Australian Cybercrime Squad issues stark warning to digital currency exchanges

Maria Nikolova

“Let this be a warning to digital currency exchange providers: if you fail to comply with your obligations, your actions will not go unnoticed,” says Cybercrime Squad Commander, Detective Superintendent Matt Craft.

The NSW Police Force and the Australian Transaction Reports and Analysis Centre (AUSTRAC) have earlier today issued a rather stark message to digital currency exchanges regarding their obligations.

In April 2018, amendments to the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 were introduced. As a result of these changes, the scope of the Act was expanded to include regulation of digital currency exchange providers. The obligations of these entities comprise registering with AUSTRAC, verifying customer identity, reporting suspicious matters and over-threshold cash transactions; and complying with record-keeping requirements.

AUSTRAC National Manager for Regulatory Operations, Dr Nathan Newman, commented:

“Digital currency exchange providers have had adequate time and opportunity to comply with these new laws and AUSTRAC has already refused the registration of two digital currency exchange providers. We continue to actively monitor the sector’s compliance”.

Cybercrime Squad Commander, Detective Superintendent Matt Craft, said this is a timely reminder to those who deal in digital currencies to ensure they are meeting their obligations.

“Any information about illicit activity by digital currency exchange providers that is provided to our squad – whether related to organised crime, terrorism, or technology-enabled crime – will be actively pursued in partnership with AUSTRAC.

“Let this be a warning to digital currency exchange providers: if you fail to comply with your obligations, your actions will not go unnoticed.”

Det Supt Craft added that an increase in popularity of Dark Net marketplaces will also mean increased targeting by law enforcement. “With police and our partners proactively targeting this space, I’ll assure these networks that their anonymity is no longer guaranteed.”

Let’s recall that the law reforms concerning digital currency exchange providers came into effect on April 3, 2018. Under the new regulation, DCE 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.

The registration by AUSTRAC of a digital currency exchange or remittance service provider, however, does not constitute endorsement of that business or compliance with any anti-money laundering and counter-terrorism financing (AML/CTF) obligations. DCE providers are not allowed to put AUSTRAC’s logo on their websites even if they are registered.

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