Financial Services and Credit Monthly Update January 2026
2026 is off to a busy start, with the looming 31 March commencement date for AML/CTF reforms concentrating the minds of many financial businesses.
Our latest Financial Services and Credit Monthly Update for January 2026 covers the important developments in regulation so far this year. Highlights this month include:
With tranche 2 reforms approaching, AUSTRAC has released AML/CTF “starter kits” for newly regulated sectors and foreshadowed transitional rules for the broader regime.
Australia’s mandatory merger control scheme commenced on 1 January, introducing compulsory notification thresholds and ACCC approval prior to completion.
ASIC’s Key Issues Outlook 2026 highlights risks in private credit, superannuation operations, digital assets, use of AI and cyber resilience.
Treasury’s draft legislation to link Director Identification Numbers to the ASIC company register.
If you would like to discuss how these developments could affect you, please contact us.
Kathleen Harris and Patrick Dwyer
Legal Directors
COMPETITION
New mandatory merger control regime commences
Australia’s new mandatory merger control regime came into effect on 1 January 2026, introducing compulsory notification for certain acquisitions and requiring approval from the Australian Competition and Consumer Commission (ACCC) before completion. The reforms significantly expand the ACCC’s role in screening transactions, with the regulator expecting to clear about 80% of matters within 15 to 20 business days through early phase 1 decisions or notification waivers.
Businesses must notify proposed acquisitions of shares or assets that meet specified thresholds and pay the relevant fee. Parties may seek confidential pre-notification engagement or request a waiver where a transaction is unlikely to raise competition concerns. The ACCC will assess whether a notified acquisition is likely to substantially lessen competition and may accept remedies proposed by the parties.
CONSUMER PROTECTION
Banks and lenders launch industry‑wide Financial Safety Alliance
Australian banks and finance firms have joined a new industry-wide initiative aimed at reducing the misuse of financial products in abusive relationships. The Financial Safety Alliance, founded by social enterprise Flequity Ventures, brings together the Australian Banking Association, the Australian Finance Industry Association, the Customer Owned Banking Association and the Australian Retail Credit Association.
The Alliance will provide tools to help lenders incorporate “financial safety by design” principles into products and services, with the goal of limiting opportunities for financial products to be weaponised. Its work builds on earlier steps taken by 40 banks to amend terms and conditions to prohibit the misuse of financial products, covering more than 20 million customers. The Alliance is intended to support over 200 banks and lenders to disrupt financial abuse, and to improve pathways for affected customers seeking assistance.
CORPORATE
ASIC consults on updated guidance for financial reporting and audit relief
The Australian Securities and Investments Commission (ASIC) has commenced consultation on its proposed updates to Regulatory Guide 43 Financial reports and audit relief (RG 43). The revision aims to modernise the guidance to reflect legislative changes since it was last updated in 2011 and to incorporate material from other ASIC publications, including Regulatory Guide 29 Financial reporting by Australian entities in dual listed company arrangements (RG 29). ASIC intends to withdraw RG 29 once the revised RG 43 is finalised.
The draft guidance outlines ASIC’s approach to granting relief from financial record‑keeping, reporting and audit requirements under Parts 2M.2, 2M.3 and 2M.4 of the Corporations Act 2001 (Cth) (Corporations Act). It also sets out how entities can apply for individual relief where class relief is not available. The consultation closes on 9 February 2026.
ASIC consults on remake and sunset of financial reporting instruments
ASIC has opened consultation on proposals affecting four legislative instruments tied to financial reporting. Three instruments covering rounding in financial and directors’ reports, electronic lodgement of financial and sustainability reports, and disregarding technical relief, are due to sunset on 1 April 2026. ASIC proposes to remake all three in their current form, saying they remain useful and operate effectively.
The regulator also plans to withdraw Regulatory Guide 28, which provides guidance on dual lodgement relief that has become redundant. Separately, ASIC is seeking feedback on allowing the ASIC Corporations (Offer Information Statements) Instrument 2016/76 to sunset, noting that offer information statements are seldom used. Submissions close on 27 February 2026.
