When you have reasonable grounds to suspect a crime, and you don't need proof.
If a customer or transaction raises a suspicion while you're providing (or about to provide) a designated service, you generally have 3 business days to lodge a suspicious matter report (SMR) with AUSTRAC, or 24 hours, if it relates to terrorism financing.
Reporting is the obligation newly regulated real estate agencies, accountants and law firms tend to find most confronting. That's understandable: it asks you to act on a feeling about a client. This guide walks through what to look for, when to report, and the one thing you must never do.
Why is this coming up now?
Since 1 July 2026, real estate, legal, accounting and other Tranche 2 businesses have had to report suspicious matters to AUSTRAC. At the end of September, AUSTRAC published a refresher on reporting for newly regulated sectors, covering both suspicious matter reports and threshold transaction reports (AUSTRAC).
It's a timely reminder. Now that AUSTRAC has started enforcing enrolment, the next question is whether programs work in practice, and reporting is one of the clearest tests of that.
What is a suspicious matter report?
A SMR is a confidential report to AUSTRAC. You make one when, in providing or proposing to provide a designated service, you form a suspicion on reasonable grounds of:
- money laundering or terrorism financing
- fraud or tax evasion
- another crime;
- a customer or agent of the customer is not who they say they are
The test is objective: would a reasonable person in your position, looking at the same facts, reach the same conclusion? You don't need to prove a crime, you simply need to flag suspicion and report it. This new regime is only successful if collectively we are able to combat acts of financial crime, and therefore its imperative businesses shine a light on anything that looks suspicious. The obligation can arise even if the deal never goes ahead (AUSTRAC).
How quickly do I need to report?
- Within 24 hours if the suspicion relates to terrorism financing
- Within 3 business days if it relates to any other reportable suspicion
A separate threshold transaction report is needed when you receive physical cash of $10,000 or more, whether or not anything seems suspicious (AUSTRAC). Firms should seek advice on their specific obligations.
What does "suspicious" look like in a property deal?
AUSTRAC's education material for real estate lists red flags across customers, transactions, delivery channels and countries (AUSTRAC). Some everyday examples:
- a buyer who is evasive or reluctant to provide ID, or walks away when questioned
- a buyer who can't explain where the money is coming from, or pays in cash
- payments from third parties, private lenders or offshore accounts with no clear reason
- unusual pressure to settle quickly, or last-minute contract changes
- layers of companies and trusts that make it hard to see who really owns the property
- a buyer who has never inspected the property and insists on dealing only by email
One red flag doesn't automatically mean a report. It means pause, ask sensible questions, and record what you found and decided. When teams are effectively trained on spotting red flags and steps to follow they can lodge Unusual Matter Reports (UMR) inside a compliance platform such as Visibl, this ultimately alerts the appointed compliance officer to something unusual. The compliance officer can then make a judgement as to whether to lodge a SMR with AUSTRAC.
What is tipping off, and why does it matter?
Once you've reported, or are planning to, you must not tell the customer or anyone else in a way that could prejudice an investigation. Tipping off is a criminal offence under section 123 of the AML/CTF Act, with penalties that include up to two years' imprisonment (AUSTRAC).
That has a practical consequence for how you store information. SMR decisions are among the most sensitive records your business holds. If they sit in a CRM or shared inbox that the whole office can see, you raise the chance of someone accidentally letting it slip. Keep suspicious matter records in a secure, access-controlled place, and limit who can see them to the people who need to.
What should my team do when something feels off?
Your AML/CTF policy should already answer this. The challenge is making sure your team knows where to find the answer. Kaan Yuksel, Visibl's founder and a certified AML specialist, says:
"Yesterday we got a question from a client: I've got a PEP, what do I do now? My response: read section 9 of your AML policy. It tells you exactly what actions you need to take next."
A simple escalation path looks like this:
- Notice: an agent spots a red flag and keeps dealing with the customer normally.
- Escalate: they raise a UMR in your compliance platform that privately alerts your AML/CTF compliance officer, not with the customer or the wider office.
- Assess: the compliance officer reviews the facts and asks for more information or documents if needed.
- Decide and record: report to AUSTRAC within the timeframe if the suspicion holds, and document the reasoning either way.
- Manage the relationship: decide whether to continue, apply extra checks or decline, without revealing the report.
Most customers will never trigger this. As Kaan puts it, the aim of completing compliance checks on your customers is to receive a full risk profile, understand any potential risks, and have fast access to a specialist in the moments you need one.
Frequently asked questions
Do I need proof before lodging an SMR?
No. The test is reasonable grounds for suspicion, not proof.
How long do I have to lodge an SMR?
Generally 3 business days after forming the suspicion, or 24 hours in circumstances related to terrorism financing.
Can I tell my client I've reported them?
No. Disclosing a report or its existence in a way that could prejudice an investigation is tipping off, a criminal offence under the AML/CTF Act.
Do I need to report if the sale doesn't go ahead?
The obligation can arise when you're proposing to provide a service, so a deal falling over doesn't automatically remove it. Seek advice on your situation.
Is a cash deposit of $10,000 or more always suspicious?
Not necessarily, but it triggers a separate threshold transaction report regardless of suspicion.
Not sure your team would know what to do?
Book a free Visibl compliance health check. One of our certified AML specialists will walk through your reporting and escalation process and show you where the gaps are.
This article is general information only and isn't legal advice. Firms should seek advice on their specific obligations.