Suspicious Matter Reporting in Australia
A practical guide to identifying, assessing, documenting and submitting suspicious matter reports to AUSTRAC without tipping off.
How this guide was researched and reviewedOn this page
Short answer
An SMR must be submitted when reasonable grounds for suspicion are formed in connection with a designated service. Certainty and proof of a crime are not required.
The duty can arise when a service is requested or proposed, even if it is not ultimately provided. The clock starts when reasonable grounds for suspicion are formed.
At a glance
The Four-Step Reporting Path
Notice
Staff and monitoring should identify unusual behaviour, transactions and information.
Review
Relevant facts should be gathered promptly without alerting the customer.
Decide
Ask whether the known facts give reasonable grounds for suspicion.
Report
File a clear SMR through AUSTRAC Online within the legal deadline.
Plain English
Key Words Explained
These words are used in the law and official guidance. This is what they mean on this page.
- SMR
- Suspicious matter report. It is submitted to AUSTRAC when the legal suspicion test is met.
- Reasonable grounds
- Facts that would allow a reasonable person with similar knowledge and training to reach the suspicion.
- Indicator
- A fact or behaviour that may point to crime or ML/TF risk. One indicator does not always create a suspicion.
- Tipping off
- Improperly disclosing SMR information in a way that could prejudice an investigation.
- LPP
- Legal professional privilege, which can protect qualifying confidential legal communications and documents.
Part 1
Identify and Escalate
Indicators should be matched to the business’s services and customers. Staff need a simple route for escalating concern.
- The customer avoids identification, ownership or purpose questions.
- The activity is unusually large, complex, rushed or split into smaller parts.
- The transaction does not fit the customer’s known work, wealth or stated purpose.
- Money, property or instructions move through unrelated people or countries without a clear reason.
- Documents, explanations or beneficial ownership information conflict.
- The customer appears to be acting for an undisclosed person.
There is no minimum dollar amount for an SMR. A small or attempted transaction can still be suspicious.
Part 2
Assess the Facts
- Step 1
Gather what is already available
Review CDD, ownership, purpose, communications, transactions, earlier alerts and reliable open-source information.
- Step 2
Ask proportionate questions
Normal CDD or service questions may be asked, but the customer should not be told that an SMR is being considered.
- Step 3
Test explanations
Compare the explanation with documents, known facts, the customer profile and the way the service is being used.
- Step 4
Record the point of suspicion
Write down when reasonable grounds were formed, who decided, the facts relied on and any alternative explanation considered.
Part 3
Submit on Time
The report should explain the story, not only list indicators. It should identify who or what is involved, what happened, when it happened, why it is suspicious and how it connects with the designated service.
| Type of suspicion | Deadline | Submission |
|---|---|---|
| Terrorism financing | Within 24 hours of forming the suspicion | AUSTRAC Online |
| Other suspicion | Within 3 business days after the day the suspicion was formed | AUSTRAC Online |
| Qualifying LPP claim | Special timing can apply, except for terrorism financing | Check current AUSTRAC LPP guidance |
Part 4
What Happens After the Report
- Restrict access to the SMR and related decision records.
- Do not tell the customer that an SMR was submitted or required.
- If the service continues, complete enhanced CDD as required.
- Decide whether extra monitoring, limits, approval or exit is needed.
- Keep the report, supporting material, submission receipt and later decisions.
- Respond to lawful AUSTRAC or law-enforcement requests through the approved channel.
Part 5
Common Mistakes
- Waiting for proof of a crime rather than applying the suspicion test.
- Starting the deadline only when the compliance officer reads the file.
- Using a vague narrative that does not explain the reason for suspicion.
- Closing an alert without recording the facts and reason.
- Discussing the report too widely inside the business.
- Failing to apply enhanced CDD when the service continues.
Helpful answers
Common Questions
Short answers to the questions businesses ask most often.
Must a transaction actually happen?
No. The obligation can arise when a person asks for or proposes a designated service, even if the service does not proceed.
Is one red flag enough?
Sometimes, but not always. The full context should be assessed. Several weak indicators may become important when viewed together.
Who should decide whether to report?
The program should name an accountable person or team. In a small business this may be the compliance officer or owner.
Can the customer be told why a service was stopped?
A neutral service or risk explanation may sometimes be possible, but SMR information must not be disclosed in a way that could prejudice an investigation. Get advice in a close case.
Does privilege remove every reporting duty for lawyers?
No. Legal professional privilege protects qualifying information, not every fact held by a legal practice. Current AUSTRAC privilege guidance should be followed.
Reference
Official Sources
This guide cites the following sources.
- Primary lawFederal Register of LegislationAnti-Money Laundering and Counter-Terrorism Financing Act 2006
The current Australian AML/CTF Act, including program, CDD, reporting, governance and record-keeping duties.
- Regulator guidanceAUSTRACSuspicious matter reports
How to identify, assess and report a suspicious matter, including submission deadlines.
- Regulator guidanceAUSTRACCustomer due diligence
Current guidance on initial, ongoing, simplified and enhanced customer due diligence.