The committee makes two recommendations only – for some definitions to be clarified, and for the bill to be passed.
The Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2017, also known as Australia’s “bitcoin bill”, has marked some important progress. Today, the Senate Legal and Constitutional Affairs Legislation Committee published its report on the bill making only two recommendations: some definitions should be clarified; and the bill should be passed.
The report is issued after in August this year, the Senate referred the bill to the Committee for inquiry and report.
The bill, which consists of a schedule containing seven parts, seeks to amend the AML/CTF Act and the Financial Transaction Reports Act 1988 (FTR Act) to:
- expand the objects of the AML/CTF Act to reflect the domestic objectives of AML/CTF regulation;
- regulate digital currency exchange providers;
- provide regulatory relief to industry with measures such as clarifying due diligence obligations, qualifying certain terms and allowing certain bodies to share information;
- strengthen AUSTRAC’s investigation and enforcement powers by expanding the powers of the AUSTRAC CEO;
- give police and customs officers broader powers to search and seize physical currency and bearer negotiable instruments (BNI) and establish civil penalties for failing to comply with questioning and search powers; and
- clarify other regulatory and administrative powers.
In the report, tabled today, the committee says it understands that the bill’s provisions would be the first phase in a multiple-stage reform effort to update the Australian anti-money laundering and counter-terrorism financing regime. The reforms are needed in order to adequately reflect the role digital currencies play in the modern economy.
The committee emphasizes that submitters were generally positive about the intent and provisions of the bill, and the contribution it would make to preventing money-laundering and terrorism financing, in addition to improving the legislative framework governing digital currency.
However, the committee also heard from some submitters who expressed concern about the changes to definitions and potential resulting uncertainty. That is why, the committee recommends that the government consider whether the terms ‘article’, ‘stored value card’ and ‘in the course of carrying on a business’ in the bill and Explanatory Memorandum, could be better defined.
The “bitcoin bill” proposes changes to the current AML/CTF law by modernizing it to take into account digital currencies like Bitcoin. Under the bill, businesses that trade digital currencies for money, and vice versa, will be 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.
The penalties proposed by the bill range 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.
Considering that one penalty unit currently equals $210, the maximum fine is $420,000.