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1. Overview of the ReformsSignificant changes to Australia’s Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) regime are taking effect under the Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024 (the Amendment Act) and the Anti-Money Laundering and Counter-Terrorism Financing Rules 2025 (the Rules). These reforms represent a fundamental shift toward an outcomes-based, risk-oriented framework, aligned with international standards set by the Financial Action Task Force.The core pillars of the reform include:• Stronger governance and oversight, with clearer accountability for the board and senior management;• Expanded risk assessments, including explicit coverage of Proliferation Financing (PF) risk; and• New transitional measures, including a three-year transition period for initial Customer Due Diligence (CDD) obligations.2. Who Do These Reforms Apply To?The AML/CTF reforms affect a broad range of businesses. If your business provides any of the designated services regulated under the AML/CTF Act, you are a “reporting entity” and must comply with the reformed regime.Existing Reporting Entities (Tranche 1)Entities already regulated under the AML/CTF Act must comply with the reformed regime from 31 March 2026. These include:• banks, building societies, and credit unions;• life insurers and friendly societies;• securities dealers, futures brokers, and managed investment scheme operators;• remittance service providers;• gambling service providers, including casinos and online wagering operators;• bullion dealers; and• virtual asset service providers (formerly digital currency exchange providers).Newly Regulated Entities (Tranche 2)A major expansion of the AML/CTF regime will bring approximately 90,000 new businesses under AUSTRAC regulation from 1 July 2026. These “Tranche 2” entities include:• lawyers and law practices;• accountants;• real estate agents;• trust and company service providers; and• dealers in precious metals and stones (jewellers).Tranche 2 entities will be able to enrol with AUSTRAC from 31 March 2026 and must be enrolled by 29 July 2026. AUSTRAC has released sector-specific guidance and program starter kits to assist newly regulated entities in preparing for their obligations.3. Governance and Oversight: New Statutory ObligationsA central feature of the reforms is the introduction of defined roles for the “Governing Body” and “Senior Manager”, together with heightened expectations for effective internal controls.Governing BodyThe “Governing Body” refers to the individuals or body (such as a Board of Directors) with primary responsibility for the governance of the reporting entity. The Governing Body is expected to maintain ongoing oversight of AML/CTF compliance and be sufficiently informed of Money Laundering (ML), Terrorism Financing (TF), and Proliferation Financing (PF) risks to ensure that the AML/CTF Program is identifying and mitigating those risks in practice.Under the Amendment Act, the Governing Body has proactive obligations to provide “appropriate ongoing oversight”. The Australian Transaction Reports and Analysis Centre (AUSTRAC) has indicated that this may be demonstrated by:• including AML/CTF compliance and ML/TF/PF risk as a regular standing agenda item in board or management meetings;• reviewing relevant matters in AML/CTF compliance officer and independent evaluation reports;• questioning how the business will address any adverse findings in those reports; and• interrogating the root causes of non-compliance and the effectiveness of existing controls.Senior ManagerA “Senior Manager” is an individual who makes, or participates in making, decisions affecting the whole or a substantial part of the reporting entity. The reforms sharpen accountability by making them legally responsible for approving the ML/TF/PF Risk Assessment, AML/CTF policies, and any material updates to those documents.The Senior Manager's approval is also required for high-risk individual matters, including:• providing designated services where politically exposed persons are involved; or • establishing or maintaining a nested services relationship.Both of these roles must be held by individuals with greater active governance, oversight and executive decision-making responsibility. 4. Proliferation Financing (PF)A key reform is the explicit requirement for reporting entities to identify, assess, and manage PF risk. PF involves financing activities linked to the development or acquisition of weapons of mass destruction. While many institutions are already familiar with sanctions compliance and screening requirements, the reforms clarify that PF must be treated as a distinct AML/CTF risk category.PF should be integrated into the ML/TF/PF Risk Assessment as part of routine risk management. For many entities, this will require refining existing methodologies to ensure PF is assessed with sufficient specificity (for example, through jurisdictional exposure, transaction typologies, and counterparty risk indicators), rather than being subsumed within broader AML/CTF risk settings.Where an entity reasonably assesses PF risk as low, a standalone Counter-Proliferation Financing policy is not required, provided the risk is appropriately managed through existing ML/TF controls. However, any low-risk assessment must be properly documented to satisfy AUSTRAC’s expectations for an auditable process. If PF is not addressed at all in the Risk Assessment and AML/CTF Program documentation, the framework may be non-compliant. 