We have created suspicious activity indicators to help you identify potential money laundering, terrorism financing and other serious criminal activities. These indicators can inform your transaction monitoring alerts that trigger further review. 

To complement these indicators, you must also ensure your transaction monitoring systems alert you to unusual, large or complex transactions or patterns of transactions. 

If you suspect a customer or a transaction involving your customer is linked to a crime, submit a suspicious matter report (SMR) to AUSTRAC within the required timeframes. This includes where you reasonably suspect a person:

  • is committing a crime
  • is not who they claim to be
  • could be the victim of a crime.

On their own, one of these indicators may not suggest suspicious activity. If you are unsure whether there are reasonable grounds for a suspicion, you should conduct further monitoring and examination, including applying enhanced customer due diligence (ECDD) measures. If you have clear and reasonable grounds for a suspicion, you must submit a suspicious matter report (SMR) to AUSTRAC.

For more information on complying with your reporting obligations, see our suspicious matter reporting reference guide and suspicious matter reporting checklist.

This indicators list is not exhaustive. You should consider other indicators specific to your business’s individual risk profile and circumstances. 

On this page

Customer identification and behaviour

Customer identification indicators

A customer:

  • provides identification information that is false, misleading, vague, or cannot be verified 
  • refuses and/or is reluctant to provide identification information or documents
  • is identified in adverse media 
  • has sources of funds or sources of wealth that are unknown or difficult to verify
  • has sources of funds or sources of wealth that are inconsistent with their profile
  • makes repeated changes to personal information 
  • uses an address that is not the customer’s permanent address (for example, customer provides a temporary accommodation address such as a hotel)
  • attempts to use a post office box address as a residential address

Customer behaviour indicators

A customer:

  • appears nervous, overly defensive, or evasive when questioned
  • appears coached or rehearsed when answering questions
  • makes an unusual enquiry to venue staff about whether they report to government authorities. For example, AUSTRAC, the Australian Taxation Office or law enforcement agencies
  • and/or their activity is the subject of law enforcement enquiries

Money laundering

Money laundering indicators 

A customer:

  • whose transaction activity is conducted in a short amount of time, including on the same day without apparent economic purpose
  • makes deposits at different bank branches to fund their trading account
  • changes banks or financial intermediaries more frequently than reasonably expected
  • receives deposits from multiple third parties
  • structures deposits under the reporting threshold
  • transaction activity is inconsistent with their profile, including their stated occupation. For example, high level of trading from a customer recorded as unemployed or working in a typically low paying job.
  • opens multiple trading accounts within a short time frame 
  • transfers funds into a trading account and then makes corresponding withdrawals with little or no trading activity
  • whose trading behaviour exhibits little economic rationale (for example, loss-making trading activity) 
  • requests for funds to be transferred to third parties
  • deals only in cash rather than through banking channels (for example, making cash payments to purchase investment products)
  • conducts a number of transactions in small amounts for the same security with the same counter party, each purchased for cash. Customer then sells these in one transaction, with the proceeds being credited to an account different from the original account.
  • trades a security in a manner that does not appear to have any economic rationale
  • is introduced by an overseas bank or affiliate located in a higher-risk jurisdiction for corruption, drug supply, bank secrecy, and their source of funds cannot to be verified
  • requests large or unusual settlements of securities in cash or bearer form
  • purchases securities to be held by the institution in safe custody, where this does not appear appropriate given the customer’s apparent circumstances
  • conducts matching buy and sell trades in the same security or futures contract which does not appear to have any economic rationale (’wash trading’)
  • uses a securities or futures brokerage firm to hold funds that are not being used to trade in securities
  • uses an offshore service provider to hide beneficial ownership of securities
  • makes large or structured cash deposits into their trading account
  • transfers funds into a trading account with minimal or no trading activity conducted
  • whose funds are transferred from their trading account back to the original or another bank account, and then withdrawn in structured cash amounts
  • uses multi-layered trading chains, legal persons and arrangements with complex ownership structures to reduce visibility of transactions
  • transfers an amount of funds into their trading account that far exceeds the level and value of trading activity 

Insider trading and other serious financial crime

Insider trading indicators

A customer:

  • accrues significant monetary gain or loss avoidance through buying or selling a company’s shares prior to a price sensitive announcement in a manner that is inconsistent with their previous trading activity 
  • conducts significant trading just before a price sensitive market announcement 
  • opens a trading account and leaves it dormant for an extended amount of time, then suddenly purchases securities and looks to sell a few days later 
  • whose trading activity is inconsistent with the usual trading activity
  • exhibits pre-arranged trading behaviour where sellers already have buyers lined up for their securities

Employees or representatives of a business:

  • undertake trading activity using information about their customer’s impending trade orders for the benefit of their firm or themselves (this is known as ‘front running’)
  • having access to price sensitive information and passing this on to their clients

Market manipulation indicators

A customer:

  • places small dollar orders, generally in illiquid securities, which have a disproportionate impact on the share price relative to the volumes being traded. This can occur:
    • at the end of the day, month, financial or calendar year (this is known as ‘window dressing’)
    • by individuals (including close associates, friends or relatives) and/or entities which have a natural incentive to increase or decrease the share price of the relevant security. This includes, but is not limited to:
      1. senior executives at the relevant listed company (who may have performance bonuses tied to the share price)
      2. major shareholders, such as fund managers, who may wish to ‘benchmark’ the price at the end of reporting periods to artificially inflate the value of their portfolio
      3. short-sellers, who may wish to decrease the price of the relevant listed security to maximise the value of their short position.
  • buys and sells securities in an attempt to create an artificial perception of trading activity that does not appear to have any economic rationale (this is known as ‘wash trading’) 
  • places a large number of buy or sell orders (often for very small amounts) then cancels them prior to trading (this is known as ‘spoofing’)
  • buys securities above the offer price to cause price increases

Tax evasion indicators

A customer:

  • uses an offshore service provider to hide beneficial ownership of securities
  • transfers securities from an Australia-based account to an account held in a jurisdiction known for it’s low-tax rate and/or tax secrecy
  • sells securities and acquires them again at a lower price, to artificially create a capital loss in order to obtain a tax benefit (this is known as a ‘wash sale’)
  • has not filed their income tax return for an extended period

Terrorism financing

Terrorism financing indicators

  • A customer is matched through screening against an Australian or international sanctions list
  • Open source information identifies a customer has links to known terrorist organisations or terrorism activities
  • Open-source information indicates a customer displays extremist ideologies (for example, social, political, environmental).

The content on this website is general and is not legal advice. Before you make a decision or take a particular action based on the content on this website, you should check its accuracy, completeness, currency and relevance for your purposes. You may wish to seek independent professional advice.

Last updated: 30 Sep 2024
Page ID: 1105

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