Identify the customer category
Existing customer is an ordinary description. It does not identify which legal treatment applies. A pre-commencement customer, a transferred customer and a customer with earlier identity checks can have different treatment.
For newly regulated services, section 36 looks at the business relationship as at the start of 1 July 2026. It must involve only the specified table 2 item 2, table 5 or table 6 services.
A separate rule concerns customers first given table 1, 2 or 3 services before 12 December 2007. An old contact record alone does not establish either category.
Sources: Federal Register of Legislation: Section 36(1); AUSTRAC: Customer is a pre-commencement customer.
- Pre-commencement customer
Establish the statutory category and examine later triggers.
- Earlier identity checks
Examine whether the recognition rule applies to the completed procedure.
- Transferred customer
Examine the transfer conditions and required records.
Identify the treatment before relying on an earlier relationship
These categories have different conditions. An old contact record alone is insufficient. Ongoing CDD and any separate entity transition still require attention.
Separate evidence questions. An answer to one does not settle the others.
When initial CDD becomes necessary
Under section 36, initial CDD applies to a pre-commencement customer if a suspicious matter reporting obligation arises.
It also applies after a significant change in the nature and purpose of the business relationship that results in medium or high risk. The customer can already have had that risk level.
AUSTRAC says to complete initial CDD before providing the designated service when a trigger applies. A customer stops being a pre-commencement customer once initial CDD is complete.
Ongoing monitoring still applies. This includes unusual transactions, relevant relationship changes and the required review, update and reverification of customer information.
Sources: Federal Register of Legislation: Sections 30 and 36(2) to (4); AUSTRAC: When you must complete initial CDD; Ongoing CDD and pre-commencement customers.
Earlier checks and transferred customers
Rules section 6-42 recognises applicable customer identification procedures completed before 31 March 2026. The procedure must have applied to the customer or the customer’s trustee. Ongoing CDD still applies.
A transfer from another reporting entity has separate conditions under section 6-27. The receiving entity must obtain copies of the customer records kept under Act sections 107, 108, 111 and 114.
A transferred pre-commencement customer also has specific ongoing treatment under section 6-28. The customer’s former status, records and monitoring conditions matter. A customer list alone is insufficient.
Source: Federal Register of Legislation: Sections 6-27, 6-28 and 6-42.
A separate transition for some reporting entities
An eligible reporting entity can continue older applicable customer identification procedures during a limited transition. This is different from a customer’s pre-commencement status.
AUSTRAC states that the entity must have been enrolled on 30 March 2026 and maintain policies requiring compliant older procedures. The period runs from 31 March 2026 to 31 March 2029.
By 1 July 2026, the transitional policies must specify customer classes and their transition dates. Further policy conditions apply. The transition does not remove ongoing CDD.
Source: AUSTRAC: Transitional period for initial customer due diligence; You must have transitional policies.
A new instruction from a familiar customer
A fictional practice has a qualifying pre-commencement customer. The customer requests a different service that significantly changes the relationship’s nature and purpose. The resulting customer risk is medium.
The practice records the changed instructions and risk assessment. It applies the section 36 trigger before starting the designated service. The age of the relationship does not remove that trigger.
Sources: Federal Register of Legislation: Section 36(4); AUSTRAC: When you must complete initial CDD on pre-commencement customers.