Financial Services, Funds and Superannuation legal update - January 2026

Welcome to the January Financial Services Legal Update, your guide to the key regulatory developments, enforcement actions and emerging legal trends shaping Australia’s financial sector.

This month has seen major developments in AML/CTF reform with the much-anticipated AUSTRAC starter kits released and updates on expected transitional provisions of the AML/CTF Act. Enhanced regulator enforcement activity of AUSTRAC and ASIC included major civil penalties and criminal enforcement outcomes. The announcement of Sarah Court from ASIC Enforcement as the new Chair of ASIC indicates enforcement will continue to be a high priority. APRA entered a CEU and imposed licence conditions on superannuation trustees resulting from the Shield and First Guardian decisions.

Additionally, Treasury is consulting on uplifts to Australian Business Registers, changes to professional indemnity insurance for AFS Licensees and determinations for the Scams Prevention Framework. ASIC also announced its ‘key issues outlook for 2026’. Parliament has started the new year with financial services reforms high on the agenda. The Draft Digital Assets Platform Bill continues to progress through Parliament.

Anti-Money Laundering and Counter Terrorism Financing (AML/CTF)

AUSTRAC released industry sector starter kits and industry sector guidance

On 29 January, AUSTRAC released its AML/CTF starter kits for the real estate sector, accountants, conveyancers, legal professionals and dealers in precious metals and stone. Each starter kit includes a risk assessment document, policy document and process document customisable for each business. The starter kits are accompanied by a number of caveats and are specific for the needs of small businesses:

• with 15 or less personnel
• with customers who are often individual Australian residents, and less commonly deal with customers who are body corporates
• that don't regularly deal with high-risk clients
• that don’t assist with the purchase, transfer or sale of overseas property, and
• that don't provide fully remote self-service options, which allow clients to obtain designated services without interacting with your personnel.

Nonetheless, this should provide some smaller businesses with helpful guidance. As AUSTRAC disclaimers highlight, there are some legal nuances and complexities to aspects of the reforms especially in relation to determining reporting groups and lead entities. Please contact us in the event you need guidance in this area.

Program starter kits | AUSTRAC

AUSTRAC provides update in relation to AML/CTF transitional rules

AUSTRAC has provided a press release update on the anticipated transitional rules for Tranche 1 and Tranche 2 entities. The proposed transitional arrangements if adopted will allow Tranche 1 reporting entities additional time to implement certain new requirements including:

• a three-year initial customer due diligence transition period from 31 March 2026 to 30 March 2029
• delaying need to notify AUSTRAC of their AML/CTF compliance officer until 30 May 2026
• Tranche 1 existing reporting entities will have until 30 May 2026 and newly regulated Tranche 2 entities will have until 29 July 2026, to notify AUSTRAC of their AML/CTF compliance officer
• digital currency exchange providers will not need to re-register
• new virtual asset services providers will not have to comply with AML/CTF obligations until 1 July 2026
• reporting obligation for international value transfer services will be deferred until 2029, and
• financial advisers with special AML/CTF programs that provide other professional services will not need to comply with the updated requirements until 1 July 2026.

The Department of Home Affairs will shortly release an exposure draft of the transitional rules. Tranche 2 entities will still be required to be compliant by 1 July 2026.

AML/CTF transitional rules update | AUSTRAC

AUSTRAC orders appointment of auditor to Airwallex

AUSTRAC has ordered the appointment of an external auditor to Airwallex Designated Business Group. AUSTRAC appointed the auditor to examine whether Airwallex business group is maintaining and complying with an AML/CTF program, operating an ongoing customer due diligence program and meeting suspicious matter reporting obligations.

AUSTRAC orders audit of Airwallex for suspected AML/CTF compliance failures | AUSTRAC

AUSTRAC refuses registration renewal for Raiyyan Exchange

AUSTRAC has refused to renew the registration of remitter, Yellow Sands Trading Pty Ltd (trading as Raiyyan Exchange). AUSTRAC identified alleged deficiencies in Raiyyan Exchange’s ability to understand, manage, and mitigate its money laundering and terrorism financing risks.

