Government cracks down on bitcoin money laundering

Moves to close regulatory gap for digital currencies

The government has moved to close what it has described as a “regulatory gap” by bringing businesses that deal with the exchange of digital currencies such as bitcoin within the purview of Australia’s anti-money-laundering rules.

Justice minister Michael Keenan today introduced the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2017 in the lower house.

The bill’s measures include the regulation of digital currency exchange providers. Currently, Australia’s AML/CTF regime can only capture an “e-currency” that is backed by a physical thing and so excludes bitcoin and other crytpocurrencies.

Under the new measures in the bill, bitcoin exchanges and similar business will have to enrol in a Digital Currency Exchange Register maintained by AUSTRAC. Exchanges will have to implement an AML/CTF program to mitigate the risks of money laundering as well as identify and verify the identity of their customers.

Such businesses will also have to report suspicious transactions, including cash transactions exceeding $10,000 or more and keep seven years’ worth or records about their anti-AML/CTF measures, customer identification and transactions.

“As a result of the amendments in this Bill, businesses which convert digital currency to money will have to collect and store personal information, and report certain transactions to AUSTRAC,” the bill’s explanatory memorandum states.

“This reporting process will occur in accordance with the existing requirements of the AML/CTF Act. Some of this information may then be compiled, analysed and disseminated by AUSTRAC as actionable financial intelligence to authorised government agencies and international counterparts to aid ongoing efforts to combat and disrupt ML and TF, and other serious crimes.”  

A digital currency is defined as a “digital representation of value” that “functions as a medium of exchange, a store of economic value, or a unit of account”, “is not issued by or under the authority of a government body”, “is interchangeable with money (including through the crediting of an account) and may be used as consideration for the supply of goods or services; and “is generally available to members of the public without any restriction on its use as consideration”; or “a means of exchange or digital process or crediting declared to be digital currency by the AML/CTF Rules”.

The government revealed last year that it would bring digital currencies into the scope of the country’s anti-money-laundering rules.

A 2016 government review of the AML regime concluded that the use of digital currencies such as bitcoin to evade monetary controls poses a “significant” risk.

Earlier this year the government changed the GST treatment of bitcoin and similar cryptocurrencies to end the ‘double taxation’ burden which them treated like a commodity rather than a currency.

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Tags AUSTRACBitcoinmoney launderingdigital currencycryptocurrencycryptocurrencies

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