What is a Reporting Group Under the AML Regime in Australia

Introduction

Reforms to the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (‘AML/CTF Act‘) that took effect on 31 March 2026 for existing reporting entities replaced the designated business group model with a new reporting group framework. This updated group concept allows two or more reporting entities to share a single anti-money laundering and counter-terrorism financing (AML/CTF) program, helping businesses streamline compliance and manage shared money laundering risks more effectively.

This article explains what constitutes a reporting group under the amended Australian law so you can understand how to form a reporting group and designate lead entities. It outlines the key differences from the previous regime and details how group members can collaborate to meet their reporting obligations ahead of the upcoming 1 July 2026 compliance deadline for newly regulated businesses.

Interactive Tool: Check Your Reporting Group Eligibility & Compliance

Understanding the Group Concept for Reporting Entities

Defining the Group Concept Under Australian Law

Under the Australian AML/CTF regime, a reporting group is a collection of entities that includes at least one reporting entity. The group operates under a single, shared AML/CTF program managed by a designated lead entity, with other participants known as ordinary members.

This group structure allows related or even unrelated businesses to share risk management frameworks and compliance arrangements. Additionally, the reporting group model officially replaced the former Designated Business Group (DBG) concept under the AML/CTF Act.

Why Reporting Entities Choose to Form a Reporting Group

Reporting entities form a reporting group to streamline their compliance efforts and manage risks more efficiently. This collaborative approach offers several advantages for businesses navigating their AML/CTF obligations, including:

• Centralised compliance functions: Grouping allows for the centralisation of AML/CTF functions, which helps in sharing resources and reducing operational costs.
• Effective risk management: It enables a more effective approach to identifying, assessing, and mitigating money laundering and terrorism financing (ML/TF) risks across all members.
• Secure information sharing: Members of a reporting group can securely share ML/TF risk-related information, including details concerning suspicious matter reports. This facilitates better group-wide risk management without breaching tipping-off offence provisions.
• Inclusion of non-reporting entities: Unlike the previous designated business group model, a reporting group can include businesses that are not reporting entities. These members can assist with carrying out AML/CTF obligations on behalf of the reporting entities in the group.

Transitioning from a Designated Business Group

The End of the Designated Business Group Model

Under the AML/CTF Act, the reporting group framework replaced the designated business group (DBG) model on 31 March 2026. As of this date, DBGs ceased to exist, requiring former members to adopt the new structure to continue sharing compliance functions.

Entities that were part of a DBG had to transition to a reporting group by the deadline. This transition involved ensuring all eligible members were included and a lead entity was appointed in writing.

If a member of a former DBG chose not to join a reporting group, they were required to develop their own separate AML/CTF program, often requiring advice from AML/CTF compliance program lawyers. Consequently, from 31 March 2026, these entities could no longer rely on the joint program established under their previous DBG arrangement.

Key Differences for a Designated Business

The reporting group concept introduces several key changes from the old DBG model, offering greater flexibility for reporting entities. One of the most significant differences is that reporting groups can include non-reporting entities as members, allowing them to assist with carrying out AML/CTF obligations.

Furthermore, other distinctions between the two models include:

• Formation: A reporting group can be formed automatically by operation of law if a control relationship exists (a business group), or it can be formed by election through a written agreement between separate businesses. This is more flexible than the DBG model, which had more rigid formation criteria.
• Scope: The new framework allows unrelated entities, such as franchises, joint ventures, or professional networks, to form an elective reporting group to coordinate compliance.
• Control: A business group can be established based on a “control” relationship, which is a broader concept than the related-companies requirement under the previous DBG rules.

Creating a Reporting Group for Your Designated Business

Forming a Business Group

A business group is automatically considered a reporting group if two conditions are met:

• a control relationship exists; and
• at least one person within the group provides a designated service.

This type of reporting group is not formed by choice, but rather by the operation of law based on the business structure.

The structure of these groups is based on control, such as in parent and subsidiary arrangements. Under Section 11 of the Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024 (‘AML/CTF Amendment Act‘), control can be determined by factors including:

• the capacity to control a board’s composition; or
• the ability to influence financial and operating policies.

The reporting group will include all entities within the control structure, even those that do not provide a designated service. Furthermore, it is not possible to include only some members of the business group, as all entities must be part of the reporting group.

However, a reporting entity that is part of a business group can choose to opt out. To do so, the entity must provide written notice to all other reporting entities in the business group, including the lead entity.

