AUSTRAC Guidance

Risk Indicators & Suspicious Activity

Official AUSTRAC risk indicators and suspicious activity red flags for real estate, accountants, lawyers, and precious metals dealers. Learn what ML/TF warning signs to watch for under Tranche 2 reforms.

Official AUSTRAC Guidance on Identifying ML/TF Risk

AUSTRAC has published comprehensive risk indicators to help businesses identify potential money laundering and terrorism financing (ML/TF). From 1 July 2026, understanding these indicators is essential for all Tranche 2 reporting entities.

The Four Areas of ML/TF Risk

AUSTRAC identifies 4 main risk areas you must monitor:

  1. Kinds of customers - Who you're dealing with, their profile and behaviour
  2. Kinds of services - What services you're providing and how they might be exploited
  3. Delivery channel risk - How you onboard and interact with customers
  4. Foreign jurisdiction risk - Connections to higher-risk countries

Customer Behaviour Red Flags

According to AUSTRAC, watch for customers who:

  • Avoid face-to-face meetings
  • Are obstructive or secretive in their dealings
  • Appear nervous or defensive when questioned
  • Don't seem to understand their business sector
  • End the relationship after you ask for more information
  • Have unusual knowledge about AML/CTF requirements
  • Are prepared to pay higher fees without clear reasons
  • Provide identity documents with inconsistencies
  • Use aliases or name variations between transactions

Customer Profile Red Flags

AUSTRAC identifies profile indicators including:

  • Lifestyle or transactions inconsistent with known income/business
  • Subject to negative media reports linking them to criminal activity
  • Changed professional advisers often without legitimate reasons
  • Politically exposed person (PEP) or closely linked to one
  • On Australian or UN targeted financial sanctions lists
  • From or present in a high-risk country
  • Connected to industries with higher ML/TF risks

Source of Funds Red Flags

  • High-value assets with no clear funding source
  • Funds or transaction activity that doesn't match financial standing
  • Won't identify source of wealth or provides false information
  • Companies set up with unknown or hard-to-value equity
  • Back-to-back transactions with rapidly increasing values
  • Frequent overseas transfers inconsistent with profile

Unusual Transaction Red Flags

  • Requests with no clear economic reason
  • Changes instructions multiple times without good reason
  • Split or structured transactions to avoid thresholds
  • Quick 'u-turn' transactions (money in/out same accounts)
  • Transactions inconsistent with expected business
  • Uses cryptocurrency/virtual assets inconsistent with profile
  • Receives money from unrelated third parties without reason

Complex Structure Red Flags

  • Requests complex business structures to hide beneficial ownership
  • Large volumes of company/trust creations at one time (wholesale sales)
  • Use of shell companies (no real business activities)
  • Requests to buy aged shelf companies for legitimacy
  • Transfers between subsidiaries with no apparent reason
  • Multi-layered trust structures
  • Offshore arrangements with no clear commercial reason

Foreign Jurisdiction Red Flags

Connections to countries that:

  • Have weak AML/CTF regulations or governance
  • Are tax havens or secrecy jurisdictions
  • Have high rates of corruption or serious crime
  • Are designated high-risk by FATF
  • Are subject to Australian or UN sanctions
  • Finance or support terrorist activities
  • Are in conflict zones

Using Risk Indicators Effectively

Remember:

  • One indicator alone may not suggest suspicious activity
  • Multiple indicators together strengthen suspicion
  • Context matters - consider your specific business and customer
  • Document your assessment and reasoning
  • Apply enhanced CDD when you're unsure
  • Report suspicious matters to AUSTRAC when you have reasonable grounds

Risk Categories

  • Customer Behaviour

    Avoids meetings, obstructive, secretive, defensive when questioned, ends relationship when asked for information, unusual AML knowledge.

  • Client Profile

    Lifestyle inconsistent with known income, PEP connections, adverse media reports, changed advisers often, on sanctions lists.

  • Source of Funds

    High-value assets with no clear source, funds don't match financial standing, won't explain wealth origin, complex fund flows.

  • Unusual Transactions

    No economic reason, rapid value increases, quick u-turn transfers, third-party payments without explanation.

  • Complex Structures

    Requests to hide beneficial ownership, large volumes of entities created at once, shell/shelf companies, offshore structures.

  • Foreign Jurisdiction

    Connections to high-risk countries, FATF non-cooperative jurisdictions, tax havens, sanctioned countries.

Common questions

How do I use AUSTRAC risk indicators?

Risk indicators help you identify potential ML/TF in your customer relationships. On their own, one indicator may not suggest suspicious activity. If you're unsure whether there are reasonable grounds for suspicion, conduct further monitoring and examination, including applying enhanced customer due diligence measures. Document your assessment.

What are the 4 areas of ML/TF risk?

AUSTRAC identifies 4 main risk areas: (1) Kinds of customers - who you're dealing with, their profile and behaviour; (2) Kinds of services - what services you're providing and how they might be exploited; (3) Delivery channel risk - how you onboard and interact with customers; (4) Foreign jurisdiction risk - connections to higher-risk countries.

What customer behaviours indicate highest risk?

Highest risk behaviours include: avoids face-to-face meetings, obstructive or secretive in dealings, appears nervous or defensive when questioned, doesn't understand their business sector, ends relationship when asked for more information, has unusual knowledge of AML/CTF requirements, prepared to pay higher fees without clear reasons.

What transaction patterns should I watch for?

Key patterns include: transactions inconsistent with client profile, funds/activity that don't match financial standing, back-to-back transactions with rapidly increasing values, transactions with no clear economic reason, split or structured transactions to avoid thresholds, quick 'u-turn' transactions (money in/out same accounts rapidly).

How do complex structures increase risk?

Complex structures can hide beneficial ownership and create distance between criminals and their funds. Watch for: requests for complex business structures, large volumes of company/trust creations at once (wholesale sales), use of shell companies (no real business) or shelf companies (aged companies bought for legitimacy), multi-layered trusts, offshore arrangements with no clear reason.

What makes foreign connections higher risk?

Factors that increase ML/TF risks include links to countries: with weak AML/CTF laws or governance, that are tax havens or secrecy jurisdictions, with high corruption or serious crime rates, subject to FATF high-risk designation, subject to Australian or UN sanctions, in conflict zones, or known for people trafficking.

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