Tranche 2 deadline: 1 July 2026—39 days remaining
Suspicious Matter Reports · Complete Guide · Updated May 2026
How to Submit a Suspicious Matter Report (SMR) to AUSTRAC
A Suspicious Matter Report (SMR) is a mandatory report lodged with AUSTRAC when you form a suspicion on reasonable grounds that a customer or transaction is connected to money laundering, terrorism financing, or other serious crime. From 1 July 2026, all Tranche 2 entities — lawyers, accountants, real estate agents, conveyancers, and jewellers — must lodge SMRs as part of their AML/CTF obligations. Standard SMRs must be lodged within 3 business days of forming the suspicion. Terrorism financing SMRs must be lodged within 24 hours.
Key facts
Last updated: May 2026 · Source: austrac.gov.au ↗
Tipping-off is a criminal offence
Do not disclose to a customer — or anyone else — that you have lodged, are lodging, or are considering an SMR. Maximum penalty: 2 years imprisonment. Source: s.123 AML/CTF Act 2006.
Definition
What is an SMR and when must you lodge one?
An SMR is triggered by suspicion — not by transaction value. You must lodge an SMR whenever you form a suspicion on reasonable grounds, regardless of the transaction amount, regardless of whether the transaction proceeds, and regardless of whether a crime is ultimately found to have occurred. Source: s.41 AML/CTF Act 2006 ↗.
What is a Suspicious Matter Report (SMR)?
A Suspicious Matter Report (SMR) is a mandatory report lodged with AUSTRAC when a reporting entity suspects on reasonable grounds that a customer or transaction is connected to money laundering, terrorism financing, or other serious crimes. SMRs are distinct from Threshold Transaction Reports (TTRs), which are triggered automatically by cash transactions of $10,000 or more. SMRs are triggered by suspicion — not by transaction value. Source: s.41 AML/CTF Act 2006.
Who must lodge SMRs with AUSTRAC?
Every reporting entity under the AML/CTF Act 2006 has an obligation to lodge SMRs. From 1 July 2026, this includes all Tranche 2 entities — lawyers, accountants, real estate agents, conveyancers, jewellers, and precious metals dealers. The obligation applies from the first day they provide a designated service. There is no size exemption, no minimum transaction threshold, and no grace period for small businesses. Source: s.41 AML/CTF Act 2006.
When does the SMR obligation arise?
The SMR obligation arises as soon as a reporting entity forms a suspicion on reasonable grounds. The suspicion may arise before, during, or after a transaction or attempted transaction. It may also arise when a customer makes an inquiry, requests information, or instructs you to carry out an activity that raises concern — even if no transaction ultimately proceeds. Source: s.41 AML/CTF Act 2006.
What is the deadline for lodging an SMR?
Standard SMRs must be lodged within 3 business days of the reporting entity forming the relevant suspicion. Terrorism financing SMRs have a 24-hour deadline — if you suspect funds are connected to terrorism financing or the financing of the proliferation of weapons of mass destruction, you must lodge within 24 hours of forming that suspicion. The clock starts when the suspicion is formed, not when a transaction occurs. Source: s.41(2) AML/CTF Act 2006.
What happens if I miss the SMR deadline?
Failing to lodge an SMR within the required timeframe is a civil penalty contravention. Maximum civil penalties are $33,000,000 for body corporates and $6,600,000 for individuals per contravention. AUSTRAC may also issue infringement notices for less serious contraventions. Late lodgement does not extinguish the obligation — you should still lodge as soon as possible and document why the delay occurred. Source: Part 15 AML/CTF Act 2006.
Suspicion indicators
Common red flags that trigger the SMR obligation
The following patterns are recognised by AUSTRAC and international AML/CTF guidance as indicators that warrant further inquiry and, where a suspicion forms, an SMR. This list is not exhaustive — any matter that gives you reasonable grounds for suspicion triggers the obligation.
Structuring
Multiple cash deposits or transactions just below the $10,000 TTR threshold — designed to avoid triggering automated reporting.
Inconsistent profile
Transaction size or type is inconsistent with the client's known income, occupation, or business activities.
Unusual urgency or secrecy
Client insists on unusual speed, refuses standard verification, or asks that records not be kept.
