A step-by-step guide to AML reporting in Australia

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AML reporting isn’t just about compliance; it’s a critical tool in combating financial crime.

By identifying and reporting unusual activities, your company contributes to a broader effort that helps state and federal law enforcement track and apprehend criminals attempting to launder illicit funds.

This guide will walk you through the different types of AML reports you must submit, common industry examples and expert operational tips taken from AMLCOs in New Zealand and the UK.

There are five main reports businesses must make to AUSTRAC:

1. Suspicious Matter Reports (SMRs)
2. Threshold Transaction Reports (TTRs)
3. International Value Transfer Services reports (IVTSs)
4. Cross-Border Movement reports (CBMs)
5. AUSTRAC compliance reports

Let's go through what they are and how to submit them.

1. Suspicious Matter Reports (SMRs) – when something seems off

What is an SMR?

Suspicious Matter Reports (SMRs) help track illicit financial flows, disrupt criminal networks and prevent financial system misuse. SMRs are based on suspicion, not value, meaning even small but unusual transactions or behaviour must be reported.

While a single transaction may seem insignificant, when SMRs are collected nationwide, they create a bigger picture of criminal activity, connecting seemingly minor activities to larger money laundering schemes and organised crime networks. 

An SMR must be submitted when you suspect that:

• A person isn’t who they claim to be.
• A transaction looks suspicious or may involve proceeds of crime.
• The transaction is linked to potential tax evasion, fraud or money laundering.
• The transaction might be linked to terrorism financing.

AMLCO tips

• Trust your gut. If something feels off, investigate further.
• Look for patterns - is the client suddenly transacting in an unusual way?
• Use internal collaboration. Consult legal or risk teams before filing to ensure the strongest report.
• Centralise customer data. A full picture of customer activity across departments will help identify suspicious trends.

When to report an SMR

• Within 3 business days of forming the suspicion (most cases).
• Within 24 hours if linked to terrorism financing.

What to report

AUSTRAC has detailed instructions on how what to report, but in essence it covers:

• What makes a good SMR
  Clear explanation of your suspicion, using plain English and is detailed.
• What SMRs must include
  Your business details, information on the SMR, details of who’s involved, as much physical information as possible if the identity isn’t known.
• How to submit a SMR
  Log in, got to the transaction reporting menu, click +, ‘create amend reports’ and ‘SMR’ then complete and submit your report.

Key concept - reasonable grounds

SMRs must be submitted if there are “reasonable grounds” for suspicion. This means:

• A reasonable person would conclude that something is suspicious based on the available information.
• If you or your organisation notice unusual activity, conduct enhanced due diligence checks to assess suspicion.
• If suspicion is confirmed, submit an SMR within the required timeframe.
• You don’t need to know the exact criminal activity or the source of suspect funds to file an SMR.
• Not all unusual behaviour is suspicious - use enhanced due diligence to decide if reporting is necessary.

Industry examples of SMRs

• Law
  A client insists on using a complex trust structure without a clear legal purpose.
• Accounting
  A business client repeatedly submits falsified financial statements.
• Real Estate
  A buyer attempts to purchase a property with multiple small cash payments from unrelated third parties.

2. Threshold Transaction Reports (TTRs)

What is a TTR?

TTRs help authorities track large cash movements and financial institutions must also report suspicious patterns of smaller transactions designed to bypass reporting rules.

A TTR must be submitted for any physical cash transaction of A$10,000 or more (or the foreign currency equivalent) to prevent structuring - the practice of splitting large cash amounts into smaller deposits to avoid detection. Structuring is used to evade AML monitoring and can indicate criminal activity.

Note that from 7 January 2025, Solicitors are not required to submit reports of significant cash transactions (SCTRs). Tranche 2 reforms will introduce new regulations.

AMLCO tips

• Automate alerts for transactions near the threshold to detect structuring.
• Monitor transaction splitting - if a customer makes multiple deposits just below the limit, they may be structuring.
• Keep an eye on repeat offenders. Some customers may frequently withdraw and re-deposit large cash amounts.

When to report a TTR

• Within 10 business days of the transaction.

What to report

According to the proposed rules (Division 3), the TTR must:

Use the approved form (yet to be released for Tranche 2 entities) and include the customer, the individual conducting the transaction, the transaction, the recipient, proof of identity verification, your business information and additional requirements for certain circumstances

Be accompanied by an LPP form if legal professional privilege applies to any information.

Exemptions

Certain designated services are exempt from TTRs under specific conditions:

• When the service is between:
  • Two exchange settlement account holders, if the transaction uses their exchange settlement accounts.
  • Two authorised deposit-taking institutions (ADIs)
• Services listed under item 54 in section 6.

Industry examples of TTRs

• Law
  A client provides A$12,000 in cash to a law firm for a property settlement. If legal professional privilege applies to any information, an LPP form must be submitted alongside the report.
• Accounting
  An accounting firm receives A$11,000 in cash from a client for tax advisory services. If the person making the transaction is not the account holder, additional information must be provided.
• Real Estate
  A buyer pays A$15,000 in cash as a deposit for a property purchase. Since the amount exceeds A$10,000, the real estate agent must submit a TTR
• Trust and company service providers
  A client pays A$13,000 in cash to establish a trust. The provider must report the transaction.

