joint ventures, or professional associations wanting a common compliance framework.
Example: A real estate franchisor and its legally independent franchisees decide to form an elective reporting group. The franchisor, having the resources and central oversight, is elected as the Lead Entity to develop and oversee a common AML/CTF program for the network.
Practical Considerations & Steps for a Successful Transition
Transitioning to the new model requires strategic planning. Here’s a roadmap to get started.
✅ Assess Your Structure & Eligibility
- Map your control relationships. Are you part of a wider business group?
- Identify all entities sharing similar ML/TF risks and customer profiles.
- Determine which pathway (Business Group or Elective) best suits your structure.
✅ Evaluate Governance & Liability
- Can a potential Lead Entity effectively oversee and enforce compliance across the entire group?
- Is there buy-in from all members for a single Lead Entity?
- Is the organisation prepared for the centralised liability this model creates?
✅ Plan for Implementation & Change Management
- Start Early. The March 2026 deadline will arrive quickly.
- Update Risk Assessments & Policies. A new group-wide program must be developed.
- Engage Stakeholders. Success depends on clear communication and strong leadership from the top down.
- Focus on Outcomes. Compliance must be embedded in daily operations, not just documentation.
Your Next Steps Before March 2026
- Conduct a Preliminary Review: Immediately assess whether your organisation operates within a potential "business group" control structure or has partnerships suitable for an "elective group."
- Designate a Project Lead: Appoint an internal team or compliance lead to own the transition project.
- Seek Expert Advice: Book a FREE Consultation to understand the full implications of the Lead Entity model for your specific structure.
- Monitor AUSTRAC Guidance: Stay updated on the ongoing consultation for the AML/CTF Rules, which will finalise the conditions for elective groups.
The shift from DBG to Reporting Group is a strategic compliance decision. Proactive organisations will use this reform to build a more robust, efficient, and risk-aware framework. Those who delay risk governance headaches and potential regulatory exposure.
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Disclaimer: This blog post provides general information and is not a substitute for legal advice. You must consider your specific circumstances and seek professional advice to determine how the new AML/CTF laws apply to you.
References
Legislation and Official Sources:
- Corporations Act 2001 (Cth), Section 50 – Definition of "related bodies corporate" and corporate group structures.
- Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) – The primary legislative framework governing AML/CTF obligations in Australia.
- Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024 – Legislation introducing the new Reporting Group model under Section 10A.
- AML/CTF Rules – Regulatory instruments detailing specific compliance requirements, including:
- Part 2.1 of Chapter 2 (Designated Business Group eligibility)
- Chapter 61 (Remittance network provider obligations)
Government and Regulatory Guidance:
- Australian Transaction Reports and Analysis Centre (AUSTRAC). (n.d.). Designated Business Groups (DBG) Guidance. Retrieved from AUSTRAC website: AUSTRAC
- Australian Transaction Reports and Analysis Centre (AUSTRAC). (n.d.). AML/CTF Reform: Reporting Groups. Retrieved from AUSTRAC website: AUSTRAC
- Australian Transaction Reports and Analysis Centre (AUSTRAC). (n.d.). Determining Ownership and Control Structures. Retrieved from AUSTRAC website: AUSTRAC
- Australian Transaction Reports and Analysis Centre (AUSTRAC). (2024, December 11). Consultation Paper: Reporting Group Eligibility Categories. (Submission deadline: 14 February 2025).
Forms and Administrative Resources:
- AUSTRAC Online Forms:
- Form 1: Election to be a member of a designated business group
- Form 2: Formation of a designated business group
- Form 3: Variations to a designated business group
Parliamentary and Legislative Materials:
- Parliament of Australia. (2024, November 29). Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2024. Retrieved from: Parliament of Australia website
Additional Contextual Resources:
- Australian Government. (n.d.). Federal Register of Legislation: Corporations Act 2001. Retrieved from: https://www.legislation.gov.au/C2004A00818/latest/text
- Australian Government. (n.d.). Australasian Legal Information Institute (AustLII): Corporations Act 2001 – Section 50. Retrieved from: AustLII - the Australasian Legal Information Institute
Note on Currency:
All legislative references are current as of the publication date of this document. Readers are advised to consult the latest versions of the AML/CTF Act, AML/CTF Rules, and AUSTRAC guidance, particularly as the new Reporting Group provisions come into effect on 31 March 2026.