Suspicious matter reports (SMRs)

A suspicious matter report is how reporting entities tell AUSTRAC about transactions or behaviours that may relate to money laundering, terrorism financing, proliferation financing, tax evasion or other serious crime.

The legal threshold. Under s 41 of the AML/CTF Act 2006 (Cth), an SMR must be filed when, in the course of providing or proposing to provide a designated service, you form a suspicion on reasonable grounds that the customer or transaction is connected to criminal activity. "Reasonable grounds" is an objective standard — would a reasonable person, with your information, hold the same suspicion. It is not certainty. It is not proof. It is a suspicion that is more than vague unease.

Deadlines.

• Terrorism-financing suspicions: within 24 hours of forming the suspicion. The legal-professional-privilege extension below does NOT apply — TF deadlines are absolute.
• Most other suspicions (money laundering, proliferation financing, tax evasion, proceeds of crime, structuring): within 3 business days.
• Legal professional privilege matters: 5 business days — but only for non-TF suspicions, and only where the privilege belongs to someone other than the reporting entity (typically a client). If all grounds for suspicion are privileged, no SMR is required at all.

The clock starts when the suspicion is formed, not when it is "confirmed."

Tipping off. Once you have formed a suspicion or filed an SMR, s 123 stops you disclosing that fact to the customer or to anyone else outside the permitted purposes (your Compliance Officer, your lawyer, AUSTRAC). The provision was amended in March 2025: the test is now outcome-focused rather than strict liability, but the penalties still bite — up to 2 years' imprisonment, 120 penalty units (currently $39,600), or both. This is why enhanced due diligence on a suspicious customer can feel uncomfortable; you cannot tell them why you are asking the extra questions.

Safe harbour. Section 235 of the Act gives civil and criminal immunity for SMRs filed in good faith. You cannot be sued by the customer for filing, you cannot be charged with breach of confidence, and you cannot be held liable for honest mistakes in the report. The protection is broad and is intended to remove any disincentive to report.

How to file. SMRs go through AUSTRAC Online. The form asks for customer details, the transaction, the grounds for suspicion and supporting evidence. Filing is free. Records of the SMR and the underlying suspicion must be retained for seven years.

What is reportable in real estate? Common triggers include large cash deposits for residential property, sudden requests to change buyer entities at settlement, third-party funding without explanation, vendors selling well below market for opaque reasons, and reluctance to provide identification documents.

Agencies that handle this well build a low-friction internal escalation path so frontline agents can flag concerns to the Compliance Officer without making a public decision themselves.

What to do next. Document an internal SMR escalation procedure — who an agent tells, how the decision is recorded, who files — and brief every agent on the tipping-off rule.