AUSTRAC has just released guidance on section 172A - examination powers . At first glance this may seem intimidating. It is a serious power. But it’s also not unusual.
Globally, AML regulators and law enforcement agencies have long had the ability to compel information, require documents and formally question people. Australia is aligning to a supervisory model that already exists in markets like the UK and New Zealand, where regulators can require records and explanations to test whether AML controls actually work in practice.
What section 172A does
Section 172A sits within AUSTRAC’s compulsory examination powers. In plain terms, AUSTRAC may issue a written notice requiring a person to:
- attend an examination before an examiner
- answer questions on oath or affirmation
- produce documents before or during the examination
AUSTRAC can only use this power if it believes on reasonable grounds the person has information or documents relevant to:
- compliance with the AML/CTF Act, rules or regulations, or
- a prescribed criminal offence.
If you receive a section 172A notice, you must attend and answer questions. Failure to comply is an offence. The guidance also makes a key point that often gets missed: a section 172A notice does not necessarily mean AUSTRAC thinks you have done anything wrong. AUSTRAC uses examinations to gather evidence and understand what has happened so it can make regulatory or enforcement decisions.
What to expect if it happens
The notice must be in writing and will include your rights and responsibilities, and the consequences of non-compliance. It will explain the general nature of the matters to be covered, but AUSTRAC will not provide the questions in advance.
Examinations are private. Typically, only the examiner, you, your legal representative, authorised AUSTRAC staff and support services (such as an interpreter) are present.
AUSTRAC will usually record the examination and produce a transcript, and you can request a copy, though conditions may apply. The notice may also include non-disclosure conditions. That means you may be prohibited from telling others you’ve received a notice or that an examination is happening, except to seek legal advice or wellbeing support. Breaching those conditions can be an offence.
The global approach
Section 172A can feel confronting because it’s explicit and formal. But the underlying idea is familiar internationally: supervision based on evidence, not assurances.
In the UK, regulators and investigators can compel information and records as part of supervision and financial crime investigations.
In New Zealand, AML supervisors can require information during compliance activity, and enforcement agencies can compel records during investigations.
Australia introducing section 172A is a signal that AUSTRAC wants stronger tools to obtain information and evidence directly, rather than relying only on what arrives through SMRs or standard regulatory engagement.
Why it matters for tranche 2 firms
For law firms, accountants and real estate agencies preparing for the AML reforms, section 172A isn’t something you should expect to encounter day-to-day. It’s more important as a marker of the supervisory environment you’re entering.
It reinforces three practical expectations.
First, AML will be assessed as an operational system, not just a policy pack. AUSTRAC will care about how risk is assessed, how decisions are made, how exceptions are handled and whether escalation is consistent.
Second, record keeping needs to be audit-ready by default. If regulators can require documents quickly, it becomes critical that risk rationale, approvals, source of funds checks and supporting evidence are organised and retrievable.
Third, people need to be able to explain decisions clearly. If onboarding decisions live in inboxes, spreadsheets and informal conversations, it becomes hard to show why you did what you did.
The takeaway
Section 172A is a strong power, but it’s part of a global pattern: regulators moving toward evidence-led supervision. For tranche 2 firms, the practical response isn’t fear. It’s building an AML process that is consistent, easy to follow in practice, capable of handling complexity and volume, and able to evidence decisions without a scramble.
About First AML
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