AML Compliance Guide
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Sanctions screening for Lawyers — 2026 AUSTRAC Guide

If your law practice provides a designated service from 1 July 2026, you must screen clients and relevant parties against the DFAT autonomous sanctions list and the UN Security Council consolidated list before you act and during the matter. This matters for lawyers because sanctions risk can arise in property deals, trust and company work, handling client money, and transaction-related legal services even where the legal work itself looks routine. If you provide a service to a sanctioned person or for the benefit of one, you can expose the practice and the people involved to serious consequences, and providing services to a sanctioned person is a strict-liability criminal offence.

Your AML/CTF obligations

  1. 1. AUSTRAC enrolment
  2. 2. Compliance officer
  3. 3. ML/TF risk assessment
  4. 4. AML/CTF program
  5. 5. Customer due diligence
  6. 6. Sanctions screening
  7. 7. Suspicious matter reporting
  8. 8. Record keeping (7 years)
  9. 9. Staff training

For lawyers, sanctions screening is not a box-ticking exercise and it is not limited to checking the client only once at onboarding. You need a process that identifies whether the person instructing you, the client entity, beneficial owners, trustees, directors, and sometimes counterparties or source-of-funds parties appear on the DFAT or UN lists. This usually comes up where the firm is helping with a designated service such as dealing with money or assets connected with a transaction, company or trust structuring, or property-related work. Pure legal advice is generally not a designated service, but once your work moves into handling money or assets in connection with a transaction, the screening obligation needs to be built into the file-opening process.

What a law practice should do on every relevant matter

  • Confirm first that the work is a designated service, not just pure legal advice.
  • Identify who needs to be screened: the client, any company or trust involved, directors, trustees, beneficial owners holding 25% or more or exercising effective control, and any person giving instructions on the client’s behalf.
  • Screen those names against the DFAT autonomous sanctions list and the UN Security Council consolidated list before you provide the designated service.
  • Check for matches again during the retainer if parties change, ownership changes, new controllers appear, or the matter runs for months.
  • Escalate any possible match immediately, pause the matter until reviewed, and do not proceed just because the client is pressing for settlement or exchange.

Critical warning for legal matters

A sanctions issue can appear late in a file — for example when a buyer is replaced, a trust beneficiary is disclosed, or overseas funds are introduced before completion. Do not rely on the client saying they are "clear" or on an old ID check. Screen before acting and re-screen when the matter changes.

Common mistakes in legal practice are predictable. Firms assume sanctions screening only applies to overseas clients, but an Australian company or trust can still be owned or controlled by a sanctioned person. They screen the named client but not the beneficial owners behind a company, unit trust or family trust. They also miss the point that sanctions screening is separate from customer due diligence: verifying identity through passports, ASIC or a trust deed does not tell you whether the person is on a sanctions list. Another trap is treating conveyancing or business sale matters as low risk because the parties are introduced by an agent or accountant. The obligation still sits with your practice if you are providing the designated service.

Practical ways to build this into a small firm

  • Add a sanctions check field to your new matter form so a file cannot open for designated work until screening is done.
  • Use name variations, former names and aliases, especially for individuals from jurisdictions with multiple transliterations.
  • For company and trust matters, collect ownership and control details early so you are not chasing them the day before settlement.
  • Nominate one senior lawyer or practice manager to review possible matches and document the decision on file.
  • Train reception, paralegals and solicitors to recognise trigger points such as urgent overseas funds, opaque ownership structures, or a client refusing to disclose controllers.

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Frequently asked questions

Do I need to do sanctions screening if I only give legal advice and never handle client money?
Not always. Pure legal advice is generally not a designated service for lawyers, so the AML/CTF obligation is generally triggered when your practice handles money or assets in connection with transactions or provides another designated service. You should still assess each matter carefully at intake, because a file that starts as advice can later move into transaction implementation.
Who exactly do I screen on a company or trust matter?
Screen more than the named client. For a company, that usually includes the company, directors, instructing individuals, and beneficial owners who hold 25% or more or exercise effective control. For a trust, screen the trustee, relevant controllers, instructing parties, and beneficial owners where identifiable from the trust structure and supporting documents.
What if I get a close name match but I am not sure it is the same person?
Do not ignore it and do not proceed on assumptions. Pause the matter, gather more identifying information such as date of birth, address, nationality or corporate identifiers, and escalate it internally for review. Keep a clear record of how you resolved the match before providing the designated service.
Do I have to buy expensive screening software?
No law says you must buy a particular product. A small practice can use a manual or lower-cost process if it is reliable, documented, and actually used before and during relevant matters. The right setup depends on your file volume, client types, and how often you deal with entities, trusts, overseas links or urgent settlement work.
Do I need to re-screen long-running clients or repeat clients?
Yes, where the relationship continues or the matter changes. Sanctions screening is required before and during the relationship, so repeat or ongoing clients should be re-screened when there is a new designated matter, a change in ownership or control, or a long gap since the last check. This is especially relevant for firms acting repeatedly on property acquisitions, restructures, or trust and company work.

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