Methodology
How Tranche generates compliant AML/CTF programs
Transparent methodology — deterministic risk engine, traceable clause selection, legislative basis on every obligation.
How the risk engine works
Risk is assessed across four dimensions before controls are applied.
Each dimension is scored independently using the firm's declared inputs from the compliance wizard. The highest dimension score determines the overall inherent risk rating before any controls are applied.
Override rules
Certain inputs trigger mandatory risk overrides regardless of the dimension base score:
- Politically Exposed Persons (PEPs) expectedCustomer dimension is mandatory High — no exceptions.
- International geographic exposureGeographic dimension is mandatory High.
- High-value transactions (AUD $500,000+)Service dimension floor is Medium — cannot be scored lower.
- Property developer clientsService dimension floor is Medium regardless of transaction size.
Inherent vs residual risk
Inherent risk is the raw rating before any controls are documented. Residual risk reflects the reduction achieved by applying the firm's documented AML/CTF program controls. Under AUSTRAC's risk-based approach, one full risk tier of reduction is credited where mandatory program controls are documented and operational.
All risk outputs are deterministic — the same wizard inputs always produce the same risk classification.
How clauses are selected
Clause selection is rule-based, not AI-generated. Every clause is traceable to a risk driver.
Always-on sections
The core Part A and Part B sections are included in every generated program — oversight structure, employee due diligence, record-keeping procedures, and ongoing monitoring. These are non-negotiable obligations under the AML/CTF Act.
Conditional sections
Three sections are conditionally included based on specific risk drivers identified during the wizard:
- Enhanced Due Diligence (EDD) proceduresTriggered when: PEPs expected = Yes — Legislative basis: AML/CTF Rules, Chapter 4.2
- Threshold Transaction Reporting (TTR) proceduresTriggered when: High-value transactions (AUD $500,000+) = Yes — Legislative basis: AML/CTF Act s.43, 81–83
- PEP screening proceduresTriggered when: PEPs expected = Yes — Legislative basis: AML/CTF Rules, Chapter 4.2
Every clause is traceable to a risk driver and a legislative provision. The clause provenance panel in the review step displays the exact trigger and citation for each conditional inclusion.
Legislative references
All program obligations are grounded in Australian law and current AUSTRAC guidance.
| Document | Citation |
|---|---|
| Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) | s.32, 36, 43, 81–83, 106, 162 |
| Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 | Chapters 3, 4, 7, 8, 9, 10 |
| AUSTRAC Guidance Note 1 (2024) | Customer identification and verification procedures |
| AUSTRAC Guidance Note 4 (2024) | Ongoing customer due diligence |
References reflect AUSTRAC guidance current as at June 2026. The clause library is updated when AUSTRAC issues new guidance. Affected firms are notified via the Compliance Calendar.
What Tranche does not do
Important scope boundaries for regulated entities relying on this platform.
Not legal advice
Generated programs are structured compliance documentation based on the firm's declared inputs. They do not constitute legal advice. All generated documents should be reviewed by a qualified AML/CTF compliance professional before relying on them for AUSTRAC registration or distribution to staff.
Not a substitute for AUSTRAC registration
Tranche generates the AML/CTF Program Manual required under the Act but does not submit or lodge any document with AUSTRAC on the firm's behalf. Firms must complete their own AUSTRAC registration as a reporting entity separately via austrac.gov.au.
Not a law firm
Tranche is a compliance platform. Its operators are not legal practitioners. Nothing in the platform constitutes a solicitor–client relationship or legal representation.
No real-time regulatory monitoring
The platform does not provide real-time monitoring of legislative changes or AUSTRAC enforcement actions. Firms are responsible for monitoring AUSTRAC guidance updates between platform update cycles. Subscribe to AUSTRAC's direct communications for real-time alerts.
Review and update process
How the clause library is maintained in response to AUSTRAC guidance changes.
AUSTRAC guidance updates
When AUSTRAC publishes updated guidance, regulatory alerts, or amended rules, the Tranche clause library is reviewed against the update. Where the update affects a mandatory program obligation, the relevant clauses are revised and the legislation version is incremented.
Firm notifications
Affected firms are notified via the Compliance Calendar when a clause library update is published. Firms can review a summary of the changes, regenerate their program manual to incorporate updated obligations, and retain the prior version as an immutable audit snapshot.
Audit trail
Every generated program is versioned with a unique version ID and the legislation reference date at the time of generation. Firms can demonstrate to AUSTRAC exactly which version of guidance was in effect when the program was produced — an important protection in an enforcement context.
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