Those who operate bitcoin or other digital currency exchanges in Australia will soon have to register with the Australian Transaction Reports and Analysis Centre (AUSTRAC).
AUSTRAC has been given the authority to monitor local cryptocurrency exchanges through the new Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2017.
Why was the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2017 passed?
This bill was first brought to parliament in August 2017 as a means to fight the threat of financial crime in Australia. Findings of the Financial Action Task Force also revealed that the current laws to fight money laundering in Australia were seriously flawed and in need of upgrading. Before this law was passed, there was no law in Australia regulating the activities of digital currencies.
What are the new laws and powers of AUSTRAC?
Under the new legislation, AUSTRAC will have the power to monitor all digital currency exchanges within Australia’s borders, with an aim to ensure that the transactions are not being used for money laundering or terrorism-related activities.
Under this new law, digital currencies will be treated the same way as physical cash in a bank with regard to money laundering and activities suspected to be linked to terrorism financing.
The new legislation states that any business which offers digital currency exchange services must register with AUSTRAC. In addition, they are required to:
- Verify their customers’ identities
- Maintain a record of transactions
- Report any digital currency transfers valued at $10,000 or more or any otherwise suspicious transactions
- Run anti-terror and anti-laundering programs.
What are the penalties for not adhering to the new laws?
Under the new laws, any company caught operating an unregistered digital exchange will be held criminally liable. The penalties start at a two-year jail term and/or a fine of $105,000 for failure to register but range up to seven years in jail and a $2.1 million fine for corporations ($420,000 for individuals) for more serious offenses.
Recent case example
AUSTRAC recently suspended two cryptocurrency businesses for their alleged links to an organised crime syndicate.
The shutdown follows the arrest of a 27-year-old Melbourne man by the Australian Federal Police (AFP) for drug trafficking offences, as well as charges being laid against two other individuals as part of an investigation into an organised crime syndicate.
Police allege that the man was instrumental in directing the operations of the criminal syndicate, which it said “used various dark net sites, bitcoin accounts and legitimate business for the sourcing, payment and distribution of the illicit drugs”.
AUSTRAC subsequently suspended two digital currency exchange providers listed as AUSCOIN ATM and MK Buy & Sell, which trades as SK BTC, in which the AFP said the man was a key member.
Under the new legislation, bitcoin and other digital currencies will be formally regulated in a similar way to cash in a bank. By maintaining a digital register of all digital currency exchanges in Australia, AUSTRAC will be better equipped to ensure that the transactions are not being used for money laundering or terrorism-related activities.
Nyman Gibson Miralis specialise in all aspects of Bitcoin and digital currency law, assisting companies and individuals who are the subject of investigations by AUSTRAC, the AFP, ATO and ACIC. If you require assistance, contact one of our expert criminal defence lawyers