Tipping Off: What Accountants and Lawyers Can (and Can't) Say to Clients in 2026

Of every obligation in Australia's AML/CTF regime, tipping off is the one where mistakes carry criminal — not just civil — consequences.

It's also the one most likely to trip up well-meaning professionals who think they're just being polite to a client.

This guide explains what tipping off actually means under the reformed AML/CTF Act, how the rules changed in early 2026, and exactly what you can and cannot say when you've filed (or might file) a Suspicious Matter Report.

What the Tipping-Off Offence Actually Says

The tipping-off offence prohibits a reporting entity (or anyone within it) from disclosing certain information that could prejudice an investigation. Specifically, you must not disclose:

1. That a Suspicious Matter Report (SMR) has been formed, lodged, or considered
2. The contents or existence of a notice from AUSTRAC, ACIC, or law enforcement requesting information
3. Information that would reasonably be expected to lead someone to figure out the above

The offence applies to:

• The compliance officer
• Partners, directors, and senior managers
• Any employee who knows about the SMR
• Anyone the information was disclosed to in the course of the firm's operations

Maximum penalty: 2 years imprisonment, or 120 penalty units ($39,960 at 2026 rates), or both.

This is one of the few criminal offences in the AML/CTF Act. AUSTRAC and the Commonwealth Director of Public Prosecutions take it seriously.

What Changed in 2026

The 2026 reforms refined the tipping-off offence in several ways that matter for Tranche 2 entities:

1. The "objective tendency" test

The old rule required intent — you had to mean to prejudice an investigation. The new rule applies an objective test: would the disclosure reasonably be expected to prejudice an investigation? You can commit the offence even if you didn't intend to.

2. Permitted disclosures expanded

The reforms created clearer carve-outs for legitimate disclosures:

• To another reporting entity in the same designated business group, for AML/CTF purposes
• To external auditors and regulators conducting their lawful duties
• To legal advisers for the purpose of obtaining legal advice
• For the prevention or detection of an offence

These are narrow. Don't assume they apply without checking.

3. Application to Tranche 2

From 1 July 2026, tipping-off applies in full to accountants, lawyers, real estate agents, conveyancers, and jewellers. This is a significant change for professions that have historically prided themselves on transparency with clients.

If you're a lawyer who has always told clients exactly what you're doing on their matter, or an accountant who explains every entry, the tipping-off rules require you to learn a new kind of professional silence.

Do's and Don'ts: A Plain-English Reference

When you've filed an SMR (or are considering one)

❌ DO NOT tell the client an SMR has been or will be filed.

❌ DO NOT tell the client AUSTRAC or law enforcement has been in contact about them.

❌ DO NOT tell the client they're being investigated, or that you suspect them of money laundering.

❌ DO NOT disclose the contents of any AUSTRAC notice or production order you've received.

❌ DO NOT suggest the client get a lawyer "because something might be coming."

❌ DO NOT delay or refuse a transaction in a way that signals "we know."

✅ DO continue to provide services as normal where lawful (unless instructed otherwise).

✅ DO keep records of the suspicion, the SMR, and any related decisions in your file.

✅ DO seek legal advice if you're unsure — that's a permitted disclosure.

When you're declining to act for a client

This is the most common pressure point. You suspect a client. You file an SMR. You decide you don't want to keep acting for them. The client asks why.

❌ DO NOT say: "We've reported you to AUSTRAC."

❌ DO NOT say: "We have suspicions about your transactions."

❌ DO NOT say: "We've been told not to act for you."

✅ DO say: "We've decided we are not the right firm for this matter."

✅ DO say: "After review, we are unable to continue to act."

✅ DO say (if true): "We have a conflict that prevents us continuing."

The Australian Bar Association and Law Society guidance is clear: a generic "we are unable to act further" is a permissible response and is not, on its own, a tip-off.

When the client asks why a transaction is delayed

For accountants and conveyancers, this is the second pressure point. Enhanced due diligence (EDD) takes time. The client wants to know why.

❌ DO NOT say: "We have to do extra checks because you triggered our system."

❌ DO NOT say: "There's a flag on your file."

✅ DO say: "We're completing our standard onboarding process."