Draft laws released to strengthen business registers
The Treasury has released draft legislation for consultation proposing significant changes to Australia’s business registers. The package would link Director Identification Numbers (Director IDs) to ASIC’s Company Register, requiring companies to report the Director IDs of all directors as part of routine filings. The aim is to allow clearer tracking of directors across entities.
ASIC would receive new registry‑related powers, including the ability to publish Director ID information, enforce penalties for non‑compliance, and apply enhanced privacy protections to directors’ personal details. Australian Business Registry Services would also be permitted to share Director ID information with ASIC.
The draft laws would “turn off” elements of the now‑discontinued Modernising Business Registers program, with ASIC to remain responsible for stabilising and improving the registers. Treasury is seeking feedback on the legislative approach and whether the proposed framework could support future integration of beneficial ownership information. Consultation closes on 10 February 2026.
FINANCIAL SERVICES
ASIC proposes extension of AFS licence relief for securitisation vehicles
ASIC has released a consultation proposing to remake the relief instrument that exempts certain securitisation special purpose vehicles from holding an Australian financial services (AFS) licence. The existing instrument, ASIC Corporations (Securitisation Special Purpose Vehicles) Instrument 2016/272, is scheduled to sunset on 1 April 2026. ASIC plans to remake the instrument on substantially the same terms for a further five‑and‑a‑half‑year period. The relief applies where a securitisation entity holds a securitisation product as custodian or trustee, or issues such a product to an AFS licensee, an entity exempt from licensing, or a wholesale client. The 2016 instrument itself continued earlier class order relief dating back to 2004 and 2005. ASIC is seeking submissions on the proposal until 20 February 2026.
FINANCIAL SYSTEM
ASIC outlines key risk areas for financial services in 2026
ASIC has released its Key Issues Outlook 2026, highlighting pressures across the financial system as cost‑of‑living strains, rising debt and geopolitical uncertainty continue to shape market conditions. The regulator points to growing retail client exposure to private credit products, with investment thresholds as low as $2,000, raising concerns about opaque structures and limited disclosure.
Superannuation operations remain a focus, with processing delays, weak IT systems and heightened scam activity creating risks for members, particularly as large cohorts approach retirement. ASIC also flags aggressive marketing and “cookie‑cutter” advice models that have driven consumers into unsuitable, high‑risk investments, prompting ongoing court action, including in relation to the Shield and First Guardian matters.
Other priorities include governance of artificial intelligence and automated decision‑making, escalating cyber threats, regulatory gaps affecting digital assets and fintechs, insurance claim handling during natural disasters, risks linked to the CHESS replacement program, and stresses in banking competition potentially encouraging riskier lending behaviours.
SUPERANNUATION
ASIC consults on extending intra‑fund transfer relief for super trustees
ASIC has released a consultation proposing to extend existing relief for superannuation trustees involved in intra‑fund transfers. The current instrument, ASIC Corporations (Superannuation: Accrued Default Amount and Intra‑Fund Transfers) Instrument 2016/64, is due to sunset on 1 April 2026. ASIC proposes to remake it for a further five years, until 1 April 2031.
The relief exempts trustees regulated by the Australian Prudential Regulation Authority from the usual application form and cooling‑off requirements in the Corporations Act when members are moved between products within the same fund during an intra‑fund transfer. ASIC considers the relief to still be functioning effectively. However, it plans to remove relief for transfers of accrued default amounts to MySuper products, which it says has become redundant, and to make minor technical amendments. Submissions are open until 18 February 2026.
AML/CTF
AUSTRAC releases AML/CTF “starter kits” for newly regulated sectors
The Australian Transaction Reports and Analysis Centre (AUSTRAC) has published a suite of anti-money laundering and counter-terrorism financing (AML/CTF) program “starter kits” aimed at helping small businesses in sectors that will come under the amended Anti‑Money Laundering and Counter‑Terrorism Financing Act 2006 (Cth) (AML/CTF Act) from 1 July 2026. The new obligations will apply to certain designated services commonly provided by lawyers, accountants, real estate agents, conveyancers and jewellers. The kits outline step‑by‑step actions for building an AML/CTF program and include practical tools intended to help businesses understand and manage ML/TF risks. They are designed to scale according to business size and risk profile. The release follows consultation with industry peak bodies and small businesses across the affected sectors.