AUSTRAC refuses registration renewal for remitter, Raiyyan Exchange | AUSTRAC

Superannuation

APRA accepts court enforceable undertaking from Netwealth related to investment governance framework

APRA has accepted a Court Enforceable Undertaking (CEU) from Netwealth Superannuation Services in relation to its investment governance framework. The CEU arose from concerns raised in a thematic review by APRA following the First Guardian matter. Netwealth has acknowledged APRA’s concerns and has committed to engage an independent expert to perform a review of high-risk investment options on its platform and its investment governance framework. They will also develop and implement a remediation uplift plan and review all investment options on its investment menu against the uplifted investment governance requirements. APRA acknowledged that Netwealth is progressing improvements to its investment governance framework. Netwealth has agreed to compensating members affected by the First Guardian investment options, with payments totalling $100 million.

APRA accepts court enforceable undertaking from Netwealth | APRA

25-307MR Netwealth admits to First Guardian failures and agrees to compensate affected members $100 million | ASIC

APRA imposes additional licence conditions on platform trustees

APRA has imposed additional licence conditions on Diversa Trustees and Equity Trustees Superannuation in relation to their investment governance frameworks and oversight of platform investment options. Under the additional licence conditions, effective in December 2025, both licensees are required to:

• appoint an independent expert to undertake separate reviews of their platforms’ investment menus and investment governance framework
• develop and implement an uplift plan to address identified gaps
• provide APRA with assurance or attestation regarding remediation actions, and
• undertake a further review of its investment menu against the enhanced investment governance requirements.

These actions are indicative of APRA’s increased supervision of platform trustees.

APRA imposes additional licence conditions on Equity Trustees Superannuation Limited | APRA

APRA imposes additional licence conditions on Diversa Trustees Limited | APRA

General regulatory

ASIC secures nearly $40 million in refunds and reforms in CFD sector

ASIC published that the contracts for difference (CFD) sector have provided $40 million in refunds to investors as a result of its Report 828: Risky business: Driving change in CFD issuers’ distribution practices.

26-004MR ASIC secures nearly $40 million in refunds to investors and drives change after CFD sector falls short | ASIC

Digital Assets Bill moves to second reading and referred to Federation Chamber

The Corporations Amendment (Digital Assets Framework) Bill 2025 moved to its second reading on 3 February 2026. The Bill proposes to introduce two new types of financial products: ‘digital asset platforms’ and ‘tokenised custody platforms’. A key aspect of the reforms is the definition of digital tokens, electronic records and the question of possession and control as relevant to digital assets and tokens.

Corporations Amendment (Digital Assets Framework) Bill 2025 – Parliament of Australia

Treasury consults on uplift to Australian Business Registers

The Treasury has released exposure draft legislation in relation to its proposed uplift of the companies register and company registration services. The proposed Treasury Laws Amendment (Business Registries Stabilisation and Uplift) Bill 2025 would broadly do the following:

• amend Director ID requirements by requiring that Director IDs are provided to ASIC as part of the company registration and director information reporting processes, requiring directors provide their Director IDs to companies, giving ASIC the power to disqualify directors who fail to apply for a Director ID, and allowing ASIC to publish Director ID information on its registers
• provide ASIC with more powers related to the company register including the power to deregister a company for inaccurate or misleading information, the discretion to approve format of documents, the ability to correct information on the registers it administers, the discretion to publish information on registers if it is the public interest, and requiring companies to provide an email address for communication, and
• ’stabilise’ business registers by repealing the Modern Business Registers program.

On a temporary basis ASIC will not publish the address of directors in the companies register. It is expected this may increase the time it will take to conduct due diligence searches related to directors.

