Under section 41 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) reporting entities must make a suspicious matter report (SMR) to Austrac if, at any time while dealing with a customer, the reporting entity forms a reasonable suspicion that the matter may be related to an offence, tax evasion, or the proceeds of crime.
What is the scope of that reporting obligation? Is it limited to suspected money-laundering or terrorism offences or does it apply to a wider range of financial crimes?
Does it extend to all suspected crimes even if they are not relevant to money laundering, such as suspected fraud of an elderly customer?
Do you report to Austrac in circumstances where there is insufficient basis for making a police report?
Under section 41(1)(f)(iii) a reporting entity must submit an SMR to AUSTRAC if the reporting entity commences to provide, or proposes to provide, a designated service to a person, and the reporting entity forms a suspicion on reasonable grounds that:
“(f) at the relevant time or a later time, the reporting entity suspects on reasonable grounds that information that the reporting entity has concerning the provision, or prospective provision, of the service: …
(iii) may be relevant to investigation of, or prosecution of a person for, an offence against a law of the Commonwealth or of a State or Territory.”
Public Legal Interpretation No. 6 of 2008 Suspicious matter and suspect transaction reports does not assist in clarifying the scope of section 41(1)(f)(iii).
It only states “If any of the conditions in paragraphs 41(1)(d) to (j) are met then a reporting obligation arises.”
“The SMR provisions under the AML/CTF Act appear to be working well. In 2014-15, reporting entities submitted a total of 81,074 reports of suspicious matters… While stakeholders are seeking more prescriptive criteria for SMR reporting, the preferred approach is to better educate reporting entities on their SMR obligations through enhanced engagement and guidance.”
While there has been discussion about the meaning of “suspicion” and “reasonable grounds” there has been little guidance on all the offences SMR applies to.
Reporting entities need to determine whether they are fully complying with their SMR obligation and all the circumstances when they will make a report.