High-risk jurisdiction
Funds sourced from or destined for FATF grey-list or black-list countries without a clear legitimate business reason.
Unexplained wealth
Client cannot or will not explain the source of funds for a significant transaction.
False or inconsistent ID
Identification documents are inconsistent, appear altered, or conflict with other information the client has provided.
PEP involvement
Client is or is connected to a politically exposed person (PEP) — foreign official, senior government figure, or their family or close associates.
Complex ownership
Transaction involves multiple layers of companies, trusts, or offshore entities with no apparent legitimate commercial purpose.
What must an SMR include?
An SMR must include: the reporting entity's details (AUSTRAC enrolment ID, entity name, ABN); the customer's identifying information (name, DOB, address, identification documents); a description of the suspicious matter — what gave rise to the suspicion, what activity or transaction was involved, what the customer said or did; the amount, currency, and nature of any transaction; any other parties involved; and your assessment of the type of offence you suspect. AUSTRAC Online provides a structured form covering all required fields.
What counts as a 'suspicion' for SMR purposes?
Suspicion under the AML/CTF Act is judged on an objective reasonable grounds standard — not a mere hunch, but not proof either. You have reasonable grounds for suspicion if, having regard to all the facts and circumstances you are aware of, a reasonable person in your position would form a suspicion. Common triggers include: structuring cash to avoid threshold reporting; inconsistency between a client's known profile and transaction value or type; unusual urgency or secrecy around a transaction; involvement of high-risk jurisdictions; unexplained sources of funds; and inconsistent or false identification documents. Source: s.41 AML/CTF Act; AUSTRAC SMR guidance 2026.
Step-by-step
How to submit an SMR to AUSTRAC — step by step
Follow these steps in order. The tipping-off prohibition applies from the moment suspicion forms — before you decide whether to lodge.
Identify the suspicion
Document exactly what gave rise to your suspicion — what the client said or did, what was inconsistent, what red flags were present. Write this down immediately, in your own words, with dates and times. Courts and AUSTRAC will assess whether your suspicion was formed on 'reasonable grounds', so contemporaneous notes are critical.
s.41 AML/CTF Act 2006
Escalate to your Compliance Officer
Your AML/CTF program should require all suspected matters to be escalated to the Compliance Officer before lodgement. The Compliance Officer reviews the matter, makes the lodgement decision, and retains the escalation record. For sole practitioners, this step is still required — you are your own Compliance Officer and must document your own decision-making process.
Do not tip off the customer
Before, during, and after lodgement, do not disclose to the customer — or anyone else — that you have lodged or are considering an SMR. Tipping off carries criminal penalties of up to 2 years imprisonment. If you need to disengage from the client, do so without revealing the reason.
s.123 AML/CTF Act 2006
Log in to AUSTRAC Online
Navigate to online.austrac.gov.au and log in with your enrolled entity credentials. If you have not yet enrolled, you must do so before you can lodge. Enrolment opens 31 March 2026 and must be completed by 29 July 2026 for Tranche 2 entities. SMR lodgement requires an active enrolled account.
Complete the SMR form
Select 'Lodge a report' → 'Suspicious Matter Report'. Complete all required fields: your entity details, the customer's identifying information (name, DOB, address, ID documents), a clear narrative description of the suspicious matter, transaction details (amount, date, currency, account), other parties involved, and the suspected offence type. AUSTRAC Online saves drafts automatically.
Submit and record the confirmation number
Submit the completed SMR. AUSTRAC Online generates a confirmation number. Record this number immediately — it is your proof of lodgement. Save a copy of the completed SMR and all supporting documents. Retain for 7 years from lodgement date.
s.112 AML/CTF Act 2006
SMR vs TTR · Portal · Safe harbour
SMR vs TTR, how to lodge, and your safe harbour protection
Do I need to tell my customer I am lodging an SMR?
No. Tipping off — disclosing to a customer or any other person that you have lodged, are lodging, or are considering lodging an SMR — is a criminal offence under s.123 of the AML/CTF Act. Maximum criminal penalty is 2 years imprisonment. You cannot disclose the existence of an SMR even if a client asks directly whether you have reported them. You may need to take care in how you communicate decisions to disengage from a client to avoid inadvertently tipping off. Source: s.123 AML/CTF Act 2006.