AML/CTF reform transition rules
The Department of Home Affairs and AUSTRAC have outlined forthcoming transitional rules to support implementation of the AML/CTF reforms. An exposure draft will be released in coming weeks for industry feedback.
Key measures include a three‑year transition period from 31 March 2026 to 30 March 2029, allowing existing reporting entities to continue using existing customer identification procedures before moving to reformed initial customer due diligence (CDD) requirements.
Deadlines for appointing and notifying AUSTRAC of AML/CTF compliance officers will be extended until 30 May 2026 for existing entities and 29 July 2026 for newly regulated “tranche 2” entities. “Tranche 2” entities will receive staggered timing for their first independent evaluation. Obligations for newly regulated virtual asset services will be deferred until 1 July 2026, with travel‑rule obligations commencing the same day. International value transfer reporting changes will be delayed until 2029.
Consultation on proposed AML/CTF reforms
The Department of Home Affairs has released a consultation paper outlining planned reforms to the AML/CTF Act. The reforms follow an announcement on 16 October 2025 by the Minister for Home Affairs that legislation will be developed to update the regime. The changes would introduce new powers for the AUSTRAC Chief Executive Officer to restrict or prohibit high‑risk products, services or delivery channels. An amendment to the statutory definition of “financing of terrorism” is also proposed to include state-based terrorism financing. The Government intends to introduce the amending legislation in Parliament during 2026. Submissions closed on Wednesday, 21 January 2026.
AUSTRAC releases preview of 2025 compliance report questions
AUSTRAC has published the full set of questions for the 2025 compliance report, due from reporting entities between 1 January and 31 March 2026. The report covers activities undertaken in the 2025 calendar year and applies to entities that provided designated services during that period.
The preview outlines a detailed questionnaire spanning designated services, digital currency exchange activity, delivery channels, outsourcing of AML/CTF functions, AML/CTF program governance, independent reviews, ML/TF risk assessments and transaction monitoring practices. It also includes new or expanded sections on blockchain use, de‑banking, employee background checks, alternative identity procedures for vulnerable customers, and enhanced customer due diligence.
Reporting entities will be asked to disclose changes to AML/CTF programs, triggers for those changes, and actions taken in response to AUSTRAC engagement. The report also gathers feedback on AUSTRAC’s guidance, regulatory approach and entities’ preparedness for reforms under the amended AML/CTF Act, commencing in 2026.
AUSTRAC highlights link between illicit gambling, scams and micro‑laundering
AUSTRAC has released a report detailing the rise of “scambling”, a hybrid of scams and unlawful online gambling, first detected in 2024. According to the report, offshore operators are targeting Australians through social‑media advertising and app‑store downloads, offering unregulated casino-style games that harvest personal data and encourage payments via PayID.
The report finds that scambling platforms not only defraud users but also form part of tiered money‑mule networks. Criminal groups reportedly recruit mules through social media, gaming platforms and paid “account renting”, using compromised or volunteered identities to move funds in high volumes of low-value transactions, described as micro‑laundering. AUSTRAC’s Fintel Alliance notes that victims often do not report fraud due to low transaction values, embarrassment or uncertainty about reporting avenues. The report also highlights disproportionate impacts on lower socio‑economic, Indigenous and remote communities.
DISPUTES AND ENFORCEMENT
AFCA highlights barriers facing First Nations consumers
The Australian Financial Complaints Authority (AFCA) has reported that complaints lodged by Aboriginal and Torres Strait Islander consumers continue to reveal persistent barriers to accessing financial services, particularly in regional and remote communities. In the 2024–25 financial year, AFCA received 2,461 complaints from First Nations consumers.