Registry stabilisation and uplift – draft legislation consultation - Consult hub

Treasury consults on enhancing the effectiveness of financial service professional indemnity insurance

In response to consistent feedback from stakeholders in relation to the Compensation Scheme of Last Resort (CSLR), Treasury is consulting on potential amendments to the Professional Indemnity Insurance (PII) in the financial services industry. Treasury is seeking responses to the following questions:

• whether the current broad legislative obligations requiring licensees to hold PII is effective in reducing the risk of consumers not being compensated
• whether ASIC’s initial oversight in granting AFS Licenses is effective in ensuring applicants obtain adequate PII cover
• to what extent AFS licensees are able to obtain affordable PII cover that allows them to fulfil their licence obligations
• what changes could be made to PII requirements to enable licensees with a representative network to operate more efficiently and at a lower cost
• to what extent are the minimum requirements for PII outlined in RG 126 appropriate; and
• whether there are opportunities to enhance PII through changes to the current PII minimum requirements.

The closing date for this consultation is 13 February 2026.

Compensation Scheme of Last Resort – enhancing professional indemnity insurance - Consult hub

ASIC releases key issues outlook 2026

ASIC has published its Key Issues Outlook 2026, setting out the risks most likely to cause consumer harm and signalling where the regulator will focus its supervisory and enforcement efforts over the year ahead. The key issues include:

• increased retail client exposure to private credit markets, raising the risk of mis‑selling, unsuitable product selection, and decision‑making without adequate disclosure
• operational challenges for superannuation fund trustees that may lead to member harm
• investments in high-risk products resulting in the loss of retirement saving
• consumers facing risks from automated decisions and AI-driven interactions
• cyber-attacks, data breaches and/or inadequate operational resilience for market and AFS licensees
• poor insurance claims handling
• poor quality financial reporting, sustainability reporting and audit quality
• significant outages resulting from the implementation of CHESS replacement, and
• increased risk appetite in the banking sector as a result of competitive pressure.

Key issues outlook 2026 | ASIC

ASIC proposes to extend relief provided under a number of instruments

ASIC is seeking feedback on a proposal to remake the following relief instruments:

• ASIC Corporations (Superannuation: Accrued Default Amount and Intra-Fund Transfers) Instrument 2016/64 which exempts trustees of APRA-regulated superannuation funds from obligations relating to application forms and cooling off rights in the event of an intra-fund transfers. Comments close 18 February 2026.
• ASIC Corporations (Securitisation Special Purpose Vehicles) Instrument 2016/272, which exempts a securitisation entity from holding an AFS licence where it holds the securitisation product as a custodian or is issuing a securitisation product to an AFS licence holder, an entity that is exempted from holding an AFS licence, or a wholesale client, submissions are due by 5pm AEDT on Friday 20 February 2026.

ASIC proposes to extend intra-fund transfer relief for super trustees | ASIC

ASIC proposes to extend relief for securitisation entities from holding an AFS licence | ASIC

ASIC releases sustainability reporting education modules for smaller companies

ASIC and the AASB have released educational modules to assist smaller and less-resourced companies prepare for new sustainability reporting requirements. The modules are intended to build capability ahead of mandatory reporting.

First sustainability reporting educational modules released to assist smaller companies | ASIC

ASIC updates guidance on managing conflicts of interest

ASIC has updated Regulatory Guide 181 AFS Licensing: Managing Conflicts of Interest. RG 181 now has further examples of the kind of conflicts AFS licensees should identify and manage conflicts, practical steps for effective conflict management, and a non-exhaustive ‘catalogue’ of related legal obligations and information.

25-304MR ASIC renews guidance on managing conflicts of interest in financial services | ASIC

ASIC extends relief for litigation funding and conditional costs schemes

ASIC has extended two legislative instruments in relation to litigation funding arrangements and conditional costs schemes. The ASIC Corporations (Conditional Costs Schemes) Instrument 2020/38 and ASIC Credit (Litigation Funding-Exclusion) Instrument 2020/37 provide relief from the credit, managed investment scheme, financial services licensing and disclosure obligations to litigation funding arrangements where the members wholly or substantially fund their legal costs under a conditional costs agreement.