Can I withdraw from acting on a matter when I suspect money laundering?
Yes. If you form a suspicion about a client or transaction, you are not required to continue acting. You may decline to proceed with the transaction or disengage from the client. You should take care that your disengagement communications do not disclose the existence of your suspicion or the SMR. Do not give a reason that reveals your concern — a general statement that you are unable to act further is preferable to any explanation that points to AML/CTF concerns. Your AML/CTF program should contain a procedure for disengagement in these circumstances.
What is the difference between an SMR and a TTR?
A Threshold Transaction Report (TTR) is triggered automatically when you handle a cash transaction of $10,000 AUD or more (or foreign currency equivalent). It is a mechanical obligation — the only question is whether the transaction met the cash threshold. A Suspicious Matter Report (SMR) is triggered by suspicion — it can be for any amount, any transaction type, and must be lodged even if no transaction ultimately proceeds. The two obligations can overlap: a cash transaction over $10,000 that is also suspicious requires both a TTR and an SMR. Source: ss.41, 45 AML/CTF Act 2006.
How do I submit an SMR to AUSTRAC?
SMRs are lodged through AUSTRAC Online at online.austrac.gov.au. You must be enrolled with AUSTRAC before you can access the portal. Once enrolled, you log in, navigate to 'Lodge a report', select 'Suspicious Matter Report', and complete the structured online form. AUSTRAC Online saves drafts, allows you to attach supporting documents, and generates a confirmation number upon submission. Keep the confirmation number and a copy of the completed SMR for your records — SMRs must be retained for 7 years. Source: AUSTRAC Online portal guidance.
Can I lodge an SMR by email or phone?
No. SMRs must be lodged electronically through AUSTRAC Online. Phone and email lodgement are not available for standard SMRs. If you are experiencing technical difficulties with AUSTRAC Online and a terrorism financing SMR is due within 24 hours, contact AUSTRAC directly by phone to discuss lodgement options. For standard 3-business-day SMRs, resolve any system access issues before the deadline. Source: AUSTRAC Online lodgement guidance.
Are SMRs kept confidential?
Yes. The existence and content of SMRs are protected information under the AML/CTF Act. AUSTRAC uses SMR data for intelligence and financial crime investigation purposes and shares it with law enforcement agencies and partner agencies (including the ATO, AFP, and ASIC) under authorised arrangements. SMR information is not publicly disclosed. AUSTRAC will not confirm to any private party whether an SMR has been lodged about them. Source: Part 11 AML/CTF Act 2006.
Does lodging an SMR protect me from civil or criminal liability?
Yes. The AML/CTF Act provides a safe harbour for reporting entities that lodge SMRs in good faith. Lodging an SMR in good faith does not breach any duty of confidentiality, does not constitute a contravention of any other law, and does not result in civil or criminal liability to the reporting entity or its employees. The protection does not apply to information lodged in bad faith or to disclosures made outside the authorised reporting process. Source: s.44 AML/CTF Act 2006.
Common questions
Frequently asked questions about SMRs
What records do I need to keep for SMRs?
You must retain a copy of every SMR you lodge, together with any supporting documents — CDD records, transaction records, correspondence, and any internal escalation notes — for a minimum of 7 years from the date the SMR was lodged. AUSTRAC may request SMR records during a compliance review. Records must be stored securely, access-controlled, and retrievable within any timeframe AUSTRAC specifies. Source: ss.112, 162 AML/CTF Act 2006; Part 10 AML/CTF Rules 2007.
Can Klyvon help me draft an SMR?
Yes. Klyvon's AI SMR Assistant generates a 6-section AUSTRAC-formatted SMR draft from your transaction details in under 60 seconds. The draft covers all sections required by AUSTRAC Online — entity details, customer details, description of the suspicious matter, transaction details, associated parties, and suspected offence type. The draft is a starting point for review by your compliance officer before submission. All decisions and final lodgement remain with your firm. Available on the Compliance Pro plan.
How Klyvon helps
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SMR drafts must be reviewed by your compliance officer before submission to AUSTRAC. All decisions and final lodgement remain with your firm. Available on the Compliance Pro plan — 25 SMR drafts per month.
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