What forms a 'suspicion'?
The threshold is lower than proof. You report when you suspect, on reasonable grounds, that a person or transaction may be connected to money laundering, terrorism financing, tax evasion or other serious crime. Reasonable grounds means more than a vague feeling and far less than certainty: a coherent reason a sensible professional would share.
- Funds or instructions with no credible commercial explanation
- Clients who obscure who really owns or benefits from a structure
- Third parties paying or receiving money without a logical connection
- Unusual urgency, secrecy or reluctance to provide routine verification
- Transactions inconsistent with the client's known profile
Deadlines
The clock runs from when the suspicion forms — which is why practices must record when a concern was first raised and how it was assessed. Business-day deadlines should account for weekends and public holidays; guessing is not a control.
- Suspicion of terrorism financing: within 24 hours
- Other suspicious matters: within 3 business days of forming the suspicion
- Threshold transaction reports (cash of A$10,000+): within 10 business days
Tipping off: the criminal offence
Section 123 of the AML/CTF Act makes it a criminal offence — carrying up to two years' imprisonment — to disclose protected SMR-related information where the disclosure would or could reasonably be expected to prejudice an investigation. Use normal, genuine CDD and service communications that do not reveal the suspicion, and restrict protected information to people with a legitimate need to know.
Structurally, SMR handling should be firewalled: only the compliance officer and those they deliberately involve should know a report exists. Shared inboxes, open file notes and team dashboards are tipping-off risks. Cassandra AML restricts suspicious-matter records to specifically authorised staff for exactly this reason.
The internal SMR path every practice needs
- Any staff member can raise a concern to the compliance officer — privately, in writing, immediately
- The compliance officer assesses: report, or do not report with recorded reasons
- If reporting: prepare the SMR, lodge through AUSTRAC Online, record the lodgement and receipt
- Access to the SMR record is restricted; continue, restrict or exit only after the documented risk decision, and apply enhanced CDD if service continues after an SMR obligation
- The decision and every date are kept for seven years
Official sources
Use these primary AUSTRAC pages to confirm the current rules and apply them to your circumstances.
Frequently asked questions
Will lodging an SMR get my client in trouble — or me?
An SMR is intelligence, not an accusation, and lodging one made in good faith is protected. Failing to lodge when you held a genuine suspicion is the legally dangerous path. Your obligation is to report the suspicion, not to investigate it.
Can I ask the client more questions before deciding?
You may conduct genuine due diligence and service communications that do not reveal the suspicion or protected SMR-related information. Do not delay past the reporting deadline once reasonable grounds for suspicion exist, and escalate promptly under the documented internal process.
Do I have to keep acting for a client after lodging an SMR?
That is a documented risk decision for the practice; lodging an SMR does not itself require automatic exit or continued service. If the practice continues providing designated services after the SMR obligation arises, it must apply enhanced CDD while communicating genuinely and avoiding prohibited disclosure. The program should govern and record the decision.
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.