Tipping off is the offence of disclosing information that would or could reasonably be expected to prejudice an investigation, where the information relates to a suspicious matter report, a proposed SMR or certain other AUSTRAC reporting. The prohibition exists so criminals cannot learn they are being watched. For professional firms the practical challenge is real: the same client conversation that must continue for the underlying matter can accidentally reveal that a report was made. This guide explains what is protected, what a firm can still say, and how to build communication controls that do not rely on memory.
What is protected
Under section 123 of the AML/CTF Act, a person commits an offence if they disclose information that would or could reasonably be expected to prejudice an investigation, where the information is about a suspicious matter report, a proposed SMR, a request for further information from AUSTRAC, or information that led to such a report or request. The test is objective: it is not enough that the firm meant well or kept the message vague.
Protected information is broader than the words 'we lodged an SMR'. The client's name combined with the timing, the service, the firm's behaviour or the regulatory context can reveal the report. Assess what a reasonable person could infer from the whole communication, including non-verbal signals and follow-up questions.
What a firm can still do
The prohibition does not stop a practice from doing its work. It stops disclosure that could prejudice an investigation. A routine request for a missing source-of-funds document remains lawful and is often exactly what the program requires - provided the request does not reveal the suspicion and is not a sham.
Special care is needed after an SMR is lodged. Refusing a service, closing an account or dramatically changing behaviour can itself communicate the report. Where the program requires an exit or refusal, document the operational reason and follow the same process a practice would follow for an ordinary risk decision.
- Continue ordinary service communications that do not disclose SMR-related information
- Ask genuine customer due diligence questions and collect missing documents
- Lodge the SMR without telling the client, and avoid changing course in an obvious way
- Seek legal advice about the disclosure rules where the position is unclear
Communications that are not tipping off
TTR obligations can generally be explained in ordinary terms because a threshold transaction report is a routine, mechanical report. SMR-related information is different. AUSTRAC's guidance distinguishes the two and warns that any communication revealing the existence of an SMR, or information from which its existence could be inferred, risks the offence where prejudice could reasonably be expected.
Legal professional privilege and the duty to keep client confidences are separate concepts. They do not override the tipping-off prohibition, and the prohibition does not automatically override privilege. Where both regimes could apply, take advice and record the reasoning rather than assuming one discipline satisfies the other.
Controls for the team
The most dangerous tipping-off events are accidental: an email copied to the client, a call from the compliance officer during a meeting, or a staff member mentioning 'the report we lodged'. A restricted suspicious-matter workflow and tested communication guidance reduce that risk.
- Train staff on what protected SMR information is, with worked examples
- Restrict SMR work to the people who need to know, as the program requires
- Use a script or checklist for common client conversations after a report
- Record disclosure decisions and the reasoning, without writing SMR details into ordinary files
Official sources
Confirm the current rules against these primary sources.
Questions
Can we tell the client we lodged an SMR?
Generally no. Disclosing that an SMR was made, or information from which it could reasonably be inferred, can be an offence where disclosure would or could reasonably be expected to prejudice an investigation. Treat SMR-related information as protected.
Is a TTR the same as an SMR for tipping-off purposes?
No. A TTR is a routine report triggered by cash volume and can generally be described in ordinary terms. The tipping-off offence protects SMR-related information; AUSTRAC guidance distinguishes the two report types.
What if the client asks directly whether we reported them?
Do not confirm or deny an SMR in a way that could prejudice an investigation. Redirect to genuine CDD or service matters, and where necessary seek legal advice. Record the interaction without placing protected details in the ordinary file.
Does privilege override tipping off?
No. Legal professional privilege and the tipping-off prohibition operate separately. A privileged communication is not automatically protected from the disclosure offence, and protected SMR information does not automatically lose privilege. Take advice where both regimes apply.
General information for Australian professionals, not legal advice. It does not replace the AML/CTF Act, the Rules or AUSTRAC guidance. See our editorial standards.
Keep reading
- SMRs & tipping off3 min
Suspicious matter reporting for newly regulated Australian practices: what forms a suspicion, SMR deadlines, what goes in the report, and the section 123 tipping-off offence every staff member must understand.
- Refusal and exit4 min
When Australian reporting entities must refuse a service or exit a relationship because CDD cannot be completed, and how to record the decision safely.
- For lawyers5 min
How Tranche 2 captures Australian law firms and conveyancers: which legal services are designated services, customer due diligence for law practices, trust money, tipping off, and how legal professional privilege is preserved.