The Australian bookmaking and betting industry is no stranger to risk, regulation, and rapid digital transformation. But with the federal government now advancing Tranche 2 AML/CTF reforms, things are about to get a whole lot more complex — especially for small and medium-sized enterprises (SMEs) operating in this space.

While Tranche 2 primarily targets lawyers, accountants, and real estate agents (DNFBPs), its ripple effects will reach deep into industries like wagering and gaming — especially where money flows intersect with these newly regulated professions or high-risk clients. So, what should you be prioritising right now?

Let’s break it down.

What is Tranche 2, and Why Should Bookmakers Care?

Tranche 2 is the next phase of Australia’s Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) regime. It aims to bring more professions under regulation, closing off avenues criminals use to launder illicit funds.

While licensed betting operators are already regulated by AUSTRAC under the AML Act, the growing interconnectedness between gaming services and DNFBPs (designated non-financial businesses and professions) — such as lawyers, accountants, and corporate agents — means SMEs in the sector must be more vigilant than ever.

If your betting agency accepts funds from trusts, syndicates, or corporate entities, you could inadvertently become a conduit for money laundering unless your internal controls evolve.

Your Top Priorities Under Tranche 2

1. Review Your Risk-Based Approach

Update your risk assessment to factor in:

1. Higher-risk customer types (e.g. trusts, cash-heavy businesses, or DNFBPs themselves)
2. Unusual betting patterns from corporate or pooled accounts
3. Transactions involving third-party payments or unknown sources of funds

Tip: Risk assessments are not a "set and forget" exercise. Revisit yours at least annually — or sooner if customer behaviours shift.

2. Strengthen Customer Due Diligence (CDD) and KYC

As more industries are subjected to compliance, your own onboarding processes must match or exceed evolving expectations. Key actions:

1. Verify Ultimate Beneficial Ownership (UBO) for business accounts
2. Introduce enhanced due diligence (EDD) for high-risk customer types
3. Ensure your eKYC tools are configured to flag red flags like foreign shell companies or nominee arrangements

Bonus: Educating your customers about your KYC requirements can reduce friction and increase trust.

3. Monitor Transactions with Tranche 2 in Mind

Transaction monitoring rules may need to be tuned to detect:

1. Rapid movement of funds between different betting accounts
2. Round-number bets or cash-outs that exceed typical thresholds
3. Syndicated betting activity or signs of account "structuring"

Look for patterns that mirror the typologies AUSTRAC and FATF have warned about — like layering via digital wallets or pooled gambling funds.

4. Tighten Third-Party Partnerships

If your SME relies on agents, affiliates, or B2B partners:

1. Review contracts to ensure they meet compliance expectations
2. Conduct Know Your Business (KYB) checks on all referral partners
3. Ask yourself: Do I know who’s introducing high-volume bettors to me?

Pro tip: Even non-regulated parties in your network can create reputational or legal risk if their customer base includes money launderers.

5. Train Your People and Build a Culture of Vigilance

Your frontline team is your first line of defense. Make sure:

1. Staff know what Tranche 2 is and why it matters
2. They can spot red flags and escalate them without hesitation
3. You keep training records for AUSTRAC or auditors

A compliance culture doesn't mean creating fear — it means giving people confidence and clarity.

6. Futureproof with RegTech

Now is the time to explore:

1. Automated transaction monitoring platforms
2. Digital onboarding solutions with biometric checks
3. Systems that can integrate with AUSTRAC and update quickly as regulations shift

Even as an SME, investing in scalable RegTech can reduce your manual burden, improve compliance accuracy, and give you an edge over less-prepared competitors.

Final Thoughts

Tranche 2 might feel like a compliance challenge for others — but in reality, it signals a much larger shift in how financial risk is managed in Australia. As a bookmaker or betting agency operator, staying ahead means:

1. Knowing your customers better
2. Rethinking who you partner with
3. Embracing technology and training

The good news? SMEs can be agile. You have the chance to not only meet regulatory expectations but to build trust and differentiate yourself in an industry where compliance and credibility matter more than ever.

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