Introduction
As a compliance manager preparing for Tranche 2, you'll need to file three types of reports with AUSTRAC: SMRs, TTRs, and IFTIs. This guide explains what each one is, when to file them, and what happens if you get it wrong - all in plain English with real property examples.
What Tranche 2 Means for Compliance Managers
From July 2026, your agency becomes responsible for spotting and reporting certain transactions to AUSTRAC. Miss a report or file it late, and you face penalties starting at $1.1 million for bodies corporate or $220,000 for individuals.
The three reports serve different purposes. SMRs catch suspicious activity. TTRs track large cash movements. IFTIs monitor international money flows. Each has different triggers and deadlines you need to master.
SMR - Suspicious Matter Reports
What it is: A report you file when something doesn't feel right about a transaction or client. This is subjective - based on your reasonable suspicion, not proof.
When to file: Within 3 business days of forming the suspicion. The clock starts when any staff member suspects something, not when management finds out.
Common triggers in real estate
• Forged or altered documents (fake bank statements, doctored IDs)
• Client can't explain source of funds coherently
• Buyer has no genuine interest in the property (never inspects, doesn't care about price)
• Complex ownership structures that make no commercial sense
• Client offers cash incentives to rush or hide aspects of transaction
• Purchase price significantly above or below market value without explanation
Real example
A buyer provides bank statements showing $2 million in savings, but the account was only opened last week. The buyer can't explain where the money came from originally. You form a suspicion of money laundering and must file an SMR within 3 business days.
Important rule
Never tell the client you've filed or are considering filing an SMR. This is called "tipping off" and it's a criminal offence.
TTR - Threshold Transaction Reports
What it is: A report for any cash transaction of $10,000 or more. This is purely factual reporting - no suspicion needed.
When to file: Within 10 business days after the transaction occurs.
What counts as cash: Physical money (notes and coins), not bank transfers, cheques or credit cards. Multiple cash amounts from the same client on the same day get added together.
Common scenarios in real estate
• Buyer brings $15,000 cash for deposit
• Vendor receives $10,000 cash at settlement (rare but happens)
• Landlord receives $12,000 cash for multiple months of rent upfront
• Commercial tenant pays $10,000 cash for bond and first month
Real example
A buyer arrives at your office with $11,000 cash for a deposit on a $550,000 house. Even if everything seems legitimate and the buyer has good reasons for using cash, you must file a TTR within 10 business days.
Key point
TTRs are automatic for cash over the threshold. Don't make judgements about whether it's suspicious - if it's $10,000+ in physical cash, report it.
IFTI - International Funds Transfer Instructions
What it is: A report for any international money transfer, regardless of amount. Even $100 from overseas triggers this requirement.
When to file: Within 10 business days of the transfer instruction being given.
What to watch for in real estate
• Deposit coming from overseas bank account
• Settlement funds wired from international source
• Rental income sent to overseas landlord
• Commission payment to international referral partner
• Any money crossing Australian borders related to property
Real example
A Chinese investor purchases an apartment in Melbourne. Their deposit of $85,000 comes via wire transfer from Bank of China. You must file an IFTI within 10 business days, capturing sender details, amount, and purpose.
Critical detail
The report is due when the instruction is given, not when money arrives. If a client tells you Monday they're sending money from Singapore, your 10-day deadline starts Monday.
Key Differences at a Glance
SMR - Suspicious Matter Report
• Trigger: Something seems wrong
• Timeline: 3 business days from suspicion
• Amount: Any amount
• Includes: Attempted transactions too
TTR - Threshold Transaction Report
• Trigger: Cash of $10,000+
• Timeline: 10 business days from transaction
• Amount: $10,000 or more
• Physical cash only
IFTI - International Funds Transfer Instruction
• Trigger: Any international transfer
• Timeline: 10 business days from instruction
• Amount: Any amount
• Includes: Both inbound and outbound
Common Mistakes to Avoid
- Waiting for proof before filing SMR: Suspicion is enough. If something feels wrong, report it. AUSTRAC would rather receive over-reporting than miss genuine criminal activity.
- Forgetting to combine related cash amounts: Three deposits of $4,000 cash from the same client on the same day equals $12,000 - that's a TTR.
- Missing IFTIs on small amounts: A $500 transfer from New Zealand needs reporting just like a $500,000 transfer from Hong Kong.
- Discussing SMRs with anyone unnecessary: Only tell staff who genuinely need to know. Never hint to the client.
- Not reporting because client is "trusted": Your 10-year client who suddenly pays cash needs the same TTR as a stranger would.
14-Day Action Plan (Printable)
Day 1-2
Map where cash typically enters your business (deposits, rent, settlements)
Day 3-4
Create SMR trigger list with 10 specific examples relevant to your market
Day 5-6
Set up secure folder for report copies with restricted access
Day 7-8
Brief accounts team on identifying international transfers in trust account
Day 9-10
Create reporting template with fields needed for each report type
Day 11-12
Run scenario training: give staff examples, ask "Which report?"
Day 13-14
Register for AUSTRAC Online if not already done (needed to file reports)
FAQs (Real Estate & Conveyancers)
Q: What if I'm not sure whether to file an SMR?
If you're genuinely unsure, err on the side of reporting. Document your reasoning. AUSTRAC prefers over-reporting to under-reporting.
Q: Do bank cheques or bank transfers need TTRs?
No. TTRs are only for physical cash - notes and coins you can hold.
Q: What if the international transfer happens between the buyer's own accounts?
Still needs an IFTI. Any international transfer connected to your services requires reporting.
Q: Can I batch multiple reports together?
No. Each report must be filed separately with its own reference number.
Q: What if I file a report incorrectly?
Contact AUSTRAC immediately to correct it. Honest mistakes fixed quickly rarely attract penalties.
Real Estate Scenario Examples
Scenario 1
Elderly vendor insists on $11,000 cash at settlement for "personal reasons." Not suspicious, just unusual. File TTR only.
Scenario 2
Young buyer with minimum wage job suddenly has $200,000 cash deposit. Can't explain coherently. File SMR (and TTR if physical cash).
Scenario 3
UK investor sends £50,000 for property deposit via bank transfer. Completely legitimate transaction. File IFTI only.
Scenario 4
Local developer pays $9,999 cash deposit, then another $9,999 cash next day. Suspicious attempt to avoid TTR threshold. File both SMR and TTR (for combined $19,998).
Conclusion
Understanding SMRs, TTRs and IFTIs isn't complex once you know the triggers. Suspicious activity gets an SMR within 3 days. Cash over $10,000 gets a TTR within 10 days. International transfers get an IFTI within 10 days. Build these checks into your processes now, and reporting becomes routine rather than panic-inducing when Tranche 2 begins.
Additional Information
For more comprehensive information on Tranche 2 AML/CTF reforms and regulatory obligations, visit AUSTRAC's official website at: https://www.austrac.gov.au/about-us/amlctf-reform/new-amlctf-rules