What is a Designated Service the AML/CTF Regime in Australia

Introduction

A designated service is a specific business activity listed in Section 6 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (‘AML/CTF Act‘) that poses a risk for money laundering and terrorism financing. From 1 July 2026, expanded anti-money laundering and counter-terrorism financing laws will regulate professional service providers, meaning any business that provides a designated service with a geographical link to Australia must meet new compliance obligations, which often requires guidance from experienced AML/CTF compliance lawyers.

For an accountant, lawyer, or conveyancer, identifying these activities is necessary because providing one transforms a practice into a reporting entity that must enrol with AUSTRAC. This article explains what constitutes a designated service for professional firms so you can determine if these regulatory requirements apply to your business.

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Defining a Designated Service for Australian Businesses

The Connection to Money Laundering Risks

As established, these specific business activities are listed in Section 6 of the AML/CTF Act because AUSTRAC has identified them as posing a risk for:

• money laundering;
• terrorism financing; and
• proliferation financing.

The anti-money laundering and counter-terrorism financing (AML/CTF) regime targets activities that criminals might exploit to legitimise illicit funds or support illegal operations. Ultimately, by regulating these services, the government aims to protect Australia’s financial system, bringing businesses that provide them into this regulatory framework.

Understanding the Geographical Link Requirement

For Australia’s AML/CTF laws to apply, the designated service must have a geographical link to Australia. This is a critical requirement that determines whether a business has an obligation under the AML/CTF Act.

If a business provides one or more designated services with this connection to Australia, it becomes what is known as a reporting entity. As a reporting entity, the business must comply with a range of AML/CTF obligations, including:

• enrolling with AUSTRAC; and
• reporting certain activities.

How Designated Services Impact Reporting Entities

Triggering AML Compliance Obligations

When a business provides one or more designated services with a geographical link to Australia, it becomes a reporting entity under the AML/CTF Act. This status is not based on the type of business you are, but on the specific activities you perform. As a result, providing a designated service triggers a range of mandatory compliance obligations to regulate activities and manage risks, including:

• Developing and maintaining an AML/CTF program to identify, mitigate, and manage money laundering and terrorism financing risks, which includes arranging independent reviews of your AML/CTF program.
• Conducting customer due diligence, which involves identifying and verifying the identity of clients before providing a designated service.
• Reporting certain transactions and any suspicious matters to the Australian Transaction Reports and Analysis Centre (AUSTRAC).
• Keeping detailed records of transactions, customer identification, and the AML/CTF program.

The Requirement to Enrol with AUSTRAC

A primary obligation for any business that becomes a reporting entity is to enrol with AUSTRAC. This is a mandatory step for all entities that provide designated services. Furthermore, for newly regulated professions such as lawyers, accountants, and conveyancers under the Tranche 2 reforms, these obligations will commence on 1 July 2026.

The enrolment process with AUSTRAC has specific timelines, as follows:

• Businesses captured by the new rules can begin their AUSTRAC enrolment from 31 March 2026.
• A reporting entity must complete its enrolment within 28 days of starting to provide a designated service.
• For businesses that provide these services from the 1 July 2026 commencement date, the deadline to enrol is 29 July 2026.

Common Examples of Designated Services for Professional Firms

Financial Banking & Gambling Activities

The AML/CTF regime has long covered a range of activities within the financial and gambling sectors. These are often referred to as Tranche 1 designated services and are regulated because they pose a known risk for money laundering and terrorism financing.

Examples of designated services in the financial sector include:

• Accepting deposits and providing bank accounts.
• Issuing debit cards or cheque books.
• Exchanging digital currency, such as cryptocurrency, for money.
• Providing remittance or money transfer services.
• Offering loans, finance, or investments.
• Managing superannuation funds.

In the gambling sector, designated services typically involve:

• Operating betting accounts for customers.
• Exchanging cash for gaming chips or tokens.
• Paying out winnings from bets or games of chance.
• Providing gaming machines like poker machines.

