How to File Your First Suspicious Matter Report (SMR)

Filing a Suspicious Matter Report is one of the most critical obligations under the AML/CTF Act. Get it wrong and you face penalties. Get it right and you are protected. Here is exactly how to do it.

What is a Suspicious Matter Report?

A Suspicious Matter Report (SMR) is a confidential report you must file with AUSTRAC when you form a suspicion about a client or transaction. Under Section 41 of the AML/CTF Act, reporting entities must report suspicious matters within strict timeframes.

The two timeframes: 24 hours vs 3 business days

What triggers an SMR?

You must file an SMR if you suspect on reasonable grounds that:

• The client is not who they claim to be
• The transaction involves money laundering
• The transaction involves terrorism financing
• Information given to you may be relevant to tax evasion
• The transaction has no apparent lawful purpose
• The client is attempting to structure transactions

Step-by-step: Filing your first SMR

1. Document the suspicion internally: Record when you formed the suspicion, what triggered it and the relevant transaction or client details.
2. Determine the timeframe: Is this a 24-hour matter (terrorism/safety) or 3-day matter?
3. Access AUSTRAC Online: Log in to your AUSTRAC Online account. If you do not have one, you must set this up as part of your enrolment.
4. Complete the SMR form: Provide details about the suspicious matter, client identification, transaction details and your reasons for suspicion.
5. Submit and retain confirmation: Keep the AUSTRAC reference number and a copy for your records (7 years).

What NOT to do

Protection for reporters

Under Section 121, you are protected from liability when making an SMR in good faith. You cannot be sued for breach of confidentiality or defamation for filing a report.

Legal professional privilege and SMRs

For lawyers, the interaction between SMR obligations and legal professional privilege (LPP) requires careful navigation. Under Section 242 of the AML/CTF Act, privileged information is generally protected from disclosure.

However, this protection is not absolute. LPP does not apply where:

• The communication was made for an improper purpose (e.g. to facilitate fraud or crime)
• The lawyer is providing a designated service outside of litigation (e.g. conveyancing, trust administration)
• The information relates to the client's identity or the nature of the transaction itself

Practically, this means lawyers providing designated services under Tranche 2 (such as real estate transactions, trust services or company formation) will often find that LPP does not apply to the suspicious matter. The safer approach is to assume the reporting obligation applies unless you have clear advice otherwise.

Note that where LPP applies and you claim it, you must still submit an LPP Form to AUSTRAC within the required timeframe (24 hours for terrorism financing matters or 5 business days for other ML/TF/PF matters). The LPP Form is submitted in addition to the SMR, not instead of it.

Read our complete Tranche 2 Guide

Key dates, affected sectors, obligations and how to prepare