From Wednesday (1 July 2026), Australian law firms will begin operating under expanded Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) obligations in a regulatory shift that’s particularly relevant to procurement.
The reforms extend AML/CTF requirements to lawyers providing designated legal services as part of Australia’s ‘Tranche 2’ reforms. This brings them into line with banks, financial institutions and other regulated entities that already undertake customer due diligence and identity verification.
For procurement teams and organisations engaging external legal providers, the changes are likely to introduce additional administrative requirements at the beginning of engagements.
Law firms may request identification documents, ownership information and supporting evidence from both new and existing clients before they can commence or continue providing certain legal services.
While this may initially appear to be no more than a slight inconvenience, the reforms reflect a broader strengthening of Australia’s financial crime framework, with increased expectations around transparency, beneficial ownership and risk management throughout supply chains.
Legal advisers are expected to implement customer due diligence processes, conduct ongoing monitoring where required, maintain records and report suspicious matters in accordance with the amended legislation.
This means procurement teams may need to factor additional time into sourcing and contracting timelines, especially when legal advice is considered urgent or when complex corporate structures require further verification.
The reforms also reinforce the growing importance of supplier due diligence across procurement.
As organisations face increasing scrutiny over third-party risks, procurement teams are already being asked to demonstrate stronger governance around supplier onboarding, ownership verification, sanctions screening and fraud prevention.
The legal sector’s inclusion in Australia’s AML/CTF regime is expected to improve information integrity during major procurement activities such as mergers and acquisitions, property transactions, large infrastructure projects and other high-value commercial arrangements where legal advisers play a central role.
As compliance becomes increasingly interconnected across business functions, potential delays stemming from incomplete identification or verification requirements may have downstream impacts.
Rather than treating the new obligations as a legal issue alone, now is the time to review internal onboarding processes, ensure key corporate documentation can be readily provided upon request and work closely with legal departments to understand how the new requirements could affect contracting timelines.
The AML/CTF obligations will be covered in a legal update seminar at PASA’s 14th Annual Premier ConfeX in Melbourne on 14 and 15 October.
