AUSTRAC reporting
Why AUSTRAC Is Worried If Your Firm *Never* Lodges an SMR
26 September 2026 · 5 min read
In brief
No SMRs does not automatically mean non-compliance, but AUSTRAC says unusually low reporting may indicate weaknesses in risk assessment, due diligence, monitoring or escalation. A firm should be able to show how it identifies, reviews and records suspicious activity.
Many firms assume that filing no suspicious matter reports is good news. AUSTRAC doesn't see it that way.
At its September 2026 RegTech session, AUSTRAC shared findings from the past 12 months of supervision, which covered existing reporting entities rather than Tranche 2 firms. On low SMR submissions it said:
AUSTRAC noted that Tranche 2 entities weren't part of these findings, but said the same issues are likely to apply as new sectors come in.
- they may signal weaknesses across risk assessments, due diligence and escalation processes
- reliance on internal triggers may indicate ineffective internal monitoring and controls
What that means in a law firm
In most small practices, suspicious activity is noticed only when one person happens to feel uneasy. That is the "internal trigger" AUSTRAC is talking about. It depends on:
AUSTRAC's supervision activity has included sector-wide campaigns, letters and questionnaires about how businesses meet their obligations. A firm with active property and entity work that has never lodged an SMR may have to explain why.
- the right person seeing the right file
- that person recognising the red flag
- that person feeling comfortable raising it with a partner who may have a long relationship with the client
What good looks like
AUSTRAC's advice to RegTech providers shows what it expects: solutions should help businesses:
In practice:
- apply red flags consistently
- identify patterns and linked activity
- connect alerts with customer and transaction data to detect suspicious behaviour earlier
- a defined red-flag list for your practice areas, such as unexplained third-party funds, late changes to settlement payees, complex structures with unclear ownership, or cash
- a simple, safe way for any staff member to raise a concern
- a documented review of every concern, including "no SMR" decisions and the reasons for them
How Comply.LM helps
- apply a legal-sector red-flag library consistently to every matter - spot links across clients, entities and matters - show whether your escalation and SMR numbers are in line with your risk profile
General information only, not legal advice.
- Today: Comply.LM risk-scores every client at onboarding and records every decision with a timestamp and a name, so your escalation trail can be shown to AUSTRAC.
- Coming next: A Risk Assessment Agent will:
Authoritative sources
This article draws on current AUSTRAC guidance. Always check the source guidance for updates that apply to your circumstances.
Common questions
Is a firm required to lodge a minimum number of SMRs?
No fixed minimum applies. The concern is whether the firm’s risk settings, monitoring and escalation processes are capable of identifying reportable matters.
What should a no-SMR firm retain?
Keep evidence of monitoring, escalations, reviews and reasoned decisions not to report, consistent with the firm’s risk profile.