Critical Steps After a Suspicious Matter Report

Your investigation then identifies more warning signs, making a suspicious matter report (SMR) necessary. You log in to AUSTRAC online, submit an SMR within the required timeframe and finally exhale. Job done? Not quite.  

Although you will likely not receive a response from AUSTRAC about the SMR, the next steps are just as important as the SMR itself. 

What You Must Do Next  

Following an SMR, a customer is considered higher risk. To manage this risk, a number of steps should be undertaken. They include: 

1. Conducting enhanced customer due diligence (CDD) and reassessing their risk rating.
2. Seeking senior manager approval to continue a customer relationship.
3. Planning for ongoing monitoring. 
4. Appropriately record keeping for all steps taken. 

Your AML/CTF program must make clear what this process looks like. 

Without a clear, repeatable and risk-based process, important steps can be missed and additional risk brought to your club. 

Completing Enhanced CDD 

After submitting an SMR, enhanced CDD must be undertaken in accordance with your AML/CTF program. This allows you to determine a customer’s risk with greater certainty and decide what additional monitoring should be put in place.  

Importantly, enhanced CDD may identify information that allows you to comfortably rate the customer as low risk and justify the conduct which resulted in the SMR. Enhanced CDD may include: 

• Reverifying the customer’s identity.
• Researching or collecting information to better understand their source of funds or source of wealth.
• Adverse media screening.
• Reviewing historical customer activity or transaction patterns.
• Reassessing the customer’s risk rating.
• Applying enhanced scrutiny to future activity.
• Setting additional controls, conditions or restrictions on the customer where appropriate. 

AUSTRAC guidance on enhanced CDD is available on their website and should be used alongside your internal AML/CTF program. 

Seeking Senior Manager Approval to Retain the Customer’s Relationship 

Where an SMR has been submitted, the decision to continue that relationship must be approved by a senior manager. This ensures higher-risk decisions are considered at the right level and properly documented.  

As the compliance officer, it is your role to gather all relevant information and present it clearly, so the senior manager/s have sufficient insight to make an informed decision. This should include any proposed controls and ongoing monitoring measures if the relationship continues.  

Senior manager approval may involve consideration of: 

• The nature and seriousness of the suspicion.
• The customer’s history and behaviour.
• The level of risk to the venue.
• Whether controls can adequately manage and mitigate the risk.
• Any other information identified as a part of the enhanced customer due diligence undertaken. 

If the Relationship Continues 

If approval is given to continue the relationship, it should not simply return to business as usual. Enhanced CDD includes additional monitoring above the regular due diligence you undertake and should be put in place, at least until such time as the customer can be considered low risk again. These measures may include: 

• Increased transaction monitoring.
• Periodic account or membership reviews.
• Monitoring for repeat or escalating behaviour.
• Considering whether further SMRs are required.
• Regular review of whether the relationship remains acceptable.
• Asking trusted staff to conduct increased observation of the patron. 

If the Relationship Ends 

Senior managers may decide that the customer’s risk cannot be appropriately managed and that the relationship should end. 

How this occurs will depend on the circumstances, your club’s rules and constitution, membership processes, and any other legal or operational obligations. Decisions should be fair, properly documented and consistent with your internal governance processes. 

This process is simpler for non-members, who do not have the same constitutional rights to access the club. 

Record Keeping  

You can only demonstrate that you have complied with your AML/CTF program and completed the appropriate steps through your record keeping. If a record does not exist, the action was not undertaken. 

Throughout the investigation process and following actions after SMR reporting, ensure clear records are maintained, including: 

• What gave rise to the suspicion.
• Information reviewed during investigations.
• The date the SMR was submitted.
• Enhanced CDD steps undertaken. 
• Senior manager decisions and reasoning for customer relationship outcomes.
• Monitoring actions implemented.

Support for Compliance Officers 

If you are an AML/CTF compliance officer looking to build your capability, ClubSafe provides AML/CTF compliance officer training specifically tailored to NSW clubs.  

This course has been amended to align with new requirements, terminology and regulator expectations following the 31 March reforms. 

These sessions are delivered monthly in a virtual format and can also be arranged as face-to-face training for your venue or team. 

Find the next available session on our website.

Final Takeaway 

Submitting an SMR is not the end of the process. If the customer relationship continues, it should trigger further action, stronger oversight and ongoing risk management. Well-designed policies and procedure help protect your venue and support compliance with your AML/CTF obligations.