ASIC extends relief for litigation funding arrangements and conditional costs schemes | ASIC

ASIC consults on regulatory guide for financial reporting and audit relief

ASIC is seeking feedback from stakeholders on its proposal to update Regulatory Guide 43 Financial reports and audit relief and withdraw Regulatory Guide 29 Financial reporting by Australian entities in dual listed company arrangements. ASIC is seeking to combine the two guides and update both with recent legislative developments. Consultation closes on Monday 9 February 2026.

ASIC proposes updates to guidance on financial reporting and audit relief | ASIC

Blockchain mining companies and unregistered scheme wound up

The Federal Court has ordered the winding up of NGS Group Limited, NGS Crypto Pty Ltd and NGS Digital Pty Ltd (collectively the Group) and an associated unregistered managed investment scheme for operating a financial services business without an AFS Licence.

The NGS Group (that is unrelated to NGS Super) targeted Australian investors, encouraging investors to invest in blockchain mining packages that promised fixed-rate returns. The Group offered a Blockchain Mining Product where a person would complete an ’initial Mining Agreement’ and provide fiat currency or Bitcoins to generate profits from the digital asset mining operations of the Group. If a person expressed an interest in investing in the Blockchain Mining Product through a SMSF, a sales representative arranged a ’financial discovery call’ between that person and a third-party company regarding setting up a SMSF. The Court considered the Blockchain Mining Product was a financial product as it was an interest in an unregistered managed investment scheme. The Court also found that the Group were arranging for the issue of interests in SMSFs and providing financial product advice in relation to the Blockchain Mining Product and SMSFs. Ultimately, the court determined that the Group were operating a financial services business.

25-310MR NGS blockchain mining companies and unregistered scheme wound up, found operating without a licence | ASIC

ASIC warns of pump-and-dump scams

ASIC has warned of a rise in coordinated ’pump-and-dump’ scams targeting retail investors promoted through social media, messaging apps and online forums. ASIC said it is intensifying surveillance and working with market operators and international regulators to identify this conduct. This follows the conviction of four co-conspirators who used Telegram app group chats to pump up the share prices of Australian stocks before dumping them at inflated prices. The co-conspirators were sentenced to terms of imprisonment, to be served by way of intensive corrections orders between 14 months and two years.

25-316MR Pump and dump scammers put regulators on high alert | ASIC

25-315MR Market riggers sentenced in ASX ‘pump and dump’ case | ASIC

ASIC Enforcement

Fund manager sentenced to 6 years’ jail in $3 for insider trading

Former investment manager Rodney Forrest has been sentenced to six years’ imprisonment for insider trading in relation to $3 million of Platinum Asset Management Limited shares.
In August 2024, Mr Forrest secretly accessed the computer of the Chairman of Regal Partners Limited (without permission) and photographed confidential takeover documents.

This matter is one of the first prosecutions initiated by ASIC’s new insider trading specialist enforcement team.

26-007MR Fund manager sentenced to 6 years’ jail in $3 million Platinum Asset Management insider trading case | ASIC

Federal Court orders penalties against RM Capital and SMSF Club for conflicted remuneration breaches

The Federal Court has ordered RM Capital and SMSF Club to pay a combined $925,000 in penalties in relation to conflicted remuneration received by SMSF Club. In February 2024, the Court found RM Capital had not taken reasonable steps to ensure that SMSF Club did not receive conflicted remuneration. The Court also found SMCSF Club had received prohibited benefits linked to SMSF establishment and lending arrangements.

25-313MR Federal Court orders $925,000 in penalties against RM Capital and SMSF Club for conflicted remuneration breaches | ASIC

ASIC suspends Australian credit licence of Transitional Funding Pty Ltd

ASIC has suspended the Australian credit licence of Transitional Funding Pty Ltd until 17 June 2026. ASIC alleged that Transition Funding failed to comply with conditions on its licence relating to the Key Person requirements as it allegedly did not notify ASIC in writing of a Key Person Change within the required timeframe. ASIC also found that Transitional Funding had allegedly failed to pay industry funding levies owed to ASIC.

