Payment patterns
The bookkeeper's advantage is context. A payment that looks normal in isolation can be unusual against the business's history, and the history is in the books. Use the customer's own records as the baseline.
- Payments from third parties unrelated to the business's stated activity
- Round amounts or frequent transfers without a commercial explanation
- Cash deposits inconsistent with the business profile
- Payments split to stay below reporting or review thresholds
- Invoices paid by a different entity from the one on the invoice
Structure and instruction patterns
A client who treats the bookkeeper as a transaction processor rather than an adviser may be avoiding scrutiny. The professional response is proportionate questioning, not confrontation.
- Frequent entity changes, trust structures or director changes without purpose
- Instructions that change repeatedly or avoid written authority
- Reluctance to explain the purpose of transactions
- Use of related parties to move money without economic substance
- New software, payment channels or bank accounts used once and abandoned
Assess, don't accuse
A red flag is an observation. Assess it against the customer's profile, the service and the transaction; consider innocent explanations; and record the assessment. Where the pattern cannot be explained and the statutory suspicion test is met, lodge an SMR within three business days (24 hours for terrorism financing) and protect the information from tipping off.
Do not write the SMR decision into the ordinary client file or tell the client. Use genuine questions and operational reasons in the relationship, and keep the restricted analysis where the program requires.
Build the escalation path
A red-flag guide without an escalation path is a reading list. The program should name the decision maker, the evidence and the deadline, so a bookkeeper who spots a pattern knows exactly what to do next.
- Define in the program which observations escalate and who decides
- Keep an assessment record: observation, context, decision, date
- Connect suspicious activity to CDD review and source-of-funds checks
- Test the path with a controlled scenario
Official sources
Use these primary AUSTRAC pages to confirm the current rules and apply them to your circumstances.
Frequently asked questions
Do bookkeepers have to report suspicious activity?
A reporting entity must lodge an SMR when it forms a reasonable suspicion on the statutory grounds. A bookkeeping practice that provides designated services is a reporting entity for that work.
What if the client's explanation seems plausible?
Then record the assessment and clear the observation. The regime requires genuine assessment, not suspicion of every client. Document why the explanation resolved the concern.
Can we continue doing the books while assessing?
Yes, unless the program, the risk assessment or the law requires you to stop. Continue ordinary service work without disclosing the suspicion.
What records should the assessment leave?
The observation, the context, the steps taken, the decision and the date. If an SMR is lodged, keep the protected analysis in the restricted workflow.
Put it into practice
Cassandra AML turns these obligations into a working system: designated-service decisions, customer due diligence, screening, monitoring and reporting records — hosted in Sydney, free to start.
This guide is general information for Australian professionals. It is not legal advice and does not replace the AML/CTF Act, the AML/CTF Rules or AUSTRAC guidance. Confirm your specific obligations with AUSTRAC or a qualified legal adviser. See our editorial and correction standards.