Friday, February 3, 2023

Australia Will Soon Include Bitcoin Companies in Money Laundering Laws

Australia Will Soon Include Bitcoin Companies in Money Laundering Laws

Australia’s Senate this week published a proposed update to money laundering laws, and recommended it be passed. Current regulations covering digital assets apply only to those “backed by a physical thing” — i.e., not Bitcoin or cryptocurrencies.

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The Senate’s Legal and Constitutional Affairs Legislation Committee published an update to its draft law covering anti-money laundering and counter-terrorism-financing (AML/CTF).

It’s designed in part to consider new forms of financial and value transfer, including stored value cards. Australia’s financial system has recently had problems with international organized crime groups, with even some of its biggest banks facing large penalties for non-compliance.

The 22-page draft actually only mentions Bitcoin once, on page 19 — it states the