Suspicious matter reports: when to lodge an SMR with AUSTRAC
When a suspicion means an SMR, the 24-hour and 3-business-day deadlines, what goes in the report, and what you can't tell the client afterwards.
A suspicious matter report (SMR) is the report you give Australian Transaction Reports and Analysis Centre (AUSTRAC) when you suspect, on reasonable grounds, that a customer or something about a designated service you provide, or are asked to provide, may be connected to crime. You don't need proof. You lodge it in AUSTRAC Online within 3 business days after the day you form the suspicion, or within 24 hours if it relates to terrorism financing. It applies to every business that provides a designated service, and since 1 July 2026 that includes the Tranche 2 sectors: accountants, lawyers, conveyancers, real estate agents, trust and company service providers and dealers in precious metals and stones.
This guide covers when the obligation arises, what reasonable grounds means, what goes in the report and what you must not say afterwards. How to find each report type in the portal, and the other reports you may owe, are in AUSTRAC reporting forms.
What the law says
- Trigger
- A suspicion on reasonable groundsAbout identity, tax evasion, any offence, proceeds of crime, money laundering or terrorism financing (Act s 41(1)). No proof needed
- When it can arise
- Providing, proposing, or being asked about a designated serviceEven if you never take the person on
- Deadline
- 3 business days, or 24 hours24 hours for terrorism financing; otherwise 3 business days after the day you form the suspicion (s 41(2))
- Penalty
- Civil penalty provisionSection 41(2)
- If you keep acting
- Enhanced customer due diligenceAct s 32(b)
- Tipping off
- A criminal offence (s 123)Up to 2 years’ imprisonment or 120 penalty units, or both
- Where
- AUSTRAC OnlineThe new SMR form for businesses enrolled after 30 March 2026
Sources: Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (ss 32, 41, 123); AUSTRAC, Suspicious matter reports Reviewed
Section 41 of the AML/CTF Act creates the suspicious matter reporting obligation. It has two parts: a moment when the obligation can arise, and a suspicion that you hold at that moment or later.
The moment is any of these: you start, or propose, to provide a designated service to a person; the person asks you for a designated service of a kind you ordinarily provide; or the person asks whether you would be willing to provide one. So the obligation can arise even when you never take the person on. AUSTRAC gives the example of a customer who wants to break a payment into amounts under A$10,000 to avoid a threshold transaction report, where you decline the work but still report.
The suspicion, formed on reasonable grounds, is one of these:
- the person, or an agent dealing with you for them, is not who they claim to be;
- information you have about the service may be relevant to investigating or prosecuting tax evasion, or any offence against a Commonwealth, state or territory law;
- the information may assist in enforcing proceeds of crime laws;
- the service is preparatory to, or the information is relevant to, a money laundering or terrorism financing offence.
Section 41(2) is a civil penalty provision, so a missed or late report can lead to civil penalty proceedings as well as other enforcement action. You must lodge a new SMR each time you form a new suspicion, even about a customer you have already reported, and AUSTRAC asks you to include the reference numbers of earlier reports.
When the report is due
| Your suspicion relates to | Lodge within | Act |
|---|---|---|
| Terrorism financing | 24 hours after you form the suspicion | s 41(2)(b) |
| Anything else: identity, tax evasion, other offences, proceeds of crime, money laundering | 3 business days after the day you form the suspicion | s 41(2)(a) |
| Anything except terrorism financing, where you reasonably believe some of the information is privileged and the privilege belongs to someone else | 5 business days after the day you form the suspicion | s 41(2)(aa) |
The clock starts when you form the suspicion, not when the unusual activity happened or when someone first noticed it. That is why the Rules require your anti-money laundering and counter-terrorism financing (AML/CTF) policies to allow a timely review of material that may need reporting, and a decision, as soon as practicable, on whether you hold a suspicion on reasonable grounds (Rules s 5-12). AUSTRAC expects higher-risk matters, such as suspected terrorism, child sexual exploitation or extensive money laundering, to be reviewed first.
Key point
Under Australia's AML/CTF Act, a reporting entity must lodge a suspicious matter report within 24 hours of forming a suspicion related to terrorism financing, and within 3 business days after the day it forms any other suspicion.
If you reasonably believe all of the information behind your suspicion is protected by legal professional privilege, you may refuse to give the report (s 41(2A)). If only part of it is privileged, you lodge the SMR without that part and attach an LPP form. Our guide to AML and legal professional privilege covers how the claim works for law firms.
What reasonable grounds means
From red flag to report
Suspicious matter reporting under the AML/CTF Act and Rules
- Notice
An indicator or alert
A staff member, or your monitoring, flags something unusual and refers it on.
- Review
Timely review of the material
Risk rating, profile, source of funds, any legitimate explanation (Rules s 5-12(a)).
