If you are a digital currency exchange provider, you are now required to meet certain regulatory obligations in accordance with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth). These changes will be implemented by the Australian Transaction Reports and Analysis Centre (AUSTRAC), the finance intelligence agency and anti-money laundering and counter-terrorism financing regulator in Australia.
As the deadline for compliance with these regulations approaches, here's what you need to know.
Registration
Following the commencement of these changes on 3 April 2018, digital currency exchange (DCE) businesses will now be required to register their company with AUSTRAC. If your business already provides exchange services to convert digital currency into fiat currency (and vice versa) you will need to ensure you are enrolled and registered with AUSTRAC by 14 May 2018. If you are proposing to commence operating a digital currency exchange from 15 May 2018, you must register with AUSTRAC before doing so. If you fail to do so and provide digital currency exchange services without being registered with AUSTRAC, criminal and civil penalties may apply.
Other obligations
In addition, digital currency exchange businesses will need to:
- Adopt and maintain an anti-money laundering and counter-terrorism financing program to identify, mitigate and manage money laundering and terrorism financing risks
- Identify and verify the identities of customers
- Report to AUSTRAC any suspicious matters and transactions involving physical currency of $10,000 or more
- Keep records for seven years
AUSTRAC recently released a guide to preparing and implementing an anti-money laundering and counter-terrorism financing (AML/CTF) program for digital currency exchange providers. This guide has been prepared in conjunction with industry bodies and has been issued to asset DCE providers understanding their AML/CTF obligations, whether they need to be registered and what is important when preparing an AML/CTF program.
AUSTRAC are conscious that there will be a transition period for digital currency exchange businesses to implement changes in order to comply with the new obligations. AUSTRAC has said that transitional registration arrangements will be in place to allow existing businesses to continue providing services while their registration application is being considered. AUSTRAC has stated that until 2 October 2018, it will not take certain enforcement action, subject to a reporting entity meeting certain conditions. As such, digital currency exchange businesses will need to ensure that they are taking all reasonable steps to comply with these obligations through this transition period.
If you are a digital currency exchange business or interested in creating a digital currency exchange business and would like to discuss the new AUSTRAC regulatory obligations, contact HopgoodGanim Lawyers’ Corporate Advisory and Governance team.