AML/CTF tipping off changes are now in effect: Are you complying?
Introduction
Australia's anti-money laundering and counter-terrorism financing (AML/CTF) framework has been overhauled by the Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024 (Cth). While most of the changes in the Act will only come into effect in 2026, the changes to the tipping off offence have already commenced on 31 March 2025.
In this article we overview the changes made to the tipping off offence and their implications.
What is tipping off?
Tipping off is basically when a reporting entity reveals to another person specific details about suspicious matters or investigations of the Australian Transaction Reports and Analysis Centre (AUSTRAC).
The concern with tipping off is that it could lead to this information reaching someone involved in criminal activity, or entering the public domain. This could have serious implications. For example, criminals could then take steps to avoid being detected, and investigations could be compromised. For that reason, tipping off is a criminal offence under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (AML/CTF Act).
How has the tipping off offence changed?
Old tipping-off offence (prior to 31 March 2025)
The former offence broadly prohibited disclosing that a reporting entity had submitted (or was required to submit) a Suspicious Matter Report (SMR) to AUSTRAC, or disclosing information from which it could be inferred that a reporting entity had lodged a SMR. It also banned disclosing that the reporting entity had been given a notice from AUSTRAC to provide information or documents. Disclosure of these matters could generally only be given to an “AUSTRAC entrusted person” such as the AUSTRAC CEO.
The old offence had only limited exceptions. Disclosure was permitted to lawyers for obtaining legal advice, and disclosure could be made within corporate groups or designated business groups.
These limited exceptions made it practically difficult for reporting entities to share information for legitimate purposes with third parties about AML/CTF and other financial fraud issues, including financial scams.
New tipping off offence (from 31 March 2025)
The new tipping off offence is more targeted. Reporting entities and other specified persons will commit an offence only if the disclosure would (or could reasonably be expected to) prejudice an investigation of an offence under a law of the Commonwealth or of a State or Territory.
Tipping off can attract a maximum penalty of two years in prison or 120 penalty units (currently worth $330) or both.
What are the elements of the new tipping off offence?
There are 4 factors to consider when deciding if the tipping off offence has occurred under the new provisions:
Is the discloser subject to the tipping off offence?
Who is the information disclosed to?
What information is disclosed?
Would the disclosure prejudice an investigation, or could the disclosure reasonably be expected to prejudice an investigation?
We look at each of these factors below.
First element: Is the discloser subject to the tipping off offence?
To commit the offence, the discloser must currently be (or have been) one of the following:
a reporting entity;
a member of a reporting group;
an officer, employee or agent of a reporting entity or of a member of a reporting group;
a person who is required by a notice to give further information or produce documents following a reporting entity’s submission of a SMR, a threshold transaction report or an international funds transfer report to AUSTRAC; or
a person who is required by a notice to give further information or produce documents to assist AUSTRAC combat, and identify trends and patterns of, serious crimes.
The new tipping off offence is broader, as it applies to a person who has left their role in one of the above categories (such as an ex-employee) and to an entity which has ceased to be a reporting entity or a member of a reporting group.
Second element: Who is the information disclosed to?
A discloser does not commit an offence if they disclose information to an AUSTRAC entrusted person, which includes the AUSTRAC CEO, the Director of AUSTRAC, a member of an AUSTRAC taskforce or an AUSTRAC employee or consultant.
Third element: What information is disclosed?
The offence applies to any of the following information:
information about a SMR including:
the fact that a reporting entity has submitted a SMR or is required to submit one;
the SMR or its copies;
documents which contain information in a SMR;
information about AUSTRAC notices to give information or produce documents:
the fact that a person is or has been required by notice to give information or produce documents to AUSTRAC or other relevant agencies;
the fact that a person has given information or documents in response to a notice by AUSTRAC or by other relevant agencies;
information about a suspect transaction report (SUSTR) under the now repealed Financial Transaction Reports Act 1988 (Cth) which were submitted by certain low risk cash dealers (e.g. motor vehicle dealers) who were dealers before 7 January 2025. The following information is included:
the fact that the dealer formed a suspicion about a transaction;
the fact that the dealer provided information to AUSTRAC under a SUSTR or as required by a notice; and
any information from which it could be reasonably inferred that the above information has been submitted to AUSTRAC.
Fourth element: Would the disclosure prejudice an investigation, or could the disclosure reasonably be expected to prejudice an investigation?