3. International Value Transfer Services reports (IVTSs)

What is a IVTS?

Previously known as International Value Transfer Services (IVTS) involve the transfer of money, virtual assets or other value across borders. Since IVTS transactions pose higher AML risks due to cross-border complexities and potential anonymity, strong compliance measures are essential.

Under the updated AML/CTF regulatory framework (Division 4) the rules governing IVTS will be simplified but expanded to ensure greater transparency and consistency across financial and non-financial institutions.

AMLCO tips

• Implement enhanced due diligence (EDD) for high-risk transfers, including virtual assets and offshore remittances.
• Train staff on the new reporting requirements to avoid non-compliance.
• Work with partner institutions to determine when reporting obligations can be discharged by intermediaries under AUSTRAC guidelines.

When to report a IVTS

• Within 10 business days of the transaction.

Industry examples of IVTSs

• Law
  Law firms distributing assets to overseas beneficiaries must ensure AML compliance in value transfers.
• Accounting
  Accounting firms handling cross-border payments for clients need to verify transaction legitimacy.
• Real Estate
  Property firms sending funds to offshore construction companies must comply with the new IVTS rules.

4. Cross-Border Movement reports (CBMs)

What is a CBM?

Cross-border movements occur when monetary instruments are moved into or out of Australia. All individuals and reporting entities, must report cross-border movements of monetary instruments in Australian or foreign currency if the combined value is A$10,000 or more due to their high money laundering risk and potential for financial crime.

Bearer negotiable instruments (BNIs), such as bearer bonds and cheques, allow anonymous transfers of value, making them vulnerable to illicit activities like money laundering, terrorist financing and tax evasion. 

Lawyers, accountants and real estate agencies may encounter cross-border movements of monetary instruments (e.g. BNIs, money orders, travellers’ cheques) in transactions involving clients, property purchases, trusts or financial planning.

AMLCO tips

• Always verify the source of funds when dealing with international transactions involving cash or BNIs.
• Conduct enhanced due diligence (EDD) on high-risk clients, such as those involved in cross-border real estate deals, international trusts or offshore business structures.
• Keep detailed records of all cross-border monetary movements, including client details, transaction amounts and supporting documents.

Types of cross-border movement reports

There are two types of cross-border movement reports:

• Cross-border Movement – Monetary Instrument (Carrying) report
  This report must be made if you depart or enter Australia via an international airport or seaport with a combined monetary instrument value of AUD10,000 or more, including BNIs and physical currency
• Cross-border Movement – Monetary Instrument (Sending/received) report
  You must make this report if you send or have received monetary instruments by ship or courier, or mail it into or out of Australia.

These reports are available through your AUSTRAC Online account.

When to report a CBM

• If you are carrying monetary instruments across borders, you must submit a report before you pass through customs when arriving or departing Australia.
• If you mail or ship monetary instruments into or out of Australia, you must submit a report before sending it.
• If you have received monetary instruments from outside Australia, you must submit a report within five business days of receipt.

Industry examples of CBMs

• Law
  Lawyers handling international estates, corporate transactions or trust fund transfers must report if monetary instruments are moved in or out of Australia.
• Accounting
  Accountants advising on cross-border tax structures, business transactions or trust management may process monetary instruments sent from offshore.
• Real estate
  Real estate agents dealing with foreign property buyers may encounter cash deposits or bearer negotiable instruments used to purchase property.
  
  

5. AUSTRAC compliance report

What is a compliance report?

A compliance report is required to summarise how your organisation met its AML/CTF obligations over the past year.

AMLCO tips

• Document everything. How you identified and managed high-risk customers, why you made the decisions you did, PEP and sanctions results and enhanced due diligence measures.
• Keep records of AML/CTF program updates, training, governance approvals and policy changes.
• Use technology to create audit trails and centralise all your cases and associated documents to reduce the reporting burden.
• Regularly evaluate customer onboarding, suspicious transaction reporting and internal AML training effectiveness.

When to submit an AUSTRAC compliance report

The report covers your business activities from 1 January to 31 December. And your report must be submitted to AUSTRAC between 1 January and 31 March of the following year. AUSTRAC sends reminders so you don’t forget.

What to report

AUSTRAC provides previews of the questionnaire that forms the basis of the annual report. 

Examples include:

• Did you offer designated services during all or part of the reporting period?
• Does your business accept customers from overseas jurisdictions?
• Is your AML/CTF program approved by its governing board and/or senior management?
• How many of your customers are high risk or above?
• How did you identify PEPs?
• Which ECDD measures did you undertake in 2024?

How to submit

1. Log in to AUSTRAC Online.
2. Go to ‘My Business’.
3. Click the plus sign (+) next to ‘My Business’ to see more menu options.
4. Select ‘Compliance Reports’.
5. Select ‘Open Compliance Report’ for the applicable year.
6. Complete the questions.
7. Review and submit.

Final thoughts

AML reporting might seem overwhelming at first, but with the right processes, technology and training, it becomes second nature. Stay proactive, document everything and never hesitate to seek advice when needed.