A suspicion is enough to trigger a report. You do not wait for proof, and you do not wait for a colleague to agree with you: the obligation starts the moment the suspicion forms, and the deadline runs from that moment.
A suspicious matter report (SMR) is the report you lodge with AUSTRAC when you suspect a customer or a transaction is connected to money laundering, terrorism financing, or another serious offence. If you are an accountant, a law practice, a conveyancer, a real estate agency, a dealer in precious metals and stones, or a trust and company service provider, you became a reporting entity on 1 July 2026 to the extent you provide a designated service: a service the Act lists as captured, whether that is the professional services in Table 6, real estate services in Table 5, or precious metals and stones in Table 2. From that point, forming the suspicion obliges you to report under s41 of the AML/CTF Act 2006 (Cth).
The report exists so that AUSTRAC sees what you see. A customer who looks clean to one firm can look different to another, and an SMR is how a single transaction finds its way into the wider picture. Filing an SMR is not an accusation. It states what you reasonably suspect, and it does not require you to be right, because the matter is assessed further up the chain.
What counts as a suspicion, and when the three-day clock starts
A suspicion is a state of mind. You have reason to think something is wrong with a customer’s activity, without being able to prove it and without believing it beyond doubt. The Act frames the test as a suspicion held on reasonable grounds, which is a lower bar than belief or proof. What matters is what you knew at the time, not what later turns out to be true.
In practice the signs are ordinary. Cash amounts that do not fit the customer’s business, payments that circle through related parties, instructions that contradict what the customer told you: any of these can form a suspicion on reasonable grounds. The suspicion usually forms with the person closest to the activity: the person who takes the instruction, processes the payment, or reviews the file.
Reasonable grounds is a basis you can point to, not a bare guess. The amount, the pattern, the contradiction: you can name what raised the doubt, even if you cannot prove what it means. You rarely need to name the exact offence, because describing the matter is the point of the report. A suspicion can come from a single transaction or from a pattern across several, and either way the clock starts when the suspicion forms, not when the pattern becomes obvious.
The clock starts when the suspicion forms: when the facts are before the person who holds them, and that person registers what they mean. It does not start when someone classifies the matter, when the file reaches your AML/CTF compliance officer (the AMLCO), or when the report is drafted. The deadline is counted in business days, so weekends and public holidays do not count.
| Situation | What you file | Deadline |
|---|---|---|
| You suspect a customer or transaction on reasonable grounds | SMR | 3 business days from when the suspicion forms (s41(2)) |
| Part of the grounds is privileged | SMR plus an LPP form | 5 business days (s 41(2)(aa)) |
| The suspicion relates to terrorism financing | SMR | 24 hours from when the suspicion forms |
The first row is the default. An LPP form is the privilege claim form AUSTRAC accepts in place of the withheld information, and the five-day path exists only because you are filing one: where no part of the grounds is privileged, the report is due in three business days.
Terrorism financing is 24 hours, and privilege buys no extension. Where the suspicion relates to terrorism financing, the deadline is 24 hours from the moment the suspicion forms. Apply the five-day privileged rule to a terrorism financing matter and you miss a statutory deadline by roughly four days. The three filing paths on the legal professional privilege page do not stretch that clock.
What goes in the report is the matter as you saw it. The SMR identifies the customer, describes the transaction or activity that concerned you, and sets out the grounds for the suspicion. You lodge it with AUSTRAC in the form AUSTRAC provides, and the AML/CTF Rules (2025) set out the lodgement detail. The exact fields on the current form, and the level of detail AUSTRAC expects in the grounds, are set by AUSTRAC and change over time.
Filing the report does not change your other obligations. Customer due diligence still applies, and the records that support the report are retained for seven years.
Once the report exists, you cannot tell the customer. Section 123 of the Act makes it an offence to disclose anything that would, or could reasonably be expected to, prejudice an investigation, whether or not an investigation has started, with a maximum penalty of two years imprisonment, 120 penalty units, or both. The boundary between a legitimate conversation and a disclosure is the subject of the tipping-off page, and the way you handle the report internally matters as much as what you say: visible flags and file notes can signal the report to the wrong person, and so can declining to act for a customer.
What catches people out
The clock starts when the suspicion forms, not when you classify it. A matter that sits unclassified for a week is consuming its deadline the whole time, and the report that finally goes in is late before anyone formally decided to file it. The date the suspicion formed is then a question AUSTRAC can ask about, so the record of the assessment needs the date and time on it.
Suspicion is a lower bar than belief or proof, and firms routinely wait for more. If you are waiting for evidence that would stand up in court, you are waiting past the deadline: the test is applied to what you knew at the time, and a suspicion on reasonable grounds is enough to file. A report that goes in late because you were still confirming reads poorly in an examination.
You cannot tell the customer, and the desire to warn a client or keep the relationship warm is exactly what s123 exists to restrain. The offence does not require an investigation to have started, so a disclosure made the day after the report is as exposed as one made at any other point. The report can be perfect and the disclosure still an offence.
What is still unsettled
Two things are open. The current SMR form’s fields and expectations are set by AUSTRAC and change over time, and the version in force for Tranche 2 reporters is not something a firm can rely on a template for. The clock is the second: the Act says three business days from when the suspicion forms, but how AUSTRAC measures that window in an examination, and what evidence it accepts that a suspicion formed at one moment rather than another, is not published in a way that settles disputes. Until it is, a dated note of when the suspicion formed is the cheapest protection you have.
Where to start
If your firm has not worked out its SMR process yet, three things do most of the work:
- A dated record of the suspicion: note the date, the time, what you saw, and who held the suspicion, the moment it forms. That note is what the three-day clock runs from.
- A deadline worked out per matter: derived from the offence classification and any privilege claim, not one figure applied to everything. Terrorism financing is 24 hours, privileged grounds are five business days, and everything else is three.
- A named owner and a filing check: the AMLCO or a nominated delegate decides and files within the window, and the report is checked against the current form before lodgement, not after.
How duely handles this
Staff raise a redacted unusual activity report rather than an SMR, so the person who noticed something does not need access to the reporting workflow to escalate it. The AMLCO then makes a two-stage decision, and a five-step wizard produces AUSTRAC SMR 2.0 XML. The deadline is calculated rather than remembered: 24 hours where the suspicion relates to terrorism financing, three business days otherwise. SMR filing is also carved out of the billing controls, because a statutory deadline cannot be made to depend on a subscription being current.