Revised Conduct Rules Bolster AML/CTF Obligations
New changes to the conduct and practice rules will assist you to understand both your anti-money laundering/counter-terrorism financing (AML/CTF) obligations and your ethical duties. Here’s what has changed.
The core shift
Amendments to the Australian Solicitors’ Conduct Rules and the Solicitors’ Practice Rules, prompted by new AML/CTF obligations, take effect on 1 July 2026. The rules have not changed in substance—it has always been the case that your legal services cannot be used for an improper purpose—but your obligations have been made clearer.
Three changes are worth noting.
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Rule 8.1: Client instructions
Rule 8.1 now provides that a solicitor must only accept and follow a client’s lawful, proper and competent instructions. What changed? The amendment adds three words—”only accept and”—and each of them matters.
While your duty is to advocate for and defend your client’s interests, your primary duty is as an officer of the court and to the administration of justice. If a client asks you to do something untoward, or to use your legal services for an improper purpose, you cannot act on those instructions. The amendment makes this limit explicit, and it clarifies that it applies from the moment a prospective client walks through your door.
It also aligns with your customer due diligence obligations under the AML/CTF Act.
Rule 13: Terminating an engagement
Under Rule 13, a law practice may terminate an engagement for just cause and on reasonable notice. Many practitioners feel nervous about terminating a retainer. Until now, “just cause” in this context has been a concept defined only in common law.
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Amendments to Rule 13 will assist by adding a non-exhaustive definition. Rule 13.4 provides that just cause includes: instructions that require, or any circumstance where continuation of the engagement would cause, a solicitor to breach ethical duties and professional responsibilities; any circumstance where a solicitor is no longer able to act in the client’s best interests; and any circumstance where a client has not provided all information requested that is required to fulfil a solicitor’s statutory obligations.
This list is a floor, not a ceiling. If a client is unreasonably evasive about identification, or cannot satisfactorily explain or demonstrate their source of funds, you can terminate the retainer, confident you are acting in accordance with the Conduct Rules.
Rule 12: New retainer requirements
A new rule has been added to the Practice Rules around retainers. Rule 12 provides that a retainer agreement should inform the client that: the solicitor is subject to statutory obligations, including reporting obligations that might include confidential information; the solicitor may terminate the retainer and notify the client where continuing to act would require breaching ethical duties or professional responsibilities; and the law may prohibit the solicitor from providing reasons for terminating the retainer on those grounds.
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Because of AML/CTF tipping-off prohibitions, you must be careful how you terminate a retainer, if required to do so. You cannot tell a client that the reason is that you have formed a reasonable suspicion that they are breaching the AML/CTF Act. The new Rule 12 means your client is informed of these possibilities from the start of the engagement, putting you on a clear contractual footing.
These amendments ask you to tread carefully, but they were made carefully, too. Ethical rigour is the pride of the profession, and it is why you can meet these new obligations with confidence.
AML/CTF compliance is an area where law societies and bar associations across different jurisdictions are updating their guidance simultaneously. The changes described here follow a pattern seen in other common law jurisdictions where solicitors face increasing obligations to identify suspicious activity.
