Insolvency practitioners occupy an unusual position in Australia’s financial ecosystem. They are appointed precisely because something has gone wrong, because a company cannot pay its debts, because assets need to be realised, because creditors need to be satisfied. That environment, characterised by distressed assets, complex ownership structures, and money moving under circumstances that are rarely straightforward, is exactly the kind of environment Australia’s financial intelligence regulator has been watching closely.
With the AML/CTF Tranche 2 reforms commencing on 1 July 2026, AUSTRAC published specific guidance on 19 June 2026 confirming that insolvency practitioners may provide designated services as part of both formal appointments and advisory arrangements. The guidance applies to corporate and personal insolvency. If you are a registered liquidator, voluntary administrator, receiver, or trustee in bankruptcy providing certain services while carrying on a business, you are likely captured under the reformed Anti-Money Laundering and Counter-Terrorism Financing Act 2006.
Why insolvency was always going to be in scope
The rationale for bringing insolvency practitioners into the AML/CTF regime is not difficult to understand. The Financial Action Task Force (FATF), the global standard-setter for combating financial crime, has long identified insolvency processes as a pathway through which illicit funds can be legitimised or concealed. Complex corporate structures, distressed asset sales conducted under time pressure, and creditor distributions involving multiple parties all present opportunities that organised criminal networks have exploited in other jurisdictions.
Australia’s 2015 FATF evaluation identified the lack of AML/CTF regulation for gatekeeper professions as a significant deficiency. The Tranche 2 reforms, passed through Parliament in November 2024 and taking effect from 1 July 2026, close that gap. Insolvency practitioners are included not because of any assumption of wrongdoing, but because they handle transactions of the precise type the regime is designed to scrutinise.
Which designated services apply to insolvency work
The regime regulates services, not professions. The question for any insolvency practitioner is not whether they hold a particular registration but whether the work they actually do falls within the Table 6 designated services defined in subsection 6(5B) of the AML/CTF Act. Items 1 through 6 are the designated services most likely to arise in insolvency and restructuring work. Items 7 to 9 apply only in limited circumstances. Full definitions of each item are available on the AUSTRAC website.
Whether you provide a designated service depends on what you do, not your appointment title. A designated service is more likely to arise where you take steps to assist a person to carry out a transaction or carry it out on their behalf. High-level or general advice alone will not usually be enough. Importantly, AML/CTF obligations are triggered by providing a designated service, not by the appointment itself. Being appointed does not mean you are already providing a designated service. After appointment, you should identify the designated services you are likely to provide and complete initial customer due diligence before you start providing those services.
Item 1: assisting to plan or execute a transaction to buy, sell or transfer real estate. This is one of the most triggered items in insolvency work. Where a liquidator or receiver manages a sale process, negotiates contracts, or executes a real estate transaction on behalf of the company they have been appointed to, they are providing an item 1 designated service. The client for AML/CTF purposes is generally the company the practitioner has been appointed to, not the creditors who ultimately benefit from the proceeds.
Item 2: assisting in the sale, purchase or transfer of a body corporate or legal arrangement. This is engaged where a practitioner takes steps to transfer ownership or control of a company or other legal arrangement, including completing a share sale or similar arrangement. A receiver implementing the sale of shares in a subsidiary, for example, is acting on behalf of the company in relation to a transaction involving a body corporate and is providing an item 2 designated service to that company.
Item 3: receiving, holding, controlling or managing a person’s property in connection with a transaction. This applies where a practitioner receives, holds, or manages money or other property as part of assisting with a transaction or carrying it out on behalf of a person. Simply having money pass through an account is not enough. The designated service arises where the practitioner is actively controlling funds as part of the appointment, such as a liquidator operating a liquidation account to receive sale proceeds and distribute funds to creditors.
Item 4: assisting with equity or debt financing for a body corporate or legal arrangement. This is engaged where a practitioner takes steps to organise, plan or carry out a financing transaction on behalf of a person. An administrator arranging short-term funding to allow a company to continue trading while sale options are explored, for example, is providing an item 4 designated service to that company.
