AUSTRAC updates digital currency exchange providers on their future obligations

Maria Nikolova

AUSTRAC is currently drafting AML/CTF rules, which will be published on its website for public consultation on January 2, 2018.

Australia unveiling new law to decimate smaller FX firms

After the Australian Parliament passed the Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2017 (Amendment Act), or the so-called “Bitcoin bill”, earlier this month, Australia’s financial intelligence agency AUSTRAC is now updating digital currency exchange providers on what is in store for them.

The document received Royal Assent on December 13, 2017. Any changes will come into effect from the date of Proclamation, which is expected to be April 1, 2018.

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

  • 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 says it is currently drafting AML/CTF Rules that will be released shortly for public consultation. On January 2, 2018, the Draft Rules will be published on AUSTRAC’s website for public consultation, with the consultation to close on February 6, 2018.

The reforms to the legislation are seen necessary to adequately reflect the role digital currencies play in the modern economy. The document aims to deter criminals from using convertible digital currencies to move illicit funds and avoid detection, as well as to facilitate the collection of transactional information about exchanges in digital currency for use by law enforcement, intelligence and national security agencies.

The Amendment Act envisages penalties for those that fail to comply. The penalties commence from imprisonment for 2 years and/or 500 penalty units for those who violate the requirement for registration with AUSTRAC for providing digital currency exchange services. The penalty may reach 7 years of imprisonment and a fine of 2,000 penalty units if the AUSTRAC CEO gave the person a direction in relation to violations of registration rules and accepted undertakings given by the person in relation to registration violations on numerous occasions.

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