Australian anti-money laundering regulator AUSTRAC has released draft AML/CTF Rules for consultation following recently passed amendments to the Anti-Money Laundering and Counter-Terrorism Financing Act which expand Australia’s AML/CTF regime to digital currency exchanges. The amendments will come into effect from the date of Proclamation which is expected to be 1 April 2018.
Under the amendments exchanging digital currency for money (whether Australian or not) or exchanging money (whether Australian or not) for digital currency, where the exchange is provided in the course of carrying on a digital currency exchange business will attract obligations under the AML/CTF regime. Notably, exchanging one digital currency for another will not be regulated.
Digital currency has been broadly defined as a digital representation of value that, among other things, is not issued by a government, is interchangeable with money and is generally available to members of the public without restriction on its use. Accordingly, cryptocurrencies such as bitcoin and ripple will be digital currencies.
Providers of digital currency exchange services will be required to:
- enrol as a reporting entity with AUSTRAC and register on the new Digital Currency Exchange Register;
- adopt and maintain an AML/CTF program to identify, mitigate and manage the money laundering and terrorism financing risks they may face;
- identify and verify the identities of their customers; and
- report suspicious matters to AUSTRAC.
The draft AML/CTF Rules set out the criteria for registering on the Digital Currency Exchange Register and determining applications for registration. The consultation period for the draft AML/CTF Rules will close on 13 February 2018.