Overview
AUSTRAC has launched a blitz encouraging inactive digital currency exchange (“DCE”) providers to voluntarily withdraw their registrations. AUSTRAC has warned these idle providers that their registrations could be cancelled if they fail to voluntarily withdraw them.
’Use it or lose it’ blitz
AUSTRAC has concerns that a significant proportion of the 427 registered DCE providers are currently inactive and are in the process of contacting providers that appear dormant. Under s76J of the AML/CTF Act, AUSTRAC has the power to cancel the registration of a DCE provider where it has reasonable grounds to believe the DCE is no longer providing DCE services. AUSTRAC has warned businesses to ‘use it or lose it’ indicating a strong intention to begin cancelling the registration of inactive DCE providers.
According to AUSTRAC CEO, Brendan Thomas, an AUSTRAC registration provides legitimacy to DCE providers, making inactive registered businesses vulnerable targets to be bought and exploited by criminals. AUSTRAC states that there has been a proliferation of the use of cryptocurrency by criminals for money laundering activities and many consumers are falling victim to scams involving these services. This blitz is an attempt to limit the improper sale and use of DCE businesses and to ensure those registered with AUSTRAC maintain up-to-date details regarding their business and the services they are no longer providing.
AUSTRAC confirms that the blitz is in line with their mandate to minimize consumer harm, protect consumer confidence in AUSTRAC’s ability to regulate and oversee the DCE sector and limit exploitation of the cryptocurrency sector by criminals.
AUSTRAC intends on establishing a DCE register of all DCE providers who are registered with AUSTRAC on completion of their review, which will be publicly searchable and will assist consumers in the identification of legitimate cryptocurrency and DCE providers.
Conclusion
Those contacted by AUSTRAC that intend to offer a service will need to respond to avoid the cancellation of their DCE’s registration. In the future, if circumstances change regarding a business’s provision of services, they will need to reapply for registration.
For further information please contact our Financial Services Team.
The financial services team would like to thank Pat O’Kane for his assistance with this insight.
This publication has been prepared for general guidance on matters of interest only and does not constitute professional legal advice. You should not act upon the information contained in this publication without obtaining specific professional legal advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication and to the extent permitted by law, Cowell Clarke does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting or refraining to act in relation on the information contained in this publication or for any decision based on it.