Item 6: assisting in the creation or restructuring of a body corporate or legal arrangement. This applies where a practitioner takes steps to assist a person to create or restructure a body corporate or legal arrangement. An administrator implementing a share transfer under a Deed of Company Arrangement, for example, is acting on behalf of the company in restructuring its ownership and is providing an item 6 designated service to that company.
Item 5, which covers the sale or transfer of a shelf company, may also be relevant in limited circumstances, such as where an insolvency adviser arranges for a shelf company to be sold to a buyer as part of a restructuring transaction. In that case, the client for AML/CTF purposes is generally the buyer or transferee of the shelf company.
Items 7 and 8, which cover acting as or arranging a nominee director, secretary, or shareholder on behalf of a nominator, are most likely to arise in advisory or restructuring engagements rather than formal insolvency appointments. Item 9, which covers providing a registered office or principal place of business address as a commercial service, applies only in limited and specific circumstances.
On the court order exception, several Table 6 items include an exception where a designated service is not provided if the relevant activity is carried out pursuant to, or results from, an order of a court or tribunal. This exception is narrower than it may appear. It does not apply simply because a practitioner was appointed by a court. It applies only where the court order itself specifically requires or gives effect to the activity that would otherwise be a designated service. Where a court appoints a practitioner but does not order a specific sale, and the practitioner sells assets using their general powers, the exception will not apply, and the activity may still be a designated service.
What you must have in place and by when
If your practice provides one or more designated services, the following obligations apply across a staged timeline.
Appoint an AML/CTF compliance officer by 1 July 2026. This is an immediate requirement. The compliance officer is responsible for overseeing your practice’s AML/CTF obligations and will play a central role in managing suspicious matter escalation while your broader program is being finalised.
Enrol with AUSTRAC by 29 July 2026. All practitioners providing designated services must apply to enrol by this date. AUSTRAC encourages practitioners to enrol by 1 July 2026 where possible, rather than waiting until the deadline.
Develop and submit an implementation plan by 30 September 2026. AUSTRAC expects practitioners to produce a plan that sets out how and when they will develop, approve and implement a full AML/CTF program, train relevant staff on that program and their responsibilities under it, and manage interim arrangements so staff know how to escalate clearly suspicious matters to the compliance officer while the program is being finalised.
Complete the AML/CTF program and staff training as soon as practicable, and no later than 30 September 2026. The program must be risk-based and tailored to your practice’s specific risk exposure, governance structure, personnel responsibilities, and due diligence processes. It is not a templated document and must reflect the actual risks your practice faces.
Once your program is in place, ongoing obligations include initial customer due diligence before providing any designated service, covering identity verification of company officers, directors, and beneficial owners of entities in administration, as well as creditors involved in distributions. Enhanced due diligence applies to high-risk customers, including politically exposed persons, sanctioned entities, and counterparties with adverse media profiles. Where you have reasonable grounds to suspect that a transaction or activity relates to money laundering or terrorism financing, including unusual asset movements or transactions that do not reflect commercial reality, you are required to report to AUSTRAC. All identity verification records, transaction records, and program documentation must be retained for seven years.
Non-compliance carries civil penalties of up to $6.6 million for individuals and $33 million for a body corporate. AUSTRAC has indicated a collaborative approach during the initial implementation period, but that position is contingent on regulated entities making genuine, sustained efforts toward compliance.
How InfoTrack supports insolvency practitioners from day one
The breadth of these obligations is significant, and insolvency practitioners face the added complexity of administering entities whose affairs are often deliberately opaque. InfoTrack’s AML/CTF Compliance Centre was constructed from AUSTRAC’s official Starter Kits, and is a complimentary, all-inclusive solution that brings enrolment, customer due diligence, risk assessment, and reporting into a single integrated workflow.
For insolvency practitioners, the platform provides centrally stored evidence for audit and regulatory review, a guided AML/CTF program setup aligned with AUSTRAC’s risk-based approach, and digital identity verification including PEPs and sanctions screening, adverse media checks, and beneficial ownership intelligence drawn from authoritative ASIC and AFSA data. It also generates automated customer risk reports with clear risk ratings and escalation prompts, pre-filled suspicious matter and threshold transaction reporting workflows for direct submission to AUSTRAC and consolidated seven-year record retention without additional administrative burden.
The platform is available at no subscription cost, with fees applied only to individual searches and verification checks you conduct.
The staged obligations for insolvency practitioners are now active. Book a demonstration for InfoTrack’s AML/CTF Compliance Centre to best prepare your business for Tranche 2 obligations.
This article is informational in nature and does not constitute legal advice. Insolvency practitioners should seek independent legal advice to determine how the AML/CTF reforms apply to their specific practice and circumstances. For the most current AUSTRAC guidance, visit austrac.gov.au.
Frequently Asked Questions
Not automatically. The AML/CTF regime regulates services, not professions or registrations. Whether you are captured depends on whether your practice provides one or more designated services listed in Table 6 of subsection 6(5B) of the AML/CTF Act. A registered liquidator whose practice is confined to activities that fall outside Table 6 may not be a reporting entity. However, for most active insolvency practices, the scope of Table 6 is broad enough that at least some of their work will engage a designated service. The starting point is an honest assessment of what your practice actually does, mapped against the nine Table 6 items.
It depends on the work you actually perform during the administration. If you take a formal role in the entity (item 7), manage the company’s assets in connection with a potential sale or restructure (items 2 and 3), or assist in organising equity or debt financing for a deed of company arrangement (item 4), you are likely providing one or more designated services. The appointment itself does not automatically trigger obligations, but the activities that follow an appointment typically will.
No. AUSTRAC has specifically addressed this scenario. Assisting a body corporate to restructure its internal governance and business operations, such as reducing staff at a particular facility or redirecting commercial activity to more profitable lines, is not a designated service under item 2 because those changes do not alter the legal structure of the entity. The distinction AUSTRAC draws is between legal restructure, which is captured, and operational or commercial restructure, which is not.
Likely yes, in part. A receiver who takes control of assets, manages property on behalf of the appointing creditor, or assists in the sale of business assets is engaging item 3 and potentially item 2. Where the receiver also assumes a formal management role within the company, item 7 may also apply. The analysis depends on the specific scope of the receivership and what the receiver actually does in the course of carrying out that appointment.
The AML/CTF Act includes a specific provision noting that acting as a trustee of a regulated debtor’s estate within the meaning of the Bankruptcy Act 1966 falls within the designated services framework. If you act as a registered trustee in bankruptcy and manage assets, facilitate transactions, or hold property on behalf of the estate in connection with a transaction, your activities are likely to engage Table 6 obligations. You should assess your practice against the Table 6 items and seek legal advice if the position is unclear.
Generally no, if your involvement is limited to providing advice. AUSTRAC has clarified that general or hypothetical advice on a client’s options, including advising a company on whether to pursue a restructure or how creditor rights operate in a hypothetical scenario, does not constitute a designated service. The obligation arises when you act on instructions in relation to a relevant transaction, typically when two or more parties to a transaction exist or when you begin taking preparatory steps such as drafting documents, holding funds, or lodging forms. The line is between advising what the law says and acting to execute an outcome.
Only partially. The court order carve-out in the AML/CTF Act applies to services provided after the court order has been made. Services you provided in order to obtain the court order, if they would otherwise fall within Table 6, remain regulated. The exemption does not apply retrospectively to work done in anticipation of or in pursuit of the order.
The answer depends on the designated service being provided. Under Table 6, the customer is the person identified in the designated service column for the relevant item. In insolvency proceedings, this will often be the entity in administration or liquidation, the directors or officers on behalf of whom you are acting, or in some circumstances the creditors who are parties to a transaction you are facilitating. The analysis requires careful consideration of which designated service is being provided and to whom it is being provided, and legal advice is recommended where the position is not clear.
AUSTRAC has published sector-specific indicators of suspicious activity, and insolvency practitioners should familiarise themselves with those. In practice, the patterns most relevant to insolvency work include asset valuations or transactions that do not reflect commercial reality, unusual or structured payments among related parties prior to the appointment, counterparties whose source of funds cannot be verified, entities with beneficial ownership structures that are deliberately difficult to trace, and transactions involving jurisdictions associated with higher money laundering risk. Where any of these patterns are present, a Suspicious Matter Report should be considered.