Australia’s largest-ever corporate misconduct penalty has just landed and it’s a warning shot for every organisation about what’s coming under Tranche 2 of the country’s anti-money laundering and counter-terrorism financing (AML/CTF) regime.

Last week, the Australian Securities and Investments Commission (ASIC) announced a record A$240 million penalty against Australia and New Zealand Banking Group (ANZ) for unconscionable conduct and widespread misconduct across its operations. The case, which includes failures in bond trading, false statements to the Australian Government and years of mistreating vulnerable customers, exposes fundamental weaknesses in risk management, compliance culture, and non-financial risk oversight.

It appears Australia’s “light-touch” era is over. Accountability is here to stay and Tranche 2 will extend that accountability far beyond the banks.

A catalogue of failures 

ASIC’s findings against ANZ are scathing. The regulator found that over several years, the bank:

• Acted unconscionably in its dealings with the Australian Government, overstating bond trading volumes by tens of billions of dollars and misleading officials about its data. 
• Failed to respond to hundreds of financial hardship notices, some for over two years, including from customers experiencing unemployment, bereavement, or family violence. 
• Made false and misleading statements about its savings interest rates, depriving tens of thousands of customers of the interest they were promised. 
• Continued to charge fees to deceased customers and ignored estate representatives trying to close accounts. 

ASIC Chair Joe Longo didn’t mince words, calling some of ANZ’s actions “grubby” and saying the bank had “betrayed the trust of Australians” time and time again. “There are fundamental issues with ANZ’s risk and compliance culture that require the board’s and executives’ urgent attention,” he noted.

The penalty, the largest ever imposed on a single entity, reflects what ASIC called “serious inadequacies across multiple levels and multiple divisions of ANZ.”

It’s not ANZ’s first offence. Since 2016, the bank has faced 11 separate civil penalty proceedings, from misleading customers about credit cards and offset accounts to breaching responsible lending laws. But this time, the scale and symbolism are different.

This fine isn’t just about misconduct but also about the failure of a culture that prioritised growth and convenience over compliance and governance. And it comes at a pivotal moment, as Australia prepares to close one of the most significant loopholes in its financial crime defences.

Tranche 2: The end of Australia’s AML exceptionalism

For nearly two decades, Australia has been labelled the “weak link” in the global fight against money laundering. Billions in illicit funds have flowed through sectors like real estate, law, and accountancy, areas exempt from AML obligations under Australia’s Tranche 1 regime since 2006.

That’s finally changing.

With Tranche 2 reforms coming into effect from 2026, the AML/CTF Act will expand dramatically. The number of businesses regulated by AUSTRAC will jump from 17,000 to more than 130,000, capturing:

• Lawyers and law firms 
• Accountants and auditors 
• Real estate professionals 
• Dealers in precious metals and stones (DPMS) 
• Trust and company service providers (TCSPs) 
• Virtual asset service providers (VASPs) 

For the first time, these professions will be required to:

• Verify client identities before providing services 
• Assess money laundering and terrorism financing risks 
• Report suspicious transactions to AUSTRAC 
• Maintain records for seven years 
• Train staff on AML/CTF obligations 

This marks a seismic cultural shift. Professionals who’ve never been subject to financial crime rules will now need to think like compliance officers, implementing policies, appointing AML officers and documenting every decision.

The timing is no coincidence. Australia faces a FATF evaluation in 2026, and regulators are determined not to be embarrassed again.

Culture, compliance and consequences

The ANZ case and Tranche 2 reforms share a common theme that compliance isn’t just a box-ticking exercise but a cultural discipline.

ANZ’s downfall stemmed not from a lack of policies but from a failure to embed compliance into decision-making. ASIC’s findings pointed to ignored warnings, poor escalation, and siloed oversight which are all symptoms of a culture that saw compliance as an operational burden, not a strategic priority. For lawyers, accountants and real estate professionals, the takeaway is clear: When AML obligations arrive in 2026, tone from the top will determine who thrives and who faces regulatory scrutiny.

What should compliance do now? 

With Tranche 2 taking effect next year, compliance teams should be moving fast. Key priorities include:

1. Map your services against AUSTRAC’s designated service categories. 
2. Develop an AML/CTF programme tailored to your risk profile, to be independently reviewed every three years. 
3. Appoint an AML/CTF Officer with real authority and expertise. 
4. Integrate sanctions screening into onboarding and transaction monitoring. 
5. Design and document CDD procedures, simplified, standard, and enhanced. 
6. Train all staff on AML/CTF responsibilities and escalation protocols. 
7. Set up suspicious matter and threshold reporting workflows. 
8. Plan for independent evaluation by 2027. 

Remember, AUSTRAC has made it clear there will be no grace period for building compliance programmes. Firms will be expected to demonstrate readiness from day one.

A turning point for Australian compliance?

The ANZ penalty isn’t an isolated scandal. It’s a symptom of a broader reckoning. It underscores why regulators are moving to make non-financial risk management mandatory for every professional sector that touches money, property or trust structures.

Tranche 2 represents not just regulatory expansion, but a cultural reset, one where integrity, transparency, and accountability are no longer optional. For firms across law, accounting, property and crypto, the challenge is enormous but so is the opportunity to build stronger, more trusted institutions. Because as ASIC’s Joe Longo made clear, when public funds, client trust, and market integrity are at stake, “every Australian pays the price.”

We’ve launched a suite of fully regionalised AML/CTF training to help Australian firms prepare for Tranche 2. Try it here.

Don’t miss our free webinar, Preparing for Tranche 2: What Australia’s AML reforms mean for professionals. VinciWorks’ AML experts will break down what Tranche 2 means in practice, what lessons can be learned from the UK and Europe, and how you can prepare your firm before the laws take effect. Register here.