5. Implementation Timeline and Transitional MeasuresThe compliance deadline for existing reporting entities is 31 March 2026. Entities should use the remaining time to finalise necessary structural and governance updates.Three-Year Transition for Initial CDDOn 22 January 2026, AUSTRAC announced that existing reporting entities will be granted an additional three years (i.e. until 30 March 2029) to comply with the new initial CDD obligations. During this period, entities may choose either to:• continue applying their existing Applicable Customer Identification Procedures when onboarding new customers; or • transition to the reformed initial CDD obligations at any time before 30 March 2029.Entities must apply whichever framework they choose consistently across all new customers and customer types. Once an entity formally transitions to the reformed CDD obligations, it must apply the new requirements from that point forward.The three-year transition applies only to initial CDD (i.e. new customer onboarding). Ongoing CDD obligations under section 30 of the AML/CTF Act must be implemented from 31 March 2026 with no deferral.Other Transitional MeasuresAUSTRAC has also confirmed the following transitional arrangements:• existing reporting entities have until 30 May 2026 to notify AUSTRAC of their AML/CTF Compliance Officer; • staggered deadlines will apply for entities that have recently completed an independent review; and • on 9 February 2026, AUSTRAC released exposure draft amendments to the AML/CTF Rules for industry consultation. The transitional rules being developed by the Department of Home Affairs under Schedule 12 of the Amendment Act are expected to be finalised shortly. 6. Your Compliance Readiness Checklist With the 31 March 2026 deadline imminent, each reporting entity should assess its current position against the following:(i) Integrating PF as a distinct risk category in your ML/TF/PF Risk Assessment, ensuring the assessment methodology is sufficiently specific to identify threats;(ii) Clearly designate the Senior Manager responsible for statutory approvals of policies and risk assessments and define the Governing Body's duty to exercise “appropriate ongoing oversight”;(iii) Assess whether the AML/CTF Compliance Officer meets the new statutory criteria, including being an Australian resident (where applicable), a fit and proper person, and possessing sufficient authority and independence;(iv) Refresh AML/CTF Programs and controls to align with the updated Rules and the outcomes-based framework;(v) Align evaluation schedules with the new statutory requirement to test Program effectiveness at least every three years, noting that any adverse findings now trigger an immediate review of the Risk Assessment;(vi) Implement ongoing CDD processes under section 30 of the AML/CTF Act; and(vii) Document transitional implementation steps, including approvals, milestones, and remediation activity.The immediate task for existing reporting entities is not to start from scratch, but to ensure that existing frameworks are updated to meet the new expectations in governance accountability, PF risk assessment, and CDD obligations.AUSTRAC has made clear that its approach to compliance will be “pragmatic and proportionate” but has also signalled that entities that fail to manage their ML/TF risks or ignore their obligations will face regulatory action. Having a documented implementation plan in place by 31 March 2026 is essential. 7. How We Can Assist H & H Lawyers has extensive experience advising reporting entities on AML/CTF compliance, risk assessments, and governance frameworks. We understand the practical challenges these reforms present, particularly for businesses operating across multiple jurisdictions.Our team can assist with:• reviewing and updating your ML/TF/PF Risk Assessments and AML/CTF Programs;• advising on governance structures, including the designation of Senior Manager and Governing Body roles;• assessing AML/CTF Compliance Officer suitability under the new statutory criteria;• preparing documented implementation plans and transitional strategies; and• providing ongoing compliance support as the reforms take full effect.To discuss how these reforms affect your business, please do not hesitate to contact us. DisclaimerThis newsletter is intended as general information only and does not constitute legal advice. The content is current as at 23 February 2026. Readers should seek professional advice tailored to their specific circumstances before making compliance decisions. To the extent permitted by law, H & H Lawyers excludes all liability for any loss or damage arising from reliance on the information contained in this newsletter.
27 Feb 2026
Firm News
We are proud to share that our lawyers - Ken Hong, John Kim, James Jung, Bella Cho, and Laura Oh - attended the 32nd Annual Conference of the International Association of Korean Lawyers (IAKL), hosted at Korea University in Seoul last week. During the conference: Ken Hong presented on “The Braiding of Legal Education and Legal Professions Across Multiple Jurisdictions”. Bella Cho spoke on “How to Deal with ESG Factors Embedded in Business”. We are also delighted to announce that our Managing Partner, Ken Hong was honoured with the prestigious Moon-In Gu Award at the Gala Dinner. This award, named in honour of Dr. Moon In Koo, founder of IAKL and a former President of both the Korea and Seoul Bar Associations, is one of the association’s highest distinctions. It recognises lawyers who have made exceptional contributions to the global Korean legal community, advancing legal professionalism, supporting overseas Koreans, and strengthening cross-border collaboration. Reflecting on the award, Ken commented: “It is an incredible honour to be recognised with the Moon In Gu Award. Dr. Moon’s legacy continues to inspire lawyers worldwide, and I am humbled to be part of that tradition. This recognition strengthens my commitment to connecting legal communities across borders.” Ken’s recognition reflects not only his professional achievements but also his enduring commitment to fostering international legal cooperation. The award ceremony was covered in Legal Times, which you can read here. The IAKL Conference once again provided an invaluable platform for legal professionals from around the world to exchange insights and build enduring relationships across jurisdictions.
