A law firm's AML/CTF obligations are matter-level, not firm-level abstractions: each matter must be tested against the designated-services table, each party who needs checking must be identified, and trust money must be handled within the statutory boundaries. This checklist gives Australian law firms a sequence that starts with the service, runs through CDD and reporting, and preserves privilege and confidentiality along the way. It is general compliance information, not legal advice, and each item should be confirmed against the current Act, Rules and AUSTRAC guidance.
Scope each matter
The designated-services analysis is documented, not assumed. AUSTRAC's guidance describes captured legal work, including drafting or reviewing documents that actively advances a captured transaction, while general legal advice and routine document preparation are not designated on their own. Record the reasoning on the file.
- Test the matter against the professional designated services in table 6
- Identify the designated service and when it starts
- Record the boundary for general legal advice and routine drafting
- Check whether the practice's risk assessment covers the practice area
Identify the parties and complete CDD
In a conveyancing or transaction matter, the parties may include a vendor, purchaser, guarantor, funder or trustee. The program should define which parties receive CDD and at what depth, then apply it consistently. A matter file that shows the party list and the verification is the core of the AML record.
- Identify the client and the persons on whose behalf the service is received
- Identify and verify counterparties where the service requires it
- For entities, map beneficial owners and controllers
- Screen for PEPs, sanctions and adverse media
- Complete initial CDD before providing the designated service
Trust money and reporting
Trust money is where laundering risk is highest in legal work, and the reporting obligations attach to the firm's own suspicion, not the client's explanation. The firm should also maintain the privilege analysis separately from the reporting decision, since the two regimes interact.
- Test client-money and property services against item 3 and its boundaries
- Keep trust money separate, authorised and reconciled
- Lodge SMRs within the deadline and protect SMR-related information
- Report TTRs for physical currency thresholds
- Preserve legal professional privilege boundaries
Monitor, retain and train
The strongest law firm AML file reads like a well-run matter: parties, evidence, decisions and dates connected in one place. Build the checklist into the matter workflow so compliance is not a separate exercise.
- Set review triggers for matters and relationships
- Retain scope, CDD, transaction and reporting records for the required period
- Deliver role-based training and record completion
- Test the workflow with a controlled matter
Official sources
Confirm the current rules against these primary sources.
Questions
Which legal services are designated services?
The service test matters, not the practice area. Captured work can include drafting or reviewing documents that actively advances a captured transaction, entity or trust formation, specified client-property transactions and certain role or address services.
Do we verify every party in every matter?
No. The program should define which parties receive CDD and at what depth based on the service and risk. The definitions must be applied consistently and the decisions recorded.
How does privilege interact with AUSTRAC requests?
Legal professional privilege and the AML/CTF regime operate separately. A firm should preserve the privilege analysis and meet its reporting obligations within the applicable rules, taking advice where the interaction is complex.
What is the most common gap in law firm files?
A CDD file that verifies the client but not the parties the matter actually requires, or a trust-money record without the transaction context. The matter file should connect both.
General information for Australian professionals, not legal advice. It does not replace the AML/CTF Act, the Rules or AUSTRAC guidance. See our editorial standards.
Keep reading
- For lawyers5 min
How Tranche 2 captures Australian law firms and conveyancers: which legal services are designated services, customer due diligence for law practices, trust money, tipping off, and how legal professional privilege is preserved.
- Law-firm designated-service scope6 min
A matter-level guide for Australian law firms deciding when conveyancing, transactions, entity work, trust services and client-money work enter AML/CTF scope.
- Trust accounts and item 35 min
A fact-based guide to when receiving, controlling, disbursing or managing customer money and property becomes a professional designated service for law firms.