✅ DO say: "Under our regulatory obligations, we conduct due diligence on all clients. Some matters take longer than others."

✅ DO say: "We need additional information to proceed. Here is what we need."

CDD requests for additional documents are not, by themselves, a tip-off — they're a routine part of the regime. The line is crossed when you explain why the request is more thorough than usual.

Client Conversation Templates

Template 1: Declining new engagement after risk review

"Thank you for the introduction. After our standard intake review, we've concluded that we are not the right firm to act on this matter. We're not able to provide further detail. We can provide a list of other firms that handle this work."

Template 2: Disengaging from an existing client

"Following our recent review of the matter, we have decided we are unable to continue to act for you. We will arrange for the orderly transfer of your file to another firm of your choosing. Please nominate replacement representation by [date]."

Template 3: Responding to "why is this taking so long?"

"We are completing our standard regulatory due diligence. As you know, our profession is subject to AML/CTF obligations that apply to all clients. We will be in touch as soon as we can move to the next step. In the meantime, here is the additional information we need: [list]."

Template 4: Internal staff response

If a staff member who knows about an SMR is asked by a client about it, or about the matter generally, the response is:

"I'm not the right person to speak to about this. Please raise it with [Compliance Officer / Partner]."

The Compliance Officer then decides what disclosure (if any) is permitted under the law.

Common Mistakes That Have Led to Tipping-Off Charges

These are real patterns AUSTRAC and prosecutors have flagged:

1. The well-meaning explanation

A bookkeeper, asked by a long-standing client why a payment is being held up, says: "I think management has concerns about the source of funds." The bookkeeper meant to be helpful. It's a tip-off.

2. The professional courtesy

A lawyer, declining to take on a matter, says: "You should know we filed something with AUSTRAC. You'll want to take advice." The lawyer thought they were doing the client a favour. It's a clear tip-off and likely criminal.

3. The body language tip

A real estate agent who, before a transaction, was warm and chatty, suddenly becomes clipped, formal, and unwilling to make eye contact after EDD is initiated. The client correctly infers something is wrong. This isn't legally tipping-off, but it can be circumstantial evidence in a prosecution if combined with anything else.

4. Disclosure to the client's accountant or lawyer

You're an accountant. The client's lawyer rings asking about a transaction. You say: "I can't talk about that, we have a regulatory issue." That phrase is itself a tip-off if it would lead the lawyer (and through them, the client) to figure out an SMR was filed.

Internal Controls That Reduce Tipping-Off Risk

A compliance program should include controls that physically reduce the chance of accidental tip-offs:

AML Mate's training module includes a dedicated tipping-off section with role-play scenarios and a quiz, so every staff member who could be asked an awkward question knows exactly what not to say.

What If You Realise You Tipped Off Accidentally?

If you think you may have tipped off a client — even unintentionally — do not try to fix it by lying or further obfuscating. That makes it worse.

Instead:

1. Document immediately what was said, by whom, and to whom
2. Notify your Compliance Officer (or, if you are the CO, your senior management or board)
3. Get legal advice (this is a permitted disclosure)
4. File a follow-up SMR if the disclosure changed the risk picture
5. Consider whether to self-report to AUSTRAC

Self-reporting doesn't guarantee immunity, but as the Cointree case showed, a cooperative posture is treated more favourably than concealment.

The Underlying Principle

Tipping-off is not about secrecy for its own sake. It's about preserving the integrity of money-laundering investigations. The ML/TF financial intelligence pipeline only works if subjects of suspicion don't know they're under scrutiny.

If you're a Tranche 2 professional and you've been used to operating with full transparency, the new rule will feel uncomfortable. That's the point. The discomfort is the price of being part of the regulated population.

Get your scripts ready. Train your staff. Document your decisions. And when in doubt, say less, not more.

For more on the SMR process itself — when to suspect, how to file, and what happens after — see our complete SMR guide.

Need help training staff on tipping-off rules? AML Mate's training module includes a dedicated tipping-off section with role-plays, a quiz, and certificates of completion — so your whole team knows exactly what they can and can't say. Or run a free compliance check to see all your Tranche 2 obligations in one view.