Amendments to the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (‘the Act’) under the Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2017 (Cth) impose obligations on digital currency exchange providers (DCE Providers) from 3 April 2018. Transitional arrangements will apply from 3 April to 2 October 2018 allowing DCE Providers time to become compliant with the Act.
What is digital currency?
The Act defines digital currency to mean a digital representation of value that functions as a medium of exchange which is not issued by or under the authority of a government body and is interchangeable with fiat money and generally available to the public. Digital currency is also commonly referred to as cryptocurrency or virtual currency.
Who is a digital currency exchange provider?
A digital currency exchange provider (DCE Provider) is a person who provides services to convert or exchange digital currency with fiat currency or vice versa.
What are your obligations?
As an existing DCE Provider or if you are intending to be a DCE Provider, you are required to:
- enrol and register your business with the Australian Transaction Reports and Analysis Centre (‘AUSTRAC’) Reporting Entities Roll;
- establish and maintain an Anti-Money Laundering and Counter-Terror Financing program to identify, mitigate and manage money laundering and terrorism financing risks and which reflects your business’ operations;
- identify and verify the identity of your customer and conduct ongoing customer due diligence;
- report suspicious matters and threshold transactions to AUSTRAC; and
- maintain certain records for seven years.
Transitional arrangements will apply from 3 April to 2 October 2018 to all existing and new DCE Providers. During the transitional period, the AUSTRAC CEO can take enforcement action against a DCE Provider if the CEO is satisfied that the provider failed to take reasonable steps to comply with the relevant provision under the Act.
When considering whether a provider has failed to take ‘reasonable steps’, the AUSTRAC CEO must have regard to all relevant matters including:
- whether the provider complies as soon as practicable with the provision, with respect to any person who becomes a customer between 3 April 2018 - 2 October 2018 and who the provider assesses to be of high money laundering or terrorism financing risk;
- any transition plan or other measures implemented by the provider outlining actions and timeframes to achieve compliance;
- the extent of oversight by the provider’s Board or CEO of any transition plan or other steps towards compliance; and
- whether sufficient resources have been assigned to enable compliance before 3 October 2018.
Registration and enrolment
- If you are already enrolled with AUSTRAC before 3 April 2018 (for example, you provide other designated services regulated under the Act), your enrolment details must be updated to include your designated service as a DCE Provider no later than 11 June 2018
- If you provided digital currency exchange services before3 April 2018 (but are not already enrolled with AUSTRAC), you must register and enrol with AUSTRAC no later than 14 May 2018
- If you begin to provide digital currency exchange services between 3 April and 14 May 2018 you must register and enrol with AUSTRAC no later than 14 May 2018
- If you intend to start providing digital currency exchange services from 15 May 2018 you must register and enrol with AUSTRAC beforeyou provide the service.
After 14 May 2018, criminal offences and civil penalty consequences may apply if you provide digital currency exchange services without registering and enrolling with AUSTRAC.
If your company is providing digital currency exchange services it important to be aware of, and compliant with, the obligations imposed on you by AUSTRAC. Please contact Cowell Clarke if you would like assistance or further information in relation to your anti-money laundering and counter-terrorism financing obligations.