AUSTRAC: Digital currency exchange business registration does not constitute endorsement

Maria Nikolova

AUSTRAC explains that if digital currency exchange businesses are registered with the agency, this does not mean they are “endorsed”, “approved’ or “licensed”.

Although the new rules for digital currency exchange businesses in Australia got into effect earlier this month, the status of such entities remains far from clear.

Australia’s financial intelligence agency AUSTRAC has earlier today sought to draw the difference between being a registered entity and being endorsed. In a notice on its website, the agency said that the registration by AUSTRAC of a digital currency exchange or remittance service provider does not constitute an endorsement of that business or compliance with any anti-money laundering and counter-terrorism financing (AML/CTF) obligations.

Digital currency exchanges have been required to apply for registration from April 3, 2018 and remittance providers are already required to be registered.

The agency warned that businesses must not use their registration status in any way that suggests AUSTRAC or the Commonwealth Government endorses them or any of their services or products. Words including ‘endorsed’, ‘approved’ or ‘licensed’ are examples of inappropriate wording.

The new requirements stem from the Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2017, also known as the “Bitcoin bill”. In December last year, the legislative piece passed both Houses and got Royal Assent.

Let’s recall that the Amendment Act expands legislation to include regulation of digital currency exchange providers. Under the new regulation, such providers are required to:

  • enroll and register with AUSTRAC;
  • establish, implement and maintain an AML/CTF program, which sets the framework for businesses to comply with their obligations, including customer due diligence requirements;
  • report threshold transactions and suspicious matters to AUSTRAC, and
  • keep appropriate records.

AUSTRAC’s CEO may suspend the registration of an entity in certain cases. In such cases, the AUSTRAC CEO may have regard to whether the person or any of its key personnel have been:

  • (a) charged, prosecuted, or convicted in relation to money laundering, terrorism financing, terrorism, people smuggling, fraud, a serious offence, or an offence under the AML/CTF Act or FTR Act;
  • (b) the subject of a civil penalty order made under the AML/CTF Act; or
  • (c) the subject of any adversely determined civil or criminal proceedings or enforcement action in relation to the management of an entity, or their commercial or professional activities.

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