03 Oct 2025
Workplace & Employment
On 26 February 2024, the Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024 (Cth) received Royal Assent, amending the Fair Work Act 2009 (Cth) (the Act).One of the changesenacted by this amendment is the introduction of “the right to disconnect” – the right for employees to not respond to work communications outside of ordinary work hours from 26 August 2024. 1. What is the Right to Disconnect? The right to disconnect is the employees’ right to refuse monitoring, reading, or responding to emails, telephone calls or any other kind of communication from their employer outside of work hours, except where such contact is reasonable. This applies to any contact from communications from a third party relating to work outside of work hours. The right to disconnect will become a protected right under the general protection regime in the Act, meaning that the employer is barred from taking any adverse action (e.g., disciplinary action, demotion or dismissal) against the employee for reasonably refusing work-related contact or attempted contact. This provides a broader avenue for employees to bring a claim against employers – in comparison to the unfair dismissal claim. However, this right to disconnect does not mean that employers are not allowed to contact their employees outside ordinary working hours – rather, while the employers may attempt contact with their employees, the employees have a right to refuse to consider any contact relating to their work. Small businesses exemptions Small businesses are exempt from the application of the right to disconnect until 26 August 2025, which gives them more time to prepare and adjust for any changes. Under the Act, you are a small business employer at a particular time if you employ less than 15 employees at that time. A casual employee is not counted unless the employee is a regular casual employee, and your associated entities (e.g. parent company or subsidiaries) are taken to be one entity. 2. What is a reasonable contact? The salient caveat to this new right is that employees cannot exercise their right to be disconnected where such contact is deemed reasonable and necessary. The new legislation provides the following factors that could be used to judge whether the contact is reasonable: 1. Nature and urgency of the reason for contact; 2. Method of contact and the level of disruption for the employee; 3. Degree of compensation for employees for the work outside their normal working hours; 4. Nature of employee’s role and level of responsibility; and 5. Employee’s personal circumstances. For instance, where contact is required under a law of the Commonwealth, State or Territory, the contact would be deemed to be a reasonable exception to the employees’ right to be disconnected. Also, the expectation of a managerial-level employee to respond to urgent emails will be higher than that of a low-level employee involved in clerkish duties. 3. Dispute over the Right to be Disconnect? As there are no case precedents to expand on the meaning of “reasonable contact”, many workplaces may face disputes over the application of this novel right. Where such a dispute occurs, employers and employees should primarily attempt to resolve the dispute at the workplace level through internal discussions. Nonetheless, if the dispute cannot be resolved internally, either party may apply to the Fair Work Commission to make a “Stop Order” that is presumed to operate similarly to the current anti-bullying order. The employee may order the employer to stop taking adverse actions, and the employer may also apply for a stop order to oblige the employee to stop unreasonably refusing to monitor, read or respond to contact or attempted contact from the employer. Currently, a breach of such a stop order may attract civil penalties of up to 60 penalty units (currently equivalent to $11,538.60) under the Act. 4. What does this mean for employers? Proper responsiveness to this new legislation will require appropriate adjustments to existing business policies. Employers should begin by considering how they may change existing work standards, practices and policies whilst also providing training to managers on this new change. We recommend that employers establish internal procedures for any after-hour communications, based on the specific role of each employee. Specifically, we propose employers to review their current employment contracts and job descriptions as well as employment handbooks to ensure no clauses expect the employees to work outside the normal working hours (depending on the nature of the role), and also consider providing internal training to all employees on this new right to disconnect. 5. Our thoughts While this right to disconnect may seem a little odd for many hard-working Australians, this right has existed from as early as 2016 in European countries, such as Spain and France. Since then, other countries around the globe, including Belgium, Portugal, India, Argentina, Chile, and Brazil, have implemented this right to disconnect to assist with growing occupational health issues that have arisen due to digital connection and growing work hours. We have seen successful implementation of this right to disconnect in other jurisdictions, overcoming prior concerns over workplace productivity and communication. Some practical recommendations for this right to be disconnected could include technical solutions like automatic forwarding of messages from inboxes of people on holiday or the use of a delayed sending option so people do not receive messages outside their working hours. Other humanistic approaches can be implemented by including information that the sender does not expect a reply on the same day, or by conducting firm-wide training on the new right, which some firms have already been doing for a long time before this right became a law. Please do not hesitate to contact us if you have any questions about this new law and how best to prepare your business and employees. Disclaimer: The contents of this publication are general in nature and do not constitute legal advice. The information may have been obtained from external sources and we do not guarantee the accuracy or currency of the information at the date of publication or in the future. Please obtain legal advice specific to your circumstances before taking any action on matters discussed in this publication.
24 May 2024