Smith had one season to run on his three-year-deal at the Sharks but was released for personal reasons.
The 32-year-old had been on the Knights' radar at the end of the 2008 season before he eventually signed with Cronulla.
Bennett admitted his surprise to have a player of Smith's quality arrive on his doorstep.
"We are very fortunate to have Jeremy coming to the club, I just didn't think a quality player would be available," Bennett.
"He got an opportunity to leave Cronulla and we got an opportunity to take him; I couldn't believe our luck.
"It is certainly one I didn't think would happen until next year but we grabbed it as quick as we could.
"We will all see what Jeremy brings on the field, but it is what he brings off the field as well.
"His actions certainly speak louder than his words, but he isn't afraid to speak up either.
"He won't tolerate teammates that aren't giving their best."
The Sharks released a statement on Wednesday praising the New Zealand international's efforts since joining the club from local rivals the Dragons after the 2010 season.
"Smith gave outstanding service to the Sharks in his two years at the club, at times assuming the leadership role in the absence of Paul Gallen," the statement read.
Cronulla are well covered in the back-row department, with off-season signings Luke Lewis (Penrith) and Chris Heighington (Wests Tigers) joining skipper Paul Gallen, Anthony Tupou, Jayson Bukuya and Wade Graham in 2013.
- AAP
