Friday, 18 August 2017 12:16
Australia to regulate digital currencies
Regulator to be given increased powers
Australia’s coalition government has announced plans to regulate digital currencies for the first time.
The action follows similar moves by authorities in Japan and China to control digital current activity. The Australian government said the reforms are necessary due to the constantly evolving threat of financial crime with new technologies emerging and criminals seeking to exploit them.
The plans are part of reforms to strengthen the country’s Anti-Money Laundering and Counter-Terrorism Financing Act and to increase the powers of financial regulator AUSTRAC (the Australian Transactions and Reporting Analysis Centre).
The proposals come after the country’s biggest banks Commonwealth Bank of Australia, was hit by allegations that A$90m (US$70.9m) was laundered to Hong Kong using its cash deposit machines.
China and Japan
In January and February, the People's Bank of China warned several digital currencies that they would be closed if they violated AML regulations. The exchanges have subsequently improved their systems and the authorities have so far held off from formally regulating digital currencies.
Unlike China, Japan set out legislation earlier this year for bitcoin to become a legal currency, and several major retailers now accept bitcoin as a payment method.
The new Australian reforms will bring digital currency exchange providers under the remit of AUSTRAC, in addition to strengthen the regulator’s investigation and enforcement powers.
The government said the reforms will also:
- Give increased search and seizure powers to police and customs officers at the border
- Provide regulatory relief to the financial industry totalling A$36m a year through the deregulation of low-risk industry sectors such as cash-in-transit, which is already subject to state and territory licensing requirements.
“These reforms appropriately balance the threat of organised crime and terrorism financing to the Australian community with ensuring excessive regulation doesn't hinder our financial sectors,” the government said in a statement.
The government said co-operation with the private sector is essential in combating money laundering and terror financing (ML/TF). AUSTRAC hosts the Fintel Alliance, launched in March 2017, a private-public anto-ML-TF partnership where industry and government agencies co-design solutions for the fight against terrorism financing and organised crime.