AML & ID Verification: What Clients Need to Know

If you don’t work in the professional services industries, you may not be aware that one of the biggest regulatory changes to affect the accounting, financial services and other related professions has come into effect. From 1 July 2026, under Australia’s expanded Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) regime, accountants providing certain designated services are now required to undertake identity verification, customer due diligence, and ongoing risk assessments as part of their client engagements.

At North Advisory, we understand that these new requirements may initially feel like additional administration. However, they exist for an important reason: to protect Australia’s financial system and legitimate businesses from exploitation by organised crime, fraud, money laundering, and terrorism financing. Rather than viewing these obligations as another layer of red tape, we see them as an opportunity to further strengthen the trust our clients place in us.

Until now, Australia’s AML (Anti-Money Laundering) legislation has primarily applied to banks, financial institutions, casinos, and other financial service providers. The latest reforms, commonly referred to as the “Tranche 2” reforms, expand those obligations to professions that play an important role in establishing companies, trusts, business structures and significant financial transactions. This now includes many accounting firms, legal practices, conveyancers and real estate professionals.

The Australian Government introduced these changes after recognising that professional advisers can unknowingly become part of transactions that criminals attempt to use to disguise the origin of illicit funds. By requiring stronger identity verification and client due diligence, AUSTRAC, the government’s financial intelligence agency, aims to reduce these risks while bringing Australia into line with international standards.

In practical terms, you should expect us to ask more questions than we may have in the past. For many new engagements involving designated services, we will need to verify your identity before we commence work. Depending on your circumstances, this may include requesting government-issued identification, confirming your residential address, understanding who ultimately owns or controls a business, trust or company, and asking questions about the purpose of a particular transaction.

If you are acting on behalf of a company, trust or other entity, we may also need to verify the identities of directors, trustees, beneficial owners or other controlling parties. While these requests may seem more detailed than previously, they are now a legal requirement rather than our own internal policy.

“I’ve been a client for years. Why do I need to provide identification now?” We expect this to be a common and legitimate question from our current clients. While we may have known you personally or acted for your business for many years, the legislation requires us to ensure that appropriate customer due diligence has been completed for clients receiving designated services. Existing client relationships may still require verification where the new AML obligations apply or where updated due diligence becomes necessary under the risk-based framework.

The new legislation adopts a “risk-based approach.” This means we are expected to understand who our clients are, the nature of their business, and whether any aspect of an engagement presents an elevated risk. The new legislation adopts a “risk-based approach.” This means we are expected to understand who our clients are, the nature of their business, and whether any aspect of an engagement presents an elevated risk.

For the overwhelming majority of our clients, these conversations will simply confirm that everything is entirely legitimate. However, the legislation requires accounting firms to identify unusual or suspicious activity where appropriate and, in limited circumstances, report certain matters to AUSTRAC. Importantly, these requirements apply consistently across the profession and are designed to protect both clients and advisers.

Keep in mind that not every service requires ID validation. The legislation focuses on specific “designated services”, particularly those involving company structures, trusts, business establishment, certain transactions and advisory services that present a higher money laundering risk. Whenever we collect identification documents or personal information, protecting that information remains one of our highest priorities.

North Advisory has secure systems and procedures in place to ensure client information is collected, stored and managed appropriately. We will only request information necessary to satisfy our legal obligations and to deliver the services you have engaged us to provide.

We understand that these new requirements may add an extra step before we can begin work on your behalf. However, complying with Australia’s AML framework is now an important part of providing professional accounting services.

As these regulations continue to evolve, North Advisory will remain at the forefront of compliance, keeping our clients informed and making the process as straightforward as possible. If you’re ever unsure why we’re requesting information or what the requirements mean for you, our team is always happy to explain.