On 31 March 2025, changes to the ‘tipping off’ prohibition set out in s123 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (Act) which relates to disclosure of suspicious matter reports will come into effect.
The purpose of the changes is to focus on whether the disclosure of the information would or could reasonably be expected to prejudice a law enforcement investigation, rather than enforcing a strict prohibition on disclosure of the information subject to certain limited exceptions.
In this article, we summarise the imminent changes to s123 and provide some practical tips on how reporting entities can best prepare to implement the changes effectively.
Current Tipping-Off Regime under s123 of the Act
Section 123 of the Act currently prohibits disclosure of information from which it could be inferred that a reporting entity has lodged a suspicious matter report with AUSTRAC in relation to a person. An offence against s123 is punishable by imprisonment for 2 years or by 120 penalty units (or both).
Some limited exceptions to the current form of tipping off offence apply such as disclosure to a legal practitioner for the purposes of obtaining legal advice or for the prevention of crime. However, the provision as it currently stands is very rigid and does not allow for discretionary disclosure for reasonable and legitimate purposes. The current formulation of the provision has created difficulties for reporting entities for some years.
Amendments to the Act
The Major Reforms1 provide that the existing tipping off offence in s123 is to be repealed and substituted with a new and reformed ‘Offence of tipping off’ framework.
The objectives under the new framework for the tipping off offence remains the same – to prevent persons engaging in, or about to engage in unlawful activity from becoming aware that their actions or behaviour are the subject of a suspicious matter report (SMR) to AUSTRAC.2
The new s123(1) provides that it is an offence for a person to disclose information relating to the reporting of suspicions of unlawful activity to AUSTRAC where disclosure would or could reasonably be expected to prejudice an investigation of an offence against a law of the Commonwealth or of a State and/or Territory.
The new format of the tipping off offence will also carry the same penalty of 2 years imprisonment of 120 penalty units (or both).
Who can commit an offence under the new s123?
The new framework will apply to reporting entities, members of a reporting group, officers, employees or agents of a reporting group or member of a reporting group and those required to disclose information or produce documents to the AUSTRAC CEO, including in response to a notice under ss49(1) or 49B of the Act.
Unlike the current regime, the new tipping off provision will also apply to those who have previously been in but are no longer in the roles referred to above. This is intended to ensure that the provision captures those who are no longer in the relevant role but might have committed an offence of tipping off.
What can be disclosed under the new tipping off framework?
The new tipping off framework provides for greater flexibility and protections in disclosing information to law enforcement agencies, other bodies corporate within the same reporting group and third-party service providers (subject to appropriate safeguards and for the purpose of ML/TF risk management). This relaxation of the obligations will also assist reporting entities in the context of a merger or acquisition or when engaging with consultants to support AML/CTF remediation and uplift projects.
The key consideration that reporting entities and those subject to the tipping off provisions must have in mind is whether the disclosure would or could reasonably be expected to prejudice an investigation by law enforcement agencies.
The explanatory memorandum to the Amendment Act provides that situations where disclosure would or could reasonably be expected to prejudice an investigation include a reporting entity notifying a customer who is the subject of a SMR or their known associate that a suspicion was formed in relation to their behaviour and a SMR has been submitted. This kind of disclosure risks criminals taking action to hide or disguise their illegal activities.
Practical Tips for Implementation
- All reporting entities (including lead reporting entities once the Major Reforms commence next year) should have requirements set out in their AML/CTF programs which govern the way information can be shared within the reporting group.
- As part of developing amended AML/CTF programs which comply with the Major Reforms (coming into effect in March 2026), reporting entities should ensure that their staff training documents, together with their policies and procedures, including their AML/CTF programs provide for the appropriate sharing of information for ML/TF risk management/mitigation and to ensure that information relating to SMRs is strictly safeguarded.
- While the tipping off offence applies to all reporting entity members of a reporting group, it is vital that the reporting entity’s AML/CTF documentary framework be updated to ensure the safeguarding of information that is shared amongst the reporting group members to prevent tipping off.
- If an AML/CTF program refers to the current legislative framework for tipping off, the reporting entity should consider staged amendments to the program to ensure that there is no inconsistency in the requirements of the AML/CTF program and the new flexibility provided by s123. In some circumstances, a more rigid approach to tipping off referred to in a reporting entity’s AML/CTF program could impose a requirement to comply with those rigorous obligations, despite the legislative change.
- Reporting entities should ensure that appropriate changes are made to internal procedures and updated training and guidance is provided to those who are responsible for submitting SMRs to AUSTRAC. This includes ensuring that that those who are aware of the details of SMRs understand that the prohibition on tipping off could survive the cessation of their employment with the reporting entity or member of a reporting group.
This article was written by Mizu Ardra, Partner and Rebecca Kelly, Senior Associate.
1 Schedule 5 to the Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024 (Amendment Act).
2 s41, Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth).
