How likely is it that AUSTRAC will examine my business in the first year?

AUSTRAC has not published specific examination targets for Tranche 2. However, they typically conduct thematic reviews of newly regulated sectors, which means industry-wide assessments rather than targeting individual businesses. The most likely trigger for an individual examination in year one is failure to enrol or register with AUSTRAC.

Do I need a lawyer if AUSTRAC examines my business?

You are not required to have legal representation during an AUSTRAC examination. However, if the examination identifies significant compliance gaps or potential enforcement action, legal advice is recommended. Your compliance officer should be the primary point of contact for routine examinations.

AUSTRAC Section 172A Examination Powers: What Property Professionals Should Expect

Q: Can AUSTRAC examine my business without notice?

In most cases, AUSTRAC provides notice before an examination. However, the Act allows for examinations without prior notice in serious cases where advance warning could compromise the examination's purpose. In practice, most Tranche 2 examinations in the first year are expected to be planned and notified in advance.

Q: What happens if AUSTRAC finds compliance issues?

Outcomes range from informal guidance (for minor issues) to remedial directions, infringement notices, civil penalties of up to $2.22 million per breach, or criminal referral for serious or deliberate non-compliance. AUSTRAC has indicated it will take an education-first approach in the first year of Tranche 2.

Key Takeaways

Under Section 172A, AUSTRAC can examine any reporting entity's compliance with AML/CTF obligations.
AUSTRAC can review your AML/CTF program, CDD records, screening processes, reporting history, training records, and risk assessment.
Common triggers include failure to enrol, non-reporting, tip-offs, and industry-wide thematic reviews.
AUSTRAC has indicated an education-first approach in the first year of Tranche 2.
The best preparation: keep your records organised, program current, and training documented.

In this guide

What is Section 172A? What can AUSTRAC examine? How an examination works What triggers an examination? What AUSTRAC is looking for Penalties if issues are found How to prepare your business First year expectations Frequently asked questions

What Is Section 172A?

Under the amended AML/CTF Act, AUSTRAC has expanded examination powers that allow it to assess whether a reporting entity is complying with its obligations. Section 172A gives AUSTRAC the authority to conduct compliance examinations — essentially, a detailed review of how your business meets its AML/CTF requirements.

This is broader than a traditional audit. AUSTRAC can examine not just your records, but your systems, processes, culture, and decision-making around AML/CTF compliance. The goal is to assess whether your compliance framework is adequate, appropriate to your risk profile, and actually being followed in practice.

What Can AUSTRAC Examine?

Scope of examination

Your AML/CTF program — is it written, risk-based, approved by your principal, and current?
Your risk assessment — does it cover all 5 dimensions? Is it reviewed annually? Does it reflect your actual business?
CDD records and processes — are you verifying customers properly? All entity types? Trusts?
Screening processes — are you screening against the DFAT Consolidated List? PEP databases? How often?
Reporting history — have you filed SMRs and TTRs as required? Are there gaps?
Record-keeping systems — can you produce 7 years of records? Are they accessible, accurate, and audit-ready?
Staff training records — who has been trained? When? On what topics? Is it role-specific?
Compliance officer appointment — have you nominated a compliance officer? Are they qualified and active?

How an Examination Works

A typical AUSTRAC compliance examination follows this process:

Notice: AUSTRAC provides written notice that it intends to examine your compliance. The notice specifies what they'll review and the timeframe.
Document request: AUSTRAC requests specific documents — your AML/CTF program, risk assessment, CDD records for selected transactions, screening logs, training records.
Review: AUSTRAC officers review the documents against the requirements of the Act and Rules.
On-site visit (if applicable): For more detailed examinations, AUSTRAC may visit your premises to observe how compliance operates in practice.
Interviews: AUSTRAC may interview your compliance officer, staff involved in CDD, or principals to assess understanding and culture.
Findings: AUSTRAC provides a report outlining compliance gaps, recommendations, and any enforcement action.

In serious cases, AUSTRAC can conduct examinations without prior notice — but this is typically reserved for situations where advance warning could compromise the examination.

What Triggers an Examination?

