When a Tranche 2 firm must lodge a suspicious matter report

A suspicious matter report is the report a reporting entity sends to AUSTRAC. It is not a finding that a crime has been proved, and it is not optional once reasonable grounds exist. Checked against AUSTRAC’s suspicious matter reports page on 2 October 2026. This is general information, not legal advice, and it is not a copy of the Act. Whether your firm is a reporting entity at all is /tranche-2 and the designated services decision tree.

When the duty starts

AUSTRAC says the obligation applies when you start to provide a designated service, when you propose to provide one, or when someone asks you for one. It still applies if you never provide the service. A customer who tests the firm and walks away can still be a report. A practice that is not providing, proposing, or being asked for a designated service is not in this trigger. Map the matter before you treat every email as a report.

The same page lists the suspicions that require a report. You suspect on reasonable grounds that information you have may be relevant to crime. You suspect the customer, a future customer, or their agent is not who they claim to be. You suspect a person is planning a money-laundering or terrorism-financing offence using a designated service. The crime list they give includes money laundering, terrorism financing, offences such as tax evasion, and Commonwealth, state, or territory offences. You lodge even if you cannot name the offender or the victim.

Reasonable grounds is a recorded standard

Reasonable grounds is objective. AUSTRAC describes it as the conclusion a reasonable person in your position would reach from the facts, circumstances, and information available, including what you knew or could reasonably be expected to have known. A feeling with no facts is not the test. Certainty that a crime occurred is not the test either. You do not wait for a conviction.

Each new suspicion is its own report, even if you have already reported that customer. AUSTRAC asks you to include earlier reference numbers so the pattern is visible. The person who first notices the fact is often not the person who lodges. How that fact reaches the compliance officer, the same day and in writing, is AML training for non-specialists. The program that names that path is how to write the AML/CTF program.

The two clocks

• Terrorism financing. AUSTRAC says you submit within 24 hours of forming the suspicion.
• Other suspicions. AUSTRAC says you submit within 3 business days after the day you formed the suspicion. Money laundering sits in this row, not in the 24-hour row.
• A privilege claim. AUSTRAC describes a longer window, 5 business days after the day you form the suspicion, where you claim legal professional privilege, and says that longer window does not apply to a terrorism-financing suspicion. That is a legal test. Get advice. This page does not apply it.

The day the suspicion is formed is the day the clock starts, not the day the customer first looked unusual. Your policies have to make the review timely. AUSTRAC says what is timely depends on risk, and that higher-risk matters are reviewed first. Newly regulated firms should also read the form note on that page: who enrolled after 30 March 2026 uses the new form from 1 July 2026. Lodge in AUSTRAC Online. FreeAML does not lodge it for you.

The tipping-off boundary

Tipping off is a criminal offence. AUSTRAC’s tipping-off page explains section 123: disclosing protected information, including that a suspicious matter report was submitted or that the requirement to submit one has been triggered, where the disclosure would or could reasonably be expected to prejudice an investigation. The page states the maximum penalty. Read it. This article does not restate the section, and it does not give you sentences to say to a customer.

• Do not tell the customer that a suspicious matter report has been lodged, will be lodged, or that the duty to lodge has been triggered.
• Do not give them enough detail to infer that you suspect criminal conduct you must report.
• Do not put the grounds, the report, or a copy of it in an email to the customer, on a website, or in a brochure.
• Escalate inside the firm, to the compliance officer, in writing. That path is training. It is not a customer script.

Asking for identity because the program requires customer due diligence is a different conversation. That requirement is customer due diligence requirements. A pre-commencement label does not switch monitoring off: a suspicious matter can still pull initial due diligence forward, which is pre-commencement customers. Once a report is in play, do not improvise an explanation. If you are unsure a sentence would disclose the report, do not send it. Get advice.

Where FreeAML fits

The wedge is the file, not the lodgement. A note of the facts, the date, and the decision is what later shows why you did or did not form reasonable grounds. When the program says a customer check is required, the firm suite is A$0 and verification is client-pays by email. Current amounts are on FreeAML pricing. The product returns evidence for that file. It does not decide the suspicion, it does not write the grounds, and it does not submit the suspicious matter report. A cash payment at or above the published threshold is a different report: the threshold transaction report.

Frequently Asked Questions