Common issues raised included unauthorised transactions, delayed or inadequate financial‑difficulty assistance, slow responses to claims and complaints, and mis‑selling of funeral and other insurance products. AFCA also identified digital exclusion as a significant obstacle, compounded by limited internet coverage, branch closures and cultural misunderstandings within firms.
Automated processes used by financial institutions, including during internal dispute resolution, may overlook indicators of vulnerability or hardship. AFCA has also adjusted its own complaints‑handling processes to be more culturally informed and accessible.
AFCA issues new Superannuation Complaints Guide
AFCA has released a new Superannuation Complaints Guide, replacing the Transitional Superannuation Guide first introduced when AFCA began operating in 2018. The updated guide aligns with AFCA’s Operational Guidelines and consolidates developments in superannuation dispute resolution over recent years. While the guide does not change AFCA’s approach to handling superannuation complaints, it reflects updates across several areas, including legislative amendments, new and revised AFCA Approaches, key court decisions, changes to AFCA’s Rules and Operational Guidelines, and adjustments to AFCA’s internal processes.
ASIC suspends Transitional Funding’s credit licence for six months
ASIC has suspended the Australian credit licence of Transitional Funding Pty Ltd (Transitional Funding) for six months, after finding the firm failed to meet key licensing obligations. ASIC found that Transitional Funding did not comply with licence conditions requiring notification when its nominated “Key Person” stopped performing their duties. Australian credit licensees must inform ASIC within five business days and lodge a variation nominating a replacement with relevant qualifications and experience. ASIC also determined that Transitional Funding had not paid industry funding levies owed to the regulator. The suspension took effect on 19 December 2025 and is scheduled to run until 17 June 2026.
ASIC review prompts nearly $40m in CFD investor refunds
ASIC has reported that a sector-wide review of contracts for difference (CFD) issuers has led to almost $40 million being refunded to more than 38,000 retail investors. The review, conducted between October 2024 and December 2025, examined the distribution practices of 52 licensed CFD issuers and identified widespread shortcomings across the industry.
The review found that more than half the sector breached the regulator’s product intervention order by offering “margin discounts” to retail clients holding opposing long and short positions. The review also found deficiencies in target market determinations, onboarding questionnaires, reporting compliance and monitoring of client trading outcomes.
ASIC required issuers to implement extensive remedial measures, including website updates, revised questionnaires, enhanced monitoring processes and corrections to over-the-counter derivative reporting, which involved more than 70 million erroneous reports. Reportable situations lodged by issuers rose 127% over the period.
AUSTRAC orders external audit of Airwallex
AUSTRAC has directed Airwallex Designated Business Group (Airwallex) to undergo an external audit amid concerns the global payments platform may be failing to meet key anti‑money laundering and counter‑terrorism financing obligations. The notice, issued on 22 January 2026, follows AUSTRAC’s suspicion of serious non‑compliance, including shortcomings in Airwallex’s transaction monitoring, customer understanding and suspicious matter reporting.
The auditor, appointed under section 162 of the AML/CTF Act, will assess whether Airwallex is maintaining and following an AML/CTF program, conducting ongoing customer due diligence and meeting reporting duties. The audit must be completed within 180 days and will be carried out at Airwallex’s expense.
Federal Court imposes $14m in penalties on BPS Financial over Qoin Wallet
The Federal Court has ordered BPS Financial Pty Ltd (BPS) to pay $14 million in penalties for misconduct linked to its Qoin Wallet crypto product. The Qoin Wallet was promoted as a non‑cash payment facility connected to the ‘Qoin’ digital token.
In 2024, the Court found BPS operated without an AFS licence for nearly three years and made false and misleading statements about the product. In 2025, the Full Federal Court extended the period of unlicensed conduct by a further 10 months, holding that BPS could not rely on the authorised representative exemption when issuing the Qoin Wallet.
Justice Downes described the misconduct, which occurred from January 2020 to mid‑2023, as “serious and unlawful”. Of the total penalties, $2 million related to unlicensed conduct and $12 million to misleading representations. The Court also imposed permanent restraints on certain statements about Qoin, a 10‑year ban on unlicensed financial services activity, adverse publicity requirements, and cost orders.