To prejudice an investigation means to take actions that could obstruct or negatively impact the investigative process.
An investigation could relate to money laundering and terrorism financing (ML/TF) or offences under a law of the Commonwealth, a State or Territory, as well as those under the Proceeds of Crime Act 2002 (Cth) or corresponding State or Territory laws.
The offence covers intentional disclosure but also reckless disclosure – such as when information is shared without due regard to the potential consequences and risks of the disclosure.
It does not require the discloser to be aware of an ongoing investigation, and there may not even be an actual investigation: the disclosure could adversely affect a hypothetical existing or potential investigation.
It is also not required that an investigation is actually harmed by the disclosure. The prejudice depends on the facts of each case.
Examples of prejudicial disclosures include informing a customer or their associate that a SMR has been submitted to AUSTRAC in relation to their activities, or sharing information to someone who might disseminate it further (e.g. a journalist).
Disclosures that might not breach the tipping off offence
AUSTRAC has released guidance on the new tipping off regime and in that guidance it has identified certain types of disclosures that are not likely to breach the tipping off offence:
disclosures to Australian law enforcement, intelligence or regulatory authorities;
disclosures required by Commonwealth or State and Territory laws;
internal disclosures for ML/TF risk management;
disclosures made in support of a due diligence process in a merger or acquisition involving the reporting entity;
disclosures for AML/CTF obligations or risk management;
disclosures in participating in Fintel Alliance activities; and
disclosures made when conducting enhanced customer due diligence.
Dealing with customers
Avoiding the tipping off offence can be a particular challenge when interacting with customers, such as when a reporting entity asks for additional information about the customer as part of customer due diligence, or when a reporting entity decides to stop providing services to the customer (for example, a bank “debanking” its customer).
AUSTRAC recommends that if a reporting entity asks for information, where possible the customer should be given genuine reasons for engagement that do not indicate there is suspicion about the customer’s conduct. For example, a reporting entity might say that it needs to comply with know your customer obligations or needs to ensure that it has up to date details.
When terminating a customer. AUSTRAC also recommends giving genuine reasons where possible that do not indicate suspicion about the customer. Some example reasons for termination given by AUSTRAC include that the customer’s activities fall outside the risk appetite of the reporting entity, or that the reporting entity has decided not to cover additional costs entailed by managing its regulatory obligations relating to the customer’s accounts.
Exemptions to the tipping off offence
There are exemptions that allow certain disclosures without breaching the new tipping off offence. A person who seeks to rely on these exemptions has to put forward or point to some evidence to support that the disclosure qualifies for the exemption.
Crime prevention
Reporting entities which are legal practitioners, qualified accountants, and other specified categories can disclose SMR-related information relating to a customer, if the disclosure is made in good faith for the purpose of dissuading the customer from engaging in an offence or a potential offence.
Disclosure to detect, deter or disrupt
The new offence provision allows for regulations to be made to enable information sharing between reporting entities for the purpose of detecting, deterring or disrupting money laundering, terrorism financing, proliferation financing or other serious crimes. These regulations have not yet been made but will be relevant to other pending initiatives such as the Scams Prevention Framework.
Disclosure to a court or tribunal
Sometimes a reporting entity may be asked to provide information to a court or tribunal which could be information that is subject to the tipping of offence. The new provisions clarify that a person is not required to disclose protected information unless it is for the purpose of giving effect to the AML/CTF Act.
Complying with the new tipping off regime
AUSTRAC’s guidance on the new tipping off provisions suggests that compliance activities to reduce the risk of tipping off could include:
Identifying information that the reporting entity holds.
Information controls to manage the risk of breaching the tipping off offence. This could include information security and confidentiality protections in agreements with service providers and periodic reviews of compliance.
Identifying situations when disclosure would or could reasonably be expected to prejudice an investigation.
Training employees on an ongoing basis, particularly those involved with customers, as well as due diligence on employees.
Changes to your AML/CTF program
Reporting entities already subject to the AMLCTF Act should review their AMLCTF programs and update any provisions relating to tipping off so that they are consistent with the new tipping off offence.
If you need any assistance with updating your AMLCTF program or advice on compliance with the tipping off provisions, please don’t hesitate to get in touch.
Kathleen Harris and Patrick Dwyer
Legal Directors
Thanks to Phuong Nguyen for his assistance in preparing this article.