Establishing an Elective Reporting Group

Separate and unrelated businesses can choose to form an elective reporting group through a written agreement. This structure is suitable for arrangements where no control relationship exists, such as franchises, joint ventures, or professional networks that wish to centralise their anti-money laundering and counter-terrorism financing compliance.

To establish an elective reporting group, several conditions must be met:

• two or more reporting entities must agree in writing to form the group;
• each member must elect in writing to be part of the group; and
• a member cannot belong to another elective reporting group.

A business group can also join an elective reporting group. However, if one member of a business group joins, all members of that business group must join collectively. Similarly, if one member of that business group later decides to leave the elective group, all members of the business group are considered to have left.

The Lead Entity in AML Compliance

Selecting an Australian Lead Entity

Every reporting group must appoint a lead entity, which is agreed upon in writing by all members. Furthermore, the lead entity must have genuine authority to determine and maintain the AML/CTF policies for all reporting entities within the group.

To be eligible, the lead entity must meet specific criteria. Specifically, it cannot be controlled by another member of the group that provides a designated service. The lead entity must also have a required connection to Australia, meaning it is one of the following:

• an Australian resident individual;
• a company incorporated in Australia;
• a foreign company registered under the Corporations Act 2001 (Cth) (‘Corporations Act‘); or
• a trust with at least one trustee who is an Australian resident.

How Lead Entities Manage and Mitigate Risks

The lead entity is legally responsible for the reporting group’s overall compliance and acts as the central point of accountability. This includes overseeing group-wide risk management and acting as the primary contact for AUSTRAC.

The lead entity’s key responsibilities involve:

• Group-Wide Risk Assessment: Conducting and maintaining a comprehensive money laundering and terrorism financing (ML/TF) risk assessment that covers all members of the reporting group.
• AML/CTF Program Development: Creating, implementing, and maintaining a group-wide AML/CTF program, including policies and procedures tailored to the nature, size, and complexity of each member’s business.
• Internal Controls: Establishing and maintaining robust internal controls and monitoring systems to detect and report suspicious activities across the group.
• Oversight and Governance: Ensuring its governing body and AML/CTF compliance officer exercise ongoing oversight across the entire reporting group to manage and mitigate risks effectively.
• Information Sharing: Developing policies that facilitate the appropriate sharing of compliance and risk-related information between group members to support customer due diligence and risk management.

How Groups Formed Share AML Compliance Obligations

Delegating Tasks Among Reporting Entities

Members of a reporting group can discharge anti-money laundering and counter-terrorism financing (AML/CTF) obligations on behalf of other members. This arrangement allows for the centralisation of compliance functions, enabling the group to share resources and operate more efficiently. For example, one member could be designated to conduct customer due diligence or submit suspicious matter reports for the entire group.

While tasks can be delegated, the reporting entity for whom the obligation is performed remains responsible for ensuring compliance, which is often verified through independent AML/CTF program reviews. Under Section 236B(6) of the AML/CTF Act, if a member breaches a civil penalty provision, both that member and the lead entity are considered to have contravened the requirement.

Empowering Entities to Manage & Mitigate Shared Risks

The reporting group framework allows non-reporting entities to be included as members, which is a key difference from the previous designated business group model. These members can carry out AML/CTF duties for reporting entities in the group, helping to manage and mitigate shared money laundering risks. Furthermore, this structure facilitates the sharing of compliance and risk-related information between all group members.

For a non-reporting entity to discharge obligations on behalf of a reporting entity, it must adhere to specific conditions. According to Rule 2-4 of the Anti-Money Laundering and Counter-Terrorism Financing Rules 2025 (‘AML/CTF Rules‘), the non-reporting member must:

• Conduct personnel due diligence, including background checks and suitability assessments, on any staff involved in carrying out AML/CTF functions; and
• Provide training to these personnel to ensure they can perform their duties effectively.

Ultimately, the standard of this due diligence and training must meet the requirements set out in the AML/CTF policies of the reporting entity whose obligations are being discharged.

Conclusion

The reporting group framework, which replaced the designated business group model on 31 March 2026, allows reporting entities to streamline anti-money laundering and counter-terrorism financing compliance under a single program. This structure requires appointing a lead entity to oversee group-wide obligations and manage shared risks, offering greater flexibility for both related and unrelated businesses to form a reporting group.

Now that these changes are in effect, ensuring your business structure is compliant with the new reporting group framework is critical. For guidance on navigating the reporting group framework and meeting your ongoing obligations, contact the AML/CTF compliance lawyers at Click Legal. Our team can provide the expert support you need to manage your compliance effectively under the current regime.

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