A Compliance Officer’s worst nightmare …

A bank teller leans in and whispers to a customer:

“They’re onto you, you might want to lay low for a while.”

It’s exactly the kind of scenario tipping off laws are meant to prevent — the kind that prejudices an investigation and helps criminals stay one step ahead.

Over time, Australia’s tipping off laws left businesses operating in a grey area — unsure of what they could say, or how far they could go without crossing a line.

On 31 March 2025, significant changes to Section 123 of the AML/CTF Act commence. These reforms are designed to simplify the rules around tipping off. In many ways, they do. But as is often the case in financial crime compliance, have we simply swapped one grey area for another — albeit a better shade?

How Did We Get Here?

At Platinum AML, we’ve worked on both sides: law enforcement and industry. In law enforcement, tipping off was straightforward: it was about stopping actions that could prejudice an investigation. For example, a bank teller warning a money mule that authorities were closing in.

In industry, it’s a different story. Many businesses became so cautious they tied themselves in knots. Fear of breaching tipping off laws led to hesitation and unnecessary roadblocks.

And it’s understandable. The broad framework and lack of clear boundaries left businesses erring on the side of extreme caution. No one wanted to be the test case.

But that caution had unintended consequences:

• Frontline staff hesitant to ask about source of funds if a customer had already been flagged.
• Contractors hired as ‘secondees’ to avoid technical tipping off risks.
• Businesses unable to defend customer exits in court, resorting to complex exemption applications instead.

Compliance programs focused on preventing any disclosure that might suggest a suspicion — rather than on what would actually obstruct justice. Ironically, this made it harder for reporting entities to collaborate, ultimately benefitting criminals.

What’s Changing — and Why It Matters

The tipping off reforms aim to address these issues, offering more clarity and aligning practice closer to the policy intent. But they also introduce new considerations that require careful navigation.

1. The Inference Prohibition is Out

There is now a defined list of prohibited disclosures under Section 123(2), including:

• That a Suspicious Matter Report (SMR) has been submitted (or is required to be submitted).
• Documents containing the content of an SMR.
• That a person has been required to respond to notices under Sections 49(1) or 49B(2).

This shift narrows the scope and reduces uncertainty for businesses. It’s a move towards clarity. But clarity doesn’t always translate to simplicity.

2. Enter the Prejudice Test

The new prohibition applies only if a disclosure would, or could reasonably be expected to, prejudice an investigation — regardless of whether an investigation is currently underway.

This reflects how law enforcement has traditionally approached tipping off: if there’s no risk to an investigation, there’s no issue.

In principle, this gives reporting entities more room to manoeuvre. You can still ask about source of funds or carry out other enhanced due diligence enquiries — even if an SMR has been submitted. The reforms make it clear these actions alone don’t amount to tipping off.

But here’s where the shades of grey appear:

• What constitutes “prejudice” isn’t tightly defined.
• Predicting whether a disclosure could “reasonably” be expected to prejudice an investigation isn’t always straightforward — especially if the investigation hasn’t yet commenced.

These are judgement calls — and judgement calls thrive in the grey areas.

3. Information Sharing Between Reporting Entities — A Step Forward

One of the most significant changes is the new ability for reporting entities to share SMR-related information to detect, deter, and disrupt serious crime (Section 123(5)). It reflects what law enforcement has always known  — collaboration gets better results.

The reforms open the door to greater cooperation between reporting entities. But the rules on how and when to share information are still being finalised. Until the regulations are formally approved or AUSTRAC releases further guidance, caution remains the safest approach.

Still, it’s a major step toward more collaborative, intelligence-led financial crime prevention. We’re hopeful this could enable initiatives like collaborative transaction monitoring, similar to successful models in the Netherlands.

4. A Broader Scope of Responsibility

One of the more significant changes is that the application of the tipping off prohibitions is no longer limited to reporting entities.

Under the revised Section 123(1), both reporting entities and their associated persons risk liability if they disclose SMR-related information in a way that prejudices an investigation.

This broadens the scope of responsibility, making it critical for businesses to ensure their workforce fully understands their obligations.

With information potentially being shared more broadly, the pool of people who need training, guidance, and oversight will naturally expand.

Living in the Grey Area

At Platinum AML, we talk a lot about living in the grey area.
That’s where we operate — helping businesses make practical, informed decisions in spaces where the law isn’t black and white. The tipping off reforms provide a perfect example.

The framework may offer more clarity — but the real work lies in navigating the grey areas, like:

• Does this disclosure create risk?
• Could this question prejudice an investigation?
• Should we share this intelligence — and if so, how?
• Can our frontline teams navigate sensitive customer conversations smoothly, without uncertainty or revealing too much?

These are judgement calls. And they’re exactly where your compliance culture and training need to be strong.

What You Should Be Doing Now

The reforms take effect at the end of March 2025. If you have not done so already, you should:

• Review and update policies and procedures to reflect the new provisions. Be sure to include policies to safeguard against breaches of subsection 123(1) — especially around the confidentiality and handling of SMR-related information (as outlined in Draft AML/CTF Rule 10).
• Train staff, particularly those in frontline and high-risk roles, on how to navigate customer interactions under the new rules.
• Explore opportunities for collaboration. Even if AUSTRAC’s regulations aren’t finalised yet, you should start considering how such partnerships could enhance your AML/CTF capabilities.
• Monitor for the final AML/CTF rules and regulations to maintain compliance and adapt quickly once they are released.

The Bottom Line

These tipping off reforms are a step toward a more pragmatic and balanced AML/CTF regime.

They provide clarity where it was needed and open the door to greater collaboration among reporting entities.

However, the reforms also introduce new complexities — and don’t eliminate regulatory risk.

At Platinum AML, we help our clients navigate the grey to make informed and confident decisions that balance compliance with commercial reality.

If you’d like to discuss how your business can prepare for the new regime or explore training options for your teams, we’d be happy to have a conversation.