Expanding anti-money laundering and counter-terrorism financing reforms to a broader range of businesses could have substantial indirect consequences for insurers, a law firm has warned.

A second tranche of reforms starting on July 1 will apply to certain services provided by real estate professionals, lawyers, accountants, conveyancers, trust and company service providers, and dealers in precious stones, metals and products.

Clyde & Co local managing partner Rebecca Kelly says many newly captured industries may be underprepared and the sweeping reforms will reshape risk exposure, with flow-on impacts for underwriting, pricing and claims.

“While we don’t expect to necessarily see the same size and scale of enforcement actions as we have seen recently against banks and casinos, the risk of regulatory enforcement action against newly regulated entities is real, and it is only a matter of time before we start to see claims come through under this enhanced regulatory regime,” she said.

Clyde & Co says there is potential for directors and officers, management liability and professional indemnity claims related to compliance failings.

Issues flagged include more scrutiny of insureds’ governance, compliance maturity and risk frameworks, coverage uncertainty around fines, penalties and regulatory response costs, greater scrutiny of policy terms and conditions, especially exclusions, and pressure on limits and excesses, especially where multiple parties seek access to shared limits.

The federal government says the new laws close gaps in the financial system and ensure Australia better meets international standards, with the expansion bringing industries recognised as high-risk for criminal exploitation under the regulatory regime.