What happens after you submit a Suspicious Matter Report to AUSTRAC?
For many reporting entities, filing a suspicious matter report (SMR) is one of the most stressful aspects of complying with the AML/CTF Act. There is often uncertainty about liability, confidentiality, and what happens next.
Here are a few key points that help demystify the process.
Legal Protection
First, the AML Act provides legal protection when you submit an SMR in accordance with your obligations. You are protected from civil or criminal liability, and submitting an SMR will not breach contractual or confidentiality obligations. The key exception is legal professional privilege, which continues to apply.
Relationship with the Client
Once you decide to file an SMR, you can generally choose whether to continue or cease the business relationship with the customer. If you continue the relationship, you must apply enhanced customer due diligence.
However, in some cases, law enforcement may issue a keep-open notice. This requires you to keep a customer’s account or file open if doing so would assist an investigation. In these circumstances, you may be exempt from enhanced and ongoing due diligence if conducting those checks could reasonably alert the customer to the existence of an investigation.
Hearing back from AUSTRAC
After submitting an SMR, you may never hear back from AUSTRAC, which is normal. In some cases, AUSTRAC may request additional information, such as supporting documents or attendance at an examination. During an examination, you may be asked questions about the suspicious matter report you submitted, and the information you provide may assist an investigation.
Section 172 Examination notice
Receiving a notice from AUSTRAC requiring you to attend an examination under s172A of the AML/CTF Act can be confronting.
If AUSTRAC believes, on reasonable grounds, that a person holds information or documents relevant to compliance with the AML/CTF Act or a prescribed criminal offence, it can require that person to attend an examination and answer questions under oath. Failure to comply is an offence.
The examination process is also strictly confidential. You generally cannot disclose that you have received a notice or that you are required to attend an examination. For many people, this combination — a compulsory examination, answering questions under oath, and being unable to talk about it — could be highly stressful.
There are, however, two important exceptions to the confidentiality requirement:
You can speak to a lawyer to obtain legal advice.
You can also speak to an appropriate healthcare professional if you need psychological or well-being support.
It is also worth noting that it will not usually be appropriate for in-house lawyers or other representatives of your employer to attend the examination with you, due to the likelihood of a conflict of interest. Independent legal advice is often critical.
What’s next
Feel free to book a time if you have any questions.