Professional Services & Real Estate Transactions

Under the expanded AML/CTF framework, certain professional services related to property and client funds are now considered a designated service.

If you are a lawyer, accountant, or conveyancer, you provide a designated service when assisting in the planning or execution of a real estate transaction. This is outlined in item 1 of table 6 in the AML/CTF Act. Activities that fall under this designated service include:

• Preparing or reviewing a contract of sale for property.
• Coordinating with financial institutions for payment and mortgage discharge.
• Preparing documents for a registry authority to transfer real estate.

Additionally, receiving, holding, controlling, or managing a person’s property as part of a transaction is a designated service under item 3 of table 6. This includes using a trust account to hold a purchaser’s funds for settlement or to receive sales proceeds on behalf of a client.

Corporate Structuring & Trust Management

Assisting clients with the formation and management of companies and trusts can also trigger obligations.

The following activities are examples of a designated service under the AML/CTF Act:

• Creating or restructuring entities: Assisting in the planning or execution of the creation of a body corporate or legal arrangement, such as a trust, is a designated service under item 6 of table 6. This includes drafting company constitutions, trust deeds, or partnership agreements.
• Acting in key roles: Acting as, or arranging for another person to act as, a director, company secretary, trustee of an express trust, or a nominee shareholder is a designated service under items 7 and 8 of table 6.
• Providing a business address: Providing a registered office address or principal place of business for a company or legal arrangement is a designated service under item 9 of table 6. This is often a service provided by trust and company service providers.

What Activities Do Not Qualify as a Designated Service?

General Advice Versus Transaction Execution

A key distinction in Australia’s AML/CTF framework is between providing advice and executing a transaction. A professional service becomes a designated service only when it involves active steps that directly advance a transaction or outcome. Therefore, merely influencing a client’s decision or providing general advice is not enough to trigger these obligations.

Activities that are generally not considered a designated service include:

• Providing pure advisory services, such as explaining the legal consequences of a contract or discussing financing options.
• Preparing tax returns, audits, or general bookkeeping.
• Litigation and legal dispute resolution, as these services typically involve determining legal questions about matters that have already occurred, rather than advancing a future transaction.

For a service to be regulated, it must be sufficiently linked to the execution of a transaction. For instance, giving a client strategic advice on whether to use a company or a trust structure would likely not be a designated service. However, acting on instructions to draft the trust deed or company constitution would be, as this directly advances the creation of the legal entity.

Court Orders & Incidental Payments

The AML/CTF Act includes specific exclusions for certain professional activities to ensure routine work is not unintentionally captured. Transactions involving the sale, purchase, or transfer of real estate or a body corporate are not a designated service if they are carried out pursuant to an order from a court or tribunal.

This means that work done to transfer property as part of a family law settlement under a consent order, or from a deceased estate following a grant of probate, is excluded. Importantly, this exception applies only to services provided after the court order has been made.

There are also several important exclusions for the designated service of receiving, holding, controlling, or managing a person’s property under item 3 of table 6. These activities are not a designated service in circumstances where:

• The money held is for payment of your own professional fees or goods.
• The funds are for payments reasonably incidental to providing a service that is not a designated service, such as holding settlement funds in escrow for a litigation matter.
• The money is received or payable under a court or tribunal order.
• The service involves receiving or disbursing payments to or from a government body, court, or licensed insurer.

Conclusion

A designated service is a specific activity listed in the AML/CTF Act that, when provided with a geographical link to Australia, transforms a business into a reporting entity with compliance obligations. From 1 July 2026, these regulated activities will expand to include many professional services, such as executing real estate transactions and creating corporate structures, while excluding general advice and certain court-ordered actions.

Understanding if the services you provide are captured by these changes is the first step towards compliance. For expert guidance on navigating your obligations under the AML/CTF framework, contact our AML/CTF compliance lawyers at Click Legal to ensure your business is prepared.

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