AUSTRAC doesn't randomly audit every business. Examinations are typically triggered by:

Failure to enrol or register — if you should be enrolled but aren't, AUSTRAC will notice (they cross-reference ASIC, ABR, and state licensing databases)
Pattern of non-reporting — if comparable businesses in your sector are filing SMRs and you're not, that's a flag
Tip-offs or intelligence — from law enforcement, other regulators, or the public
Industry-wide thematic reviews — AUSTRAC regularly conducts sector-wide assessments. Expect this for Tranche 2 sectors in the first 1-2 years
Random compliance reviews — less common, but AUSTRAC does conduct random checks
Follow-up from previous issues — if you've previously had compliance concerns raised

What AUSTRAC Is Looking For

AUSTRAC is not looking for perfection. They understand that Tranche 2 entities are new to AML compliance. What they want to see is proportionality and genuine effort:

A risk-based approach appropriate to your business size and complexity
Documented procedures that staff actually follow (not a document on a shelf)
Evidence of staff training with records of who was trained, when, and on what
Records that are complete and accessible — not scattered across email inboxes and filing cabinets
A culture of compliance — staff who understand why AML matters, not just what boxes to tick
Continuous improvement — evidence that you review and update your program as risks change

A small agency with a well-maintained, proportionate compliance system will fare much better than a large agency with an expensive but unused compliance program.

Penalties If Issues Are Found

The outcome depends on the severity of the issues. See our full penalties guide for details. In summary:

Informal guidance — for minor gaps. AUSTRAC provides recommendations and a timeframe to address them.
Remedial directions — formal orders to fix specific compliance issues within a set timeframe.
Infringement notices — on-the-spot fines for specific breaches.
Civil penalties — up to $2.22 million per breach for businesses.
Criminal referral — for serious, deliberate, or repeated non-compliance. Up to 10 years imprisonment for individuals.

How to Prepare Your Business

AUSTRAC examination readiness checklist

✓AML/CTF program is current — written, risk-based, approved by principal, reviewed within the last 12 months

✓Risk assessment is documented — covers all 5 dimensions, reflects your actual business operations

✓CDD records are organised — can you pull up any customer's CDD records within minutes?

✓Screening logs are maintained — evidence of DFAT and PEP screening at onboarding

✓Training records are complete — who, when, what topics, completion status

✓SMR/TTR reporting is up to date — no outstanding reports, filed within deadlines

✓Compliance officer is nominated — named, contactable, aware of responsibilities

✓Records stored for 7 years — audit-ready, tamper-proof, exportable

✓Regular internal reviews — evidence that you periodically assess your own compliance

First Year Expectations

AUSTRAC has indicated it will take an education-first approach in the first year of Tranche 2 for newly regulated entities. In practical terms, this means:

Guidance visits rather than enforcement actions for good-faith compliance efforts
Industry workshops to help businesses understand their obligations
Thematic reviews across the real estate sector to identify common compliance gaps
Focus on enrolment — the most basic obligation. Businesses that haven't enrolled will likely be the first to receive attention

However, "education-first" does not mean "no enforcement." Serious or deliberate non-compliance — particularly failure to enrol, failure to report suspicious activity, or tipping-off — can attract enforcement action from day one.

Be audit-ready from day one

AMLTranche keeps your records organised, your screening documented, and your program current — so you're always ready if AUSTRAC comes knocking.

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Frequently Asked Questions

Can AUSTRAC examine my business without notice?

In most cases, they provide written notice. But the Act allows examinations without notice in serious cases. Most Tranche 2 examinations in the first year are expected to be planned.

What happens if AUSTRAC finds compliance issues?

Outcomes range from informal guidance to remedial directions, infringement notices, civil penalties up to $2.22M, or criminal referral. AUSTRAC has indicated an education-first approach in year one.

How likely is an examination in the first year?

AUSTRAC typically conducts thematic reviews of newly regulated sectors. The most likely individual trigger is failure to enrol. Good-faith compliance efforts with documented processes are unlikely to attract early enforcement.

Do I need a lawyer for an AUSTRAC examination?

Not required, but recommended if significant gaps or enforcement action are identified. Your compliance officer should be the primary contact for routine examinations.

Disclaimer: This article provides general information about AUSTRAC examination powers and does not constitute legal advice. You should confirm your specific obligations with AUSTRAC or a qualified legal adviser. AMLTranche helps streamline your compliance workflows alongside your professional advisers.