Cryptocurrencies get AUSTRAC anti-money laundering and terrorism funding scrutiny

Updated

Cryptocurrency exchanges operating in Australia will now come under the scrutiny of Australia's financial intelligence agency, AUSTRAC, and be monitored for money-laundering and terrorism funding activities.

The new law gives AUSTRAC the powers to police digital currency exchanges (DCEs) trading in a variety of crypto currencies including bitcoin, Ethereum and Ripple.

AUSTRAC CEO Nicole Rose said the new laws had been generally welcomed by the digital currency exchange sector.

"The new laws will strengthen [AUSTRAC's] intelligence capabilities to help DCEs implement systems and controls that can minimise the risk of criminals using them for money laundering, terrorism financing and cybercrime," Ms Rose said.

"It's recognised that this reform will help protect their business operations from money laundering and terrorism financing, while regulation will also help strengthen public and consumer confidence in the sector."

Suspicious transactions must be reported

DCEs with a business operation located in Australia must now register with AUSTRAC and meet Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) compliance and reporting obligations before May 14.

There are believed to be fewer than 100 DCEs operating in Australia. So far around 20 have registered with AUSTRAC.

The AML/CTF act requires businesses on AUSTRAC's register to collect information to establish a customer's identity, monitor transactional activity and report transactions or activity that is suspicious or involves large amounts of cash over $10,000.

"AUSTRAC now has increased opportunities to facilitate the sharing of financial intelligence and information relating to the use of digital currencies, such as bitcoin and other cryptocurrencies, with its industry and government partners," Ms Rose said.

"The information that these businesses will collect and report to AUSTRAC will have immediate benefit in the fight against serious crime and terrorism financing."

Cryptocurrencies and crime

The move to bring DCEs under AUSTRAC oversight follows a report from the Australian Criminal Intelligence Commission (ACIC) into the increased activity by criminal gangs in cryptocurrencies.

"Virtual currencies, such as bitcoin, are increasingly being used by serious and organised crime groups," ACIC noted in its report on Australian organised crime, released in August.

"They are a form of currency that can be sold anonymously online, without reliance on a central bank or financial institution to facilitate transactions."

There is abundant evidence that cryptocurrencies are being used on darknet marketplaces like Silk Road 3.0 and Valhalla Marketplace to facilitate the sale and trafficking of illicit drugs, firearms, precursor chemicals and child exploitation materials.

Ransomware attacks launched by cyber-criminals commonly demand payments to be made in cryptocurrencies to avoid being tracked.

A series of tougher regulatory responses around the world to the potential misuse of cryptocurrencies has sent their values tumbling since their peaks of late last year.

The largest, and most popular, bitcoin has lost around 60 per cent of its value since December, while later entries to the market, such as Ethereum, are down more.

Topics: crime-prevention, markets, australia

First posted