What is Changing?
Historically, most Australians associated anti-money laundering obligations with banks and financial institutions.
From 1 July 2026, those obligations will extend to law firms providing certain regulated legal services known as “designated services.”
Importantly, not every legal matter will be affected. AML/CTF obligations generally arise where a law firm is involved in implementing or facilitating certain transactions involving property, businesses, companies, trusts, assets or funds.
Examples of legal services that may constitute designated services include:
Where a matter involves a designated service, law firms are required by law to undertake customer due diligence before providing that service.
Will AML Apply To Every Matter?
No. The AML/CTF legislation only applies to specific designated services.
Many legal services may not require AML verification, including certain advice-based engagements where no regulated transaction is being implemented or facilitated. Examples may include:
Whether AML requirements apply will depend upon the nature of the legal service being provided.
If AML obligations apply to your matter, we will explain:
What Does This Mean For Clients?
Where a designated service is being provided, we may be required to obtain and verify information before we can commence or continue acting.
Depending on the nature of the matter, we may request:
These requests are not discretionary. They are legal requirements imposed upon law firms under the AML/CTF legislation.
Is AML Verification A One-Off Process?
Not necessarily. AML obligations are assessed by reference to the designated service being provided, rather than simply by reference to the client relationship.
This means that even where a client has previously completed identification or verification processes with our firm, we may be required to:
Where additional verification is required, our team will explain why it is necessary and endeavour to minimise duplication wherever possible.
The Questions We Have Never Asked Before
Many clients may notice that some of the questions being asked appear unrelated to their legal matter. For example, we may need to ask:
These enquiries form part of the due diligence process required by law.
What Is A Politically Exposed Person (PEP)?
One of the concepts introduced under the AML/CTF framework is the identification of Politically Exposed Persons (PEPs). A PEP may include:
Importantly, most clients will not be Politically Exposed Persons. Further, being a PEP does not prevent us from acting. However, where a person is identified as a PEP, the legislation may require additional enquiries and enhanced due diligence before certain designated services can be provided.
Will This Delay My Matter?
Potentially. The most common cause of delay under the new regime is expected to be incomplete information or delays in providing requested documentation.
We encourage clients to provide requested information as early as possible. Doing so will minimise delays and assist us in progressing matters efficiently.
What Happens If Information Is Not Provided?
This is one of the most important aspects of the reforms. Where AML obligations apply, the legislation may prevent a law firm from proceeding with a designated service until the required due diligence has been completed.
As a result, delays in providing information may delay:
In some circumstances, we may be unable to commence or continue acting until the required information has been provided.
Will There Be Additional Costs?
The introduction of AML/CTF obligations requires law firms to undertake additional verification, risk assessment and compliance processes.
Where AML requirements apply to a matter, any associated costs will be disclosed in accordance with our legal costs disclosure obligations at the commencement of the engagement.
How Zervos Lawyers Has Prepared
The legal profession has spent considerable time preparing for these reforms.
At Zervos Lawyers, we have undertaken extensive training, reviewed our internal procedures, assessed the legal services provided by the firm and implemented systems to identify when AML obligations apply and when they do not.
Our objective is to ensure compliance with the AML/CTF legislation while minimising disruption to our clients and maintaining the practical, commercial and efficient service our clients expect.
Where additional information is required, we will explain:
What We Ask Of Our Clients
As we move into this new regulatory environment, we ask clients to:
The Key Message
From 1 July 2026, certain legal services classified as designated services under the AML/CTF legislation will require additional verification, due diligence and client information before work can proceed.
These requirements are not unique to Zervos Lawyers. They form part of a new regulatory framework that applies across the Australian legal profession. Where AML obligations apply, Zervos Lawyers is required by law to undertake those checks and cannot simply waive the requirements.
By working together and providing information early, we can minimise delays, manage compliance obligations efficiently and ensure your matter progresses as smoothly as possible.
Should you have any questions regarding the AML/CTF reforms or how they may affect your matter, please contact a member our AML Compliance Team.
Anthony Ghabrial | Partner & Compliance Officer
E anthonyg@zervoslawyers.com.au
Disclaimer
The content of this newsletter is provided for informational purposes only to offer general insights and an overview of the law. It is not intended to be legal, accounting or tax advice, nor does it consider your specific objectives, circumstances or needs. Zervos Lawyers and the authors accept no responsibility for any loss incurred by individuals acting or refraining from acting based on the material contained herein. We strongly encourage you to seek tailored professional advice before making any decisions.