AFS Licensees are reminded that replacement of a key person requires a variation of AFS licence and the licensee is not permitted to provide any financial services until an ASIC approved replacement is appointed.

26-001MR ASIC suspends Australian credit licence of Transitional Funding Pty Ltd | ASIC

Court order $14 million in pecuniary penalties in relation to Qoin Wallet

The Federal Court has ordered BPS Financial Pty Ltd to pay $14 million in pecuniary penalties in relation to the Qoin Wallet matter. In 2024 and on appeal in 2025, the Court found that BPS Financial promoted the Qoin Wallet as a non-cash payment facility linked to a digital crypto token called ‘Qoin’. Qoin Wallet was found to be operating a financial services business without holding an AFS License. The $14 million in pecuniary penalties is made up of $2 million for unlicensed conduct, and $12 million for misleading and deceptive conduct in connection with the making false and misleading statements.

26-008MR BPS Financial to pay $14 million in penalties over crypto Qoin Wallet | ASIC

Brendan Gunn pleads guilty to dealing with suspected proceeds of crime

Director of Mormarkets Pty Ltd, Brendan Gunn, pleaded guilty to dealing with more than $180,000 when it was reasonable to suspect that those funds were the proceeds of crime, derived from suspected international scams that targeted Australian investors. Mr Gunn was allegedly notified of suspicious activity or reports of fraud and closed customer accounts accordingly. However, Mr Gunn admitted to dealing with proceeds of investment from those accounts totalling $181,000.

26-009MR Brendan Gunn pleads guilty to dealing with money reasonably suspected of being proceeds of crime | ASIC

Authorised Deposit-taking Institutions (ADIs) and banking

Treasury consults on Scams Prevention Framework instrument

Treasury has consulted on two legislative instruments required to implement the Scams Prevention Framework. The first instrument, the Competition and Consumer (Scams Prevention Framework—Regulated Sectors) Designation 2025, applies the Scams Prevention Framework to the following:

• ADIs while providing a service in the course of carrying on a banking business or during the provision of a purchased payment facility
• telecommunications services while providing a message services or voice call service where the service is provided by a carrier, public carriage service provider or using a listed carriage service
• covered digital platform services which is a designated instant messaging service, a designated internet search engine service or a designated social media service accessible to end users in Australia and meets the revenue test.

A digital platform will meet the threshold test if its Australian revenue (including entities it controls or is controlled by) is $100 million or more, or alternatively, if its gross revenue (including entities it controls or is controlled by) is $1 billion.

The second instrument authorises the Australian Financial Complaints Authority (AFCA) scheme to be the SPF EDR scheme for the banking, telecommunications and digital platforms sectors. The authorisation only applies in relation SPF-related complaints made to AFCA on or after 1 January 2027.

Scams Prevention Framework – Draft law package and position paper - Consult hub

Bank subject to joint APRA and AUSTRAC action

APRA and AUSTRAC jointly announced that they are taking action against Bendigo and Adelaide Bank in relation to suspected money laundering and alleged deficiencies with the bank’s approach to management of money laundering and terrorism financing risk. AUSTRAC have initiated an investigation in relation to whether the bank has complied with its AML/CTF obligations. APRA will require the bank to hold an operational risk capital add-on of $50 million and a broader root cause analysis addressing non-financial risk management.

APRA and AUSTRAC take action in response to risk management deficiencies at Bendigo and Adelaide Bank | APRA

in1Bank to relinquish its ADI licence

in1Bank Limited has announced that it will discontinue its banking business, and it will hand back its ADI licence to APRA upon returning all deposits. APRA announced that it will monitor the return of all deposits to in1Bank depositors.

APRA monitors in1Bank return of deposits | APRA

Press release | in1bank