AUSTRAC has moved to further tighten regulation for digital currency providers in a draft of the new anti-money laundering and counter-terrorism financing regulations.
AUSTRAC has opened a draft consultation paper that lays out new anti-money laundering and counter-terrorism financing (AML/CTF) regulations, including new rules for digital currency providers.
Currently, the AML/CTF laws apply to authorised deposit-taking institutions (ADIs), banks, building societies, credit unions and other persons or entities specified by AUSTRAC, but the new amendments will seek to extend them to digital currency providers.
A note by law firm Dentons partner Elise Ivory and solicitor Shriya Narula has outlined the ways in which the AML/CTF laws might apply to digital currency providers.
“Digital currency providers will soon be required to adhere to the AML/CTF standards required for remittance sector providers,” said Dentons.
Providers would be required to adopt and maintain an AML/CTF program, conduct “thorough” identification and due diligence of customers, report on suspicious matters and threshold transactions, and retain the required records according to the AML/CTF regime, according to the note.
“The draft rules mirror the rules as they currently apply to the remittance sector,” it said.
“Providers will be required to register with AUSTRAC under a regime similar to the current registers for the remittance industry.”
Furthermore, when reporting on suspicious transactions, providers will have to provide additional information where the transfer would involve digital currency.
This would include the code of the digital currency as well as the number of digital currency units, the equivalent amount in Australian dollars, a description of the digital currency including details of the backing asset or thing, the IP address of the beneficiary and/or payee, the social media identifiers of the beneficiary and/or payee, the unique identifiers of the beneficiary/payee’s digital currency wallet(s), and the unique device identifiers of the beneficiary and/or payee.
“If you are a digital currency provider, it is time for you to start thinking about how you will manage your new obligations under the AML/CTF regime,” the note said.
“This most importantly includes drafting and maintaining an AML/CTF program and KYC [Know Your Client] policy, in addition to systems and procedures which will identity any AML and CTF risks in your business.”
The consultation period will close 13 February 2018, and the draft rules are expected to come into effect in April 2018.
Law firm Dentons rebranded from Gadens Sydney in December 2016.
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