Tipping Off AML/CTF is a serious compliance risk for Australian businesses regulated under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act). Organisations that identify suspicious activity must ensure employees do not disclose information that could alert a customer to an investigation or Suspicious Matter Report (SMR).
Failing to comply with tipping off requirements can expose businesses and individuals to significant penalties, regulatory action, and criminal prosecution. Understanding what constitutes tipping off and implementing appropriate controls is therefore essential for maintaining AML/CTF compliance.
What is Tipping Off AML/CTF?
Tipping Off AML/CTF occurs when a person discloses information that alerts a customer or another person that they may be the subject of an anti-money laundering or counter-terrorism financing investigation.
The purpose of Tipping Off AML/CTF provisions is to prevent criminals from changing their behaviour, moving assets, destroying evidence or avoiding law enforcement investigations.
Tipping Off AML/CTF is a serious offence under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) and can apply to reporting entities, their employees, contractors and agents.
Why is Tipping Off AML/CTF a Risk?
When a suspicious transaction or activity is identified, businesses may be required to submit a Suspicious Matter Report (SMR) to AUSTRAC.
If a staff member tells the customer:
- “We have reported you to AUSTRAC.”
- “Your transaction has been flagged as suspicious.”
- “Law enforcement is interested in your account.”
- “We have lodged a Suspicious Matter Report against you.”
they may be committing a Tipping Off AML/CTF offence because the disclosure could prejudice an investigation.
Changes to the Tipping Off Laws
Prior to 31 March 2025, the law largely prohibited disclosure of the existence of a Suspicious Matter Report.
Following AML/CTF reforms, the offence now focuses on whether the disclosure would or could reasonably be expected to prejudice an investigation under Tipping Off AML/CTF rules.
This change allows greater flexibility for businesses to share information for legitimate compliance purposes while still protecting law enforcement investigations.
Common Examples of Tipping Off AML/CTF
Example 1 – Gaming Venue
A patron wins a large amount on gaming machines, and the venue conducts enhanced customer due diligence.
The duty manager says:
“We are investigating your gambling activity and have reported you to AUSTRAC.”
This would likely be considered Tipping Off AML/CTF.
Example 2 – Real Estate Agency
A purchaser is unable to explain the source of funds for a property transaction.
The sales agent advises:
“We have concerns about money laundering and have submitted a report about you.”
This may constitute Tipping Off AML/CTF.
Example 3 Bullion Dealer
A customer attempts to purchase precious metals using multiple cash transactions.
The employee advises:
“Your transaction has triggered an AUSTRAC investigation.”
This could be considered a Tipping Off AML/CTF breach if it prejudices an investigation.
What Staff Can Say
Businesses can still make legitimate enquiries and collect information to meet their AML/CTF obligations.
For example:
- “We require additional information to verify your identity.”
- “We need further documentation to comply with our regulatory obligations.”
- “Additional checks are required before we can proceed.”
These types of statements generally do not constitute Tipping Off AML/CTF because they do not disclose suspicious activity reporting or investigative actions.
Practical Controls to Prevent Tipping Off AML/CTF Breaches
Businesses should implement controls within their AML/CTF Program, including:
Restrict Access to Sensitive Information
Only employees with a genuine need to know should have access to:
- Suspicious Matter Reports
- Investigation records
- AUSTRAC correspondence
- Transaction monitoring alerts
Staff Training
Provide regular AML/CTF training that covers:
- What tipping off is
- Examples of prohibited disclosures
- Customer interaction techniques
- Escalation procedures
Confidential Record Keeping
Implement:
- Secure electronic storage
- Password-protected files
- Access controls
- Audit trails
- Secure destruction of documents
Customer Communication Procedures
Develop standard wording for staff when:
- Requesting additional information
- Conducting enhanced customer due diligence
- Delaying transactions
- Ending customer relationships
Third-Party Controls
Where consultants, contractors or service providers have access to AML/CTF information, confidentiality obligations and appropriate safeguards should be in place to prevent Tipping Off AML/CTF breaches.
Penalties for Tipping Off
Tipping Off AML/CTF is a criminal offence.
Individuals who unlawfully disclose protected information may face:
- Criminal prosecution
- Significant financial penalties
- Imprisonment
- Employment disciplinary action
The offence applies where a disclosure would or could reasonably be expected to prejudice an investigation.
Key Takeaway
The safest approach is simple:
Never tell a customer, colleague or third party that a Suspicious Matter Report has been lodged or that they may be the subject of an AML/CTF investigation.
Instead, explain that additional information or verification is required to meet regulatory obligations.
Every reporting entity should ensure that tipping off controls, staff training, confidentiality requirements and customer communication procedures form part of its AML/CTF Program.
By maintaining strong controls and educating staff, businesses can help protect investigations, comply with AUSTRAC requirements and reduce their exposure to regulatory action.
For official guidance on Tipping Off AML/CTF, businesses can refer to AUSTRAC’s guidance on reporting obligations and tipping off requirements:
https://www.austrac.gov.au/industry-and-business/obligations-and-guidance/your-amlctf-program/reporting-us/tipping
If your organisation requires assistance with AML/CTF Programs, risk assessments, compliance audits or staff training, contact CHD Partners to discuss how we can support your compliance obligations.