- As soon as practicable
Decide: reasonable grounds or not
Record the reasons either way (Rules s 5-12(b)).
- Within 3 business days
Lodge the SMR in AUSTRAC Online
After the day you form the suspicion. 24 hours for terrorism financing (Act s 41(2)).
Don’t delay it to finish further checks.
- Afterwards
Enhanced CDD if you keep acting, and no tipping off
Act ss 32(b) and 123.
Sources: Anti-Money Laundering and Counter-Terrorism Financing Rules 2025 (s 5-12); Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (ss 32, 41, 123); AUSTRAC, Suspicious matter reports Reviewed
Reasonable grounds is an objective test. AUSTRAC describes it as whether a reasonable person in your position, with the facts and information you had or could reasonably be expected to have had, would form the same suspicion. You don't need to be certain a crime has occurred, know what the crime is, or be able to identify the offender or the victim.
AUSTRAC suggests what to weigh in an initial assessment: the customer's risk rating, whether the activity fits their profile, their identity, source of funds and source of wealth, whether they seem to act on someone else's instructions, any legitimate explanation, and earlier investigations. Three outcomes follow:
- No reasonable grounds. No report. AUSTRAC suggests a short written record of why, which helps if the customer's behaviour comes up again.
- Still uneasy, but not enough to go on. Keep monitoring, make further enquiries and keep a record of what you did.
- Reasonable grounds. Lodge the SMR within the deadline. Don't hold it back to finish further checks first.
Red flags AUSTRAC lists
One indicator on its own may have an innocent explanation. Several together usually need a closer look. Among the common indicators AUSTRAC lists, these are the ones a professional firm is most likely to see:
- the customer wants to stay anonymous, or seems to be acting for someone they won't name;
- they are evasive, refuse to explain why they want the service, or ask whether you report to AUSTRAC, the Australian Taxation Office (ATO) or police;
- identity documents look forged or altered, or the name on the ID differs from the name on the payment;
- they appear in adverse media, on a sanctions list, or use different versions of their name;
- a transaction is unusually large or complex for their profile, involves a higher-risk country, or cash is split into amounts under A$10,000 with no clear purpose.
For real estate agents, the Rules add one specific point. Where the other party to a sale (the buyer when you act for the seller, or the seller when you act for the buyer) won't cooperate with your customer due diligence, you must take that failure into account when deciding whether you have reasonable grounds for a suspicion (Rules s 9-4A), and record that you considered it (Rules s 6-33). Counterparty CDD for real estate agents sets out that check.
What goes in an SMR
A report must be in the approved form, contain the information the Rules specify and include a statement of the grounds for your suspicion (s 41(3)). Division 1 of Part 9 of the Rules lists the information. In summary:
- your business's full name and AUSTRAC identifier, the date of the report and the date the obligation arose (Rules s 9-2);
- the name, position and contact details of the person completing the report, and of the person who can explain how the suspicion was formed;
- any earlier report to AUSTRAC that is relevant, and any report of the same matter to another agency;
- details of the person the suspicion relates to, and of anyone else involved in facilitating, funding or benefiting from the matter, with their relationship (Rules s 9-3);
- the suspicious activity itself: the designated services, accounts and transactions involved and, where relevant, property transfers such as real estate, products such as bullion, online activity and virtual assets (Rules s 9-4).
Writing the grounds for suspicion
The grounds are the part an analyst reads first. AUSTRAC's advice is to open with one or two sentences that say what you think is happening, who is involved and which service was used. Follow with the events in order, then who, what, where, when, why and how. Write in plain English, explain your own industry's terms, and avoid internal team or system names AUSTRAC won't know.
A weak opening says only that the activity "looks suspicious". A strong one reads like this: "Our client asked us to set up a trust and pay A$48,000 into it in cash at our office, in five amounts under A$10,000. The client could not say where the money came from and asked whether we tell the ATO about cash. We suspect the client is structuring cash to avoid reporting and may be laundering the proceeds of crime." This example is ours, built on the indicators above.
Leave out tax file numbers, which the Act doesn't authorise you to give AUSTRAC, and placeholder text such as "N/A" or "unknown". If a field isn't mandatory and you don't know the answer, leave it blank.
How to lodge it
You lodge SMRs in AUSTRAC Online. Which form you use depends on when you enrolled. A business that enrolled after 30 March 2026, which includes every Tranche 2 firm, must use the new SMR form from 1 July 2026. Businesses already enrolled on 30 March 2026 can move to the new form at any time up to 30 March 2029.
Make sure the people who may need to lodge have their own AUSTRAC Online access before a report is due, not on the day. AUSTRAC publishes user guides and quick reference guides for the portal, and a bulk reporting method for businesses that lodge many reports.
After you lodge
What you can say to the client, and what you can’t
| Situation | Generally fine | Risks tipping off |
|---|---|---|
| Asking the client for more information | Your AML/CTF obligations require you to keep their details current | Saying you suspect them, or that you must report |
| Ending the relationship | A genuine commercial reason, such as the work being outside your risk appetite | Saying it is because of their activity or a report |
| Inside your business | Staff and senior management who need it to manage the risk | Sharing details with anyone without a genuine need to know |
| Getting advice | Your lawyer, about your AML/CTF obligations | Anyone who may pass it on, such as a journalist |
| Lawyers and qualified accountants | In good faith, dissuading the client from an offence by explaining the law and penalties (s 123(4)) | Mentioning the SMR, or that you must report |
Sources: AUSTRAC, Tipping off; Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (s 123) Reviewed
You don't have to end the relationship. If you keep providing designated services to a customer you have reported, the Act requires enhanced customer due diligence (s 32(b)), and AUSTRAC expects controls that manage the risk, such as closer monitoring or limits on what the customer can use. Our guide to enhanced due diligence covers what that involves. If you can't manage the risk, AUSTRAC expects you to consider whether to keep acting.
Tipping off
Section 123 of the Act makes it a criminal offence to disclose that you have lodged, or must lodge, an SMR, or to disclose the report or its contents, where that would or could reasonably be expected to prejudice an investigation. It applies to the business and to its officers, employees and agents, and it doesn't matter whether an investigation has started. The maximum penalty is 2 years' imprisonment or 120 penalty units, or both.
In practice, when you ask a customer for more information or end a relationship, give a genuine reason that doesn't mention your suspicion: for example, that your AML/CTF obligations require you to keep their details current, or that the work is outside your risk appetite. AUSTRAC says disclosures to your own staff and senior management to manage risk, to your lawyer for advice on your obligations, and to law enforcement agencies are generally not tipping off.
Lawyers and qualified accountants have one specific exception. Disclosing information in good faith to dissuade a client from conduct that is or could be an offence is not tipping off (s 123(4)). Even then, AUSTRAC's guidance is to talk about the law and the penalties, not about any report.
The Act also protects you from criminal or civil action for anything done in good faith to comply with it (s 235), subject to exceptions such as proceedings for offences against the Act itself.
What your AML/CTF program needs
Suspicious matter reporting is part of your AML/CTF program, not a separate task. Your policies must enable a timely review and a decision as soon as practicable (Rules s 5-12) and must include safeguards to prevent tipping off (Rules s 5-13). AUSTRAC also expects them to:
- train customer-facing staff to recognise suspicious activity and refer it on;
- set out how matters are escalated and who decides and lodges, whether that is you as a sole trader, your AML/CTF compliance officer or a team;
- prioritise alerts by risk, and avoid information sitting where the person assessing it can't see it.
The Rules also require you to monitor customers for unusual transactions and behaviour that may lead to an SMR, which is part of ongoing customer due diligence.
Where StackGo fits
StackGo doesn't form suspicions, decide what to report or lodge reports. Those stay with your business, in AUSTRAC Online. What StackGo does is run the identity, screening and re-check steps of customer due diligence inside the practice software you already use, through its Screen and Monitor workflows. A sanctions match, an adverse media hit or a document that doesn't check out is the kind of result your compliance officer then weighs.
Frequently asked questions
Do I need proof before I lodge an SMR?
No. You need a suspicion on reasonable grounds. AUSTRAC says you don't need to be certain a crime has occurred.
Do I report if I didn't take the client on?
Yes, if the suspicion arose when they asked for, or asked about, a designated service you ordinarily provide. The obligation doesn't depend on providing the service.
When does the 3 business days start?
From the day you form the suspicion. You lodge within 3 business days after that day. For terrorism financing it is 24 hours from the time you form the suspicion.
Can I tell the client we've reported them?
No. Telling them, or giving them enough to work it out, can be the tipping off offence in section 123 of the Act.
Do we have to stop acting for a client we've reported?
No. You can continue, but you must apply enhanced customer due diligence and manage the risk.
Sources
Checked on 2 November 2026.
- Anti-Money Laundering and Counter-Terrorism Financing Act 2006, sections 32, 41, 123 and 235 (Compilation No. 63, 1 October 2026)
- Anti-Money Laundering and Counter-Terrorism Financing Rules 2025, sections 5-12, 5-13, Division 1 of Part 9 (ss 9-2 to 9-4A) and sections 12-1 and 12-2 (Compilation No. 1, 31 March 2026)
- AUSTRAC: Suspicious matter reports (updated 9 September 2026)
- AUSTRAC: Tipping off (updated 2 October 2026)
- AUSTRAC: How to get your reporting right (30 September 2026)