Suspicious matter reports (SMRs)

SMRs only relate to matters involving designated service. This includes when you start providing designated services, or when you are asked about providing designated services as part of your normal business activities.

You must submit an SMR if you have reasonable grounds to suspect that the customer or transaction is related to one of the following offences:

• terrorism financing
• money laundering
• an offence against a Commonwealth, state or territory law
• proceeds of crime
• tax evasion
• someone is not who they claim to be.

Reasonable grounds for suspicion

You must submit an SMR if you have ‘reasonable grounds’ for suspicion. This means that after considering all the information and circumstances available, a reasonable person would conclude that an SMR should be submitted. In the report you will be asked to explain what has made you suspicious.

If you or anyone in your business or organisation notices something unusual you must conduct enhanced due diligence checks to determine if you have reasonable grounds for your suspicion. Once the appropriate person in your business or organisation has completed the checks and ‘forms a suspicion’, you must submit an SMR within the required timeframe.

You or your staff, including your AML/CTF compliance officer don’t have to know exactly what criminal activity your customer might be involved in, or where the suspect funds or property came from, to make an SMR.

To help you identify suspicious activity and prevent customers using your business or organisation to launder money or finance terrorism, you must have systems and controls in relation to:

• ML/TF risk assessment
• customer identification procedures
• a transaction monitoring program
• AML/CTF risk awareness training program for employees

They should be designed to help you identify and check suspicious activity or customer behaviour so you can decide whether you need to report it to us.

It’s important to remember that not all unusual customer behaviour is suspicious. Sometimes customers have irregular transaction patterns or account activity. When this happens, you should use enhanced customer due diligence procedures to help you decide if the activity is suspicious and needs to be reported through an SMR.

An SMR must include details about your business or organisation and everything you know about:

• the suspicious matter
• the person/organisation it relates to
• any transactions involved.

For individuals, you must include, if known:

• their full name, address and telephone number
• their date of birth
• country of citizenship
• occupation, type of business activity and ABN
• email address
• any other name they use
• a description of the documents or electronic data you used to verify their identity.

If you don’t know someone’s identity, the SMR should instead include:

• a description of the person
• whether you have any video footage or photographs of them
• their address and email address, if known.

What makes a good SMR

A good SMR explains clearly and concisely why you think the customer’s behaviour is suspicious. Use your own words and include as many details as possible. For example, if you can’t identify the customer, you might include details about how old they looked, what they were wearing, the colour of their hair, how they walked and whether they wore any noticeable jewellery or had any tattoos. If you do know them, you might include any nicknames they use. Include as much detail as you can about your interactions with them – the questions they asked, the way they acted – and why these things made you suspicious. The information you provide can help detect and prevent serious crime.

Every provider of designated services must make an SMR if they have reasonable suspicions about a customer. This includes an affiliate of a remittance network provider (RNP), however if the affiliate and the RNP have a written agreement, and the suspect transaction has been made using the RNP’s network, either one can submit the SMR.

You are exempt from making an SMR if you provided the designated service at or through a permanent establishment in a foreign country.

You can submit an SMR through your AUSTRAC Online account.

1. Log in to AUSTRAC Online 
2. Navigate to the transaction reporting menu
3. Select the + sign next to the transaction reporting menu, then select ‘create amend reports’ and ‘SMR’
4. Complete and submit your report.

There are detailed instructions on how to fill in an SMR form in AUSTRAC Online.

The SMR reporting deadlines start once you have formed your suspicion, which may be at any time in your business relationship. A suspicion is only ‘formed’ after the appropriate person in your business or organisation has conducted enhanced due diligence checks and determined that there are reasonable grounds for suspicion.

For example, a bank teller who doubts that a customer is who they claim to be should tell their supervisor, who should alert the bank’s AML/CTF compliance officer. The SMR reporting time frame only starts once the compliance officer has finished their own investigation and has formed a suspicion on ‘reasonable grounds’.

You don’t have to end your business relationship or stop providing designated services to a customer because you have formed a suspicion about them. You should use your own risk-assessment policy and procedures to decide whether to continue doing business with them.

If you do decide to end the business relationship, you must not tell the customer that you have formed a suspicion or that you have reported an SMR to us.  If you do so, it is called ‘tipping off’ and is against the law.

About ‘tipping off’

You must not tell anyone other than AUSTRAC that you have formed a suspicion about a customer or that you have submitted an SMR, unless you have an official exemption. Revealing this information is an offence that’s punishable by up to two years jail and/or a fine of up to 120 penalty units. Find out more about consequences of not complying.

Your other obligations when you submit an SMR include:

• not revealing any information that might reasonably lead a person to conclude that you have formed a suspicion about them or have told AUSTRAC about that suspicion
• not revealing any requests AUSTRAC or law enforcement agencies make for more information about an SMR.

Once you form a suspicion about a customer, be discreet when seeking further details so they don’t realise you may make, or have already made, an SMR. However, asking the customer for more information, including about their identity or the source or destination of their funds, is not considered ‘tipping off’.

You can’t give information about a specific SMR to any external parties appointed to review your AML/CTF program, even if they are reviewing your SMR obligations.

Exemptions

There are some situations where you are allowed to disclose that you have formed a suspicion about a customer. The exemptions to ‘tipping off’ are when:

• you are a legal practitioner or qualified accountant who has suspicions about a client and want to persuade them not to do something illegal
• you want to get legal advice relating to your suspicion from a legal practitioner
• you are a member of a designated business group (DBG) with a joint AML/CTF program and need to inform other members of the group of the risks involved in dealing with the customer
• you are a member of a corporate group and need to tell someone in the group about the risks involved in dealing with the customer
• you are a remittance network provider(RNP) giving information about the customer to one of your affiliates, or you are an affiliate giving information to your RNP
• you are an authorised deposit-taking institution (ADI) giving customer information to an owner-managed branch of the same ADI
• you are disclosing information in compliance with a Commonwealth, state or territory law
• you are disclosing information to an Australian law enforcement body, such as the Australian Federal Police or the Australian Crime Commission
• you are disclosing to a law enforcement agency that a customer may be on a government sanctions list and you are freezing their assets under the Charter of the United Nations Act.

To help with our investigations, we may ask you for more information about an SMR you’ve submitted. Our partner agencies also have the right to ask for further information in some circumstances. We will issue a written notice asking for this information. This might include asking you for further details about the customer or a specific transaction or account. If you don’t provide the information when asked you can be fined.

The SMR you submit is not admissible as evidence in court, but it can be used in criminal proceedings for some AML/CTF Act offences, such as if you tip off a customer or provide false or misleading information.

If you submit an SMR late – or don’t submit one when you should – you can be fined up to 20,000 penalty units in the Federal Court of Australia, or 100,000 penalty units if you’re a body corporate. Find out more about consequences of not complying.