Australia AML/CTF Amendment Act 2017

The bill originated in the House of Representatives as a Government bill during Australia’s 45th Parliament, passed both Houses on Dec. 7, 2017, and received assent on Dec. 13, 2017. Parliament’s summary described a broader AML/CTF reform package beyond crypto, including expanded statutory objects, correspondent banking changes, information sharing by related bodies corporate, additional infringement notice powers, remedial directions, search-and-seizure powers for physical currency and bearer negotiable instruments, revised definitions and industry deregulatory measures.

The amendment introduced a definition of “digital currency” as a digital representation of value that can function as a medium of exchange, store of economic value or unit of account, is not issued by or under government authority, and is interchangeable with money. It also replaced earlier e-currency language in several provisions.

The central crypto-specific change was item 50A in section 6, which captured exchanging digital currency for money, or money for digital currency, where provided in the course of carrying on a digital currency exchange business. This scope was narrower than a comprehensive virtual asset service provider framework because it focused on fiat-to-crypto and crypto-to-fiat exchange activity.

• Created Part 6A for the Digital Currency Exchange Register.
• Required registrable digital currency exchange providers to be registered with AUSTRAC.
• Allowed AUSTRAC to assess whether registration would involve significant money laundering, terrorism financing or other serious crime risk.
• Made unregistered provision of registrable exchange services, and breach of registration conditions, subject to offences and civil penalties.

AUSTRAC announced on Apr. 11, 2018 that the new digital currency exchange laws had been implemented and that DCEs with a business operation located in Australia had to register with AUSTRAC and meet AML/CTF compliance and reporting obligations. AUSTRAC’s statement identified a transition period to May 14, 2018 for existing DCE businesses.

The 2017 Act is therefore best understood as Australia’s first crypto-specific AML/CTF amendment. It did not determine whether a crypto asset is a financial product, security or commodity. Its function was to make covered exchange activity visible to Australia’s financial intelligence unit through registration, customer due diligence, transaction monitoring and reporting.