Pre-commencement customers: does an old client skip CDD?

In this article AML means anti-money laundering for an Australian firm. It is not a medical topic.

Two different “existing customer” rules

Firms mix up two AUSTRAC pages. They answer different questions.

• Pre-commencement customers. AUSTRAC’s transitioning existing customers guidance (last updated 1 July 2026) is about customers you were already serving with certain newly regulated designated services. Unless a trigger applies, you can keep providing those services without initial CDD.
• The ACIP window for entities already enrolled. AUSTRAC’s transitional rules guidance lets a business that was enrolled as a reporting entity on 30 March 2026 keep using pre-reform applicable customer identification procedures (ACIP) for initial CDD until 31 March 2029, if the policy conditions are met. Ongoing CDD still starts 31 March 2026. A firm that is only newly regulated from 1 July 2026 was not enrolled on 30 March 2026, so that window is not a free pass for an old law, accounting, conveyancing, or agency client.

Dentons’ 6 February 2026 note on AUSTRAC’s 22 January announcement made the same split: the extra time on new initial CDD was for current reporting entities, and tranche 2 businesses were described as outside it. Early commentary dated the end of that window as 30 March 2029. Use the date on AUSTRAC’s transitional-rules page, which states 31 March 2029. Read both pages against the firm’s own enrolment date. Tranche 2 is the hub for who is newly regulated.

When a customer is pre-commencement

On AUSTRAC’s transitioning page, a customer is pre-commencement if either of these is true, and the service is one of the kinds listed below:

• You are providing a designated service to them on 1 July 2026.
• You have a business relationship that involves a designated service, and you provided a designated service to them before 1 July 2026.

The designated services in that relief are limited to: buying or selling precious metals, stones, or products for $10,000 or more in physical currency or virtual assets; brokering the sale, purchase, or transfer of real estate, or selling or transferring real estate without a broker; and professional services. The page says the approach for financial, bullion, and gambling services has not changed. Map the matter on designated-services decision trees before you treat a file as covered.

“We have always acted for them” is not the test

AUSTRAC expects you to look at how long you have provided designated services, how recently, and whether past dealings show a pattern or an expectation of future designated services. A will file from 2019, or a tax return that is not a designated service, does not by itself create the relationship the relief describes.

The guidance’s own examples are specific. Creating a company for the customer on 1 July 2026 can qualify. So can creating a company on 20 June 2026 and already being committed to a family-trust restructure that starts on 20 July 2026. A quiet client with no designated service in the relationship does not become pre-commencement because the firm likes them.

When initial CDD can wait — and when it cannot

Unless the circumstances in the guidance apply, AUSTRAC says you can continue designated services to a pre-commencement customer without initial CDD. That sentence is easy to over-read. The same page then lists when initial CDD is required. The guidance points at sections 28, 30, and 36 of the Act.

• A suspicious matter report obligation arises for the customer.
• There is a significant change in the nature and purpose of the business relationship, and the customer’s money laundering, terrorism financing, or proliferation financing risk is medium or high. AUSTRAC’s example is a new service that is different from the existing relationship and leaves the risk at medium or high, whether or not it was already medium or high.

If that trigger hits, initial CDD comes before you start the designated service. Once initial CDD is completed, the customer stops being pre-commencement. The file should record which limb you relied on, and the date the category ended.

Ongoing CDD still runs

Even where initial CDD is not required yet, AUSTRAC’s page keeps ongoing CDD in place. That includes monitoring for unusual transactions or behaviour that may lead to a suspicious matter report, reviewing and reverifying KYC information when you doubt it or on the frequency your program sets, and watching for a significant change that moves risk to medium or high. A pre-commencement label is not a reason to stop looking at the client.

Transferred books

A separate limb covers a customer who became yours because you took over another reporting entity’s business, or because assets and liabilities transferred. AUSTRAC says initial CDD is not required only if you received the transaction records kept under sections 107 and 108 and the CDD records kept under sections 111 and 114. If those copies did not come across, initial CDD is required before the designated service. Ongoing CDD still applies, and the same suspicious-matter and significant-change triggers can force initial CDD later.

Worked files

Conveyancer, repeat buyer

The firm settled three purchases for the same buyer before 1 July 2026 and is instructed on another purchase after that date. Brokering or transferring real estate is in the service list, and there is a pattern of that designated service. The buyer may be pre-commencement, so initial CDD is not automatic on day one. If this purchase is a different kind of service, or the risk moves to medium or high because of how the deal is structured, the trigger can require initial CDD before the work starts. The firm’s program, not the client’s memory of the last settlement, makes that call. See AML checks for lawyers.

Accountant, old tax client, new company

The firm has lodged returns for years and is now asked to form a company. Tax compliance by itself is not the designated-service relationship in AUSTRAC’s examples. Forming the company can be the first professional service that counts. Treat that as a fresh initial-CDD question unless the relationship already included designated services in the way the guidance describes. AML checks for accountants is the neighbouring workflow.

Agency, seller the firm has listed before

A previous listing can support a pre-commencement relationship if it was a designated real-estate service and the pattern is still there. A new buyer on this campaign is a different customer. Do not copy the seller’s status onto the buyer. Real estate obligations are outlined in AML checks for real estate agents.

What to put on the file

1. Name the designated service. If it is not in the pre-commencement list, do not use the label.
2. Record why the relationship qualifies: service on 1 July 2026, or an earlier designated service plus the length, recency, and pattern test.
3. Record that ongoing CDD still applies, and who watches for a suspicious matter or a significant change.
4. If a trigger fires, stop and complete initial CDD before the new designated service. Note that the customer is no longer pre-commencement.
5. If the firm was enrolled on 30 March 2026, read the ACIP transitional rule separately. Do not borrow it for a business that was not enrolled that day.

Where FreeAML fits

The firm suite is A$0. When the program says initial CDD has to restart, FreeAML emails the customer a link and the verification is client-pays. The firm’s cash cost of that check is A$0 when the customer pays. Current check pricing is on FreeAML pricing. There is no volume floor and no monthly AML seat.

Use the product to collect evidence and keep a record of the outcome. Use your program, and advice where the edge is unclear, to decide whether this client is pre-commencement at all. AUSTRAC’s own page says its scenarios are not exhaustive and that a court interprets the Act.

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