As Australia accelerates its rollout of Tranche 2 Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) reforms, small and medium-sized remittance service providers (RSPs) are under increasing pressure to tighten controls and prepare for more robust compliance obligations.

For SME business owners in the remittance industry—whether operating as stand-alone money transfer businesses or offering remittance services alongside retail operations—the reforms present both a compliance challenge and an opportunity to build long-term trust with regulators, customers, and financial partners.

Why the Focus on Remittance Providers?

Remittance businesses are high-risk targets for money laundering, terrorism financing, and fraud. The nature of the business—handling large volumes of cross-border funds transfers, often in cash or on behalf of third parties—can attract illicit actors if controls are weak.

While many RSPs are already regulated under Tranche 1 and must be registered with AUSTRAC, the Tranche 2 reforms are expected to enhance oversight, demand stronger due diligence, and increase enforcement around reporting entities who don’t meet their obligations.

Key Priorities for SME Remittance Business Owners in 2025

1. Ensure You’re Registered with AUSTRAC

First and foremost: ensure your business is properly registered with AUSTRAC as a remittance service provider. Operating unregistered is illegal and could lead to significant fines or criminal penalties.

Confirm your business:

• Is listed on AUSTRAC’s Remittance Sector Register
• Has updated its registration details if services or ownership structures have changed
• Has nominated a compliance officer

2. Update and Strengthen Your AML/CTF Program

Your AML/CTF program should be tailored to your business's size, structure, and risk level. It must include:

• A risk assessment specific to your services and clientele
• Customer due diligence (CDD) and enhanced due diligence (EDD) procedures
• Record-keeping and reporting obligations
• Employee training and escalation procedures
• Regular reviews and updates

If you haven't updated your program in the last 12 months, now is the time.

3. Know Your Customer (KYC) – And Their Source of Funds

A core priority under Tranche 2 will be to demonstrate:

• Verification of customer identity, including beneficial ownership where applicable
• Understanding the purpose of transactions
• Monitoring for unusual behaviours, such as structured transfers or multiple transfers below the threshold

Technology can help streamline KYC, but manual checks and escalation processes are still essential.

4. Submit Required Reports on Time

As an RSP, you’re likely already subject to:

• Threshold Transaction Reports (TTRs) for cash transactions over $10,000
• Suspicious Matter Reports (SMRs) when you suspect money laundering or terrorism financing
• International Funds Transfer Instructions (IFTIs) for cross-border transactions

Tranche 2 is expected to ramp up scrutiny around timeliness and accuracy of these reports. Make sure your team understands when and how to lodge them.

5. Train and Empower Your Staff

Even small remittance businesses must ensure that every team member understands their AML/CTF responsibilities. Training should cover:

• KYC procedures
• Recognising suspicious behaviour or document irregularities
• How to escalate concerns
• Confidentiality and legal protections

Document training completion and refresh it annually or when regulations change.

6. Improve Digital Record-Keeping and Audit Trails

Paper-based systems are vulnerable to loss, error, or manipulation. Strengthen your compliance with:

• Secure, digital transaction logs
• Timestamped due diligence and verification records
• Clearly documented decision-making for EDD or declined transactions

You’ll need to retain records for seven years—make sure your storage practices can handle that.

7. Engage With the Regulator and Industry Peers

AUSTRAC offers resources, webinars, and guidance specific to remittance providers. Make it a habit to:

• Subscribe to updates from AUSTRAC
• Join RSP industry associations or working groups
• Stay alert to typologies, sanctions updates, and emerging risk indicators

Peer learning and open dialogue with regulators can help avoid costly mistakes.

The Business Case for Compliance

Tranche 2 isn’t just about staying out of trouble. Getting it right can:

• Attract more customers who value trust and security
• Preserve banking relationships (many RSPs struggle with de-banking risks)
• Open the door to new partnerships and technologies
• Demonstrate your professionalism in a sector that often struggles with reputational risk

In a competitive market, compliance can be your edge.

‍Final Thoughts

As an SME owner in the remittance services industry, your top Tranche 2 priorities should include:

1. Confirming your AUSTRAC registration
2. Reviewing and upgrading your AML/CTF program
3. Ensuring strong KYC and transaction monitoring practices
4. Training staff and documenting compliance activities
5. Submitting reports accurately and on time
6. Digitising your compliance recordkeeping
7. Staying engaged with AUSTRAC and industry peers

Tranche 2 isn’t just coming—it’s a strategic shift. The better prepared you are, the more resilient and credible your business will become.

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