Tranche 2: Why ML and PI are Better Placed Together

If you place cover for accountants or real estate agents, Tranche 2 will be part of your renewal conversation.

Tranche 2 is the second stage of Australia’s anti-money laundering reforms. The Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024 (Cth) expanded the AML/CTF Act 2006 (Cth). From 1 July 2026, certain services provided by accountants, real estate agents and other professions fall under AUSTRAC’s oversight. Firms providing those services must assess financial crime risk, verify customers and beneficial owners, monitor relationships, report suspicious matters, train staff and keep records.

Many clients assume their PI policy has this covered. Many PI wordings respond to professional negligence claims, not regulator-led action, so the wording is worth checking.

Picture a suburban real estate office filing away a routine settlement. The buyer paid. The keys changed hands. Five years on, AUSTRAC asks about that buyer, and the agency’s defence rests on whatever its records can prove. Ross Chambers, our Head of Long Tail, puts it plainly in Insurance Business:

"A combination of PI and ML are needed to address the concerns that clients may have around their Tranche 2 obligations, and it's always best to place these together where you can."

Is PI enough cover for Tranche 2 AML/CTF exposures? 

A statutory breach isn't automatically professional negligence. A regulator's investigation, a penalty and a client's civil claim can land at the same time, and each can call for a different policy.

Professional Indemnity typically responds when a professional failure costs someone else money. Management Liability may respond when a claim comes from a regulator or lands on the company or its directors, subject to the policy terms and to what the law allows to be insured.

Which services fall under AML/CTF from 1 July 2026? 

• Real estate businesses, including agents, buyers' agents and property developers
• Lawyers, conveyancers and legal services
• Dealers in precious metals, stones and products
• Professional services, including accountants and trust and company service providers

Source: AUSTRAC

What's new in the HML4 wording?

We’ve updated our Management Liability wording. The changes most relevant to your clients:

• AML/CTF Act cover. Section 4 now includes an extension for Defence Costs, Investigation Expenses and Statutory Liability arising from a reporting entity’s obligations under the AML/CTF Act. Terms and exclusions apply, including for deliberate, dishonest or wilful conduct.
• Intellectual Property exclusion in Section 2. It now applies only to high-risk industries, or to high-risk risks assessed case by case.
• Work Health & Safety Defence Costs Extension. It is no longer sub-limited and sits within the Section 4 limit.
• Revised dishonesty exclusion. It now requires intentional conduct and a final adjudication before it applies.
• Narrower vehicle exclusion. The Section 4 exclusion now targets traffic infringements, not all vehicle use. The general Aircraft, Watercraft or Vehicle exclusion has been removed.

Important: Cover is “claims made and notified”. Statutory Liability availability and insurability of fines depend on the law. Some benefits are optional or sub-limited. See the Policy Wording and Schedule.

Refer to the latest wording for full details of covers, limits, conditions, and exclusions.

Five questions to ask your accounting and real estate clients

Start the renewal conversation here:

• Which of their services bring them within the AML/CTF regime?
• Have they completed a documented risk assessment?
• Where are their records stored, and can they retrieve them for seven years?
• Are their activities accurately described in their PI proposal and schedule?
• Do they hold an ML policy with appropriate sections and limits?

The full ten-question checklist is in the article.

How do you quote Hutch Management Liability on Sunrise? 

Quote Management Liability on Sunrise under product code HUTHML. 

Hutch ML is Dawn Enabled

Email just the ABN, Occupation, Turnover & Employee Count to dawn@ai.hutchunderwriting.com.au and Dawn will enter your quote into Sunrise.

Questions on ML?

Contact our underwriter Alec Bouchard, or ring the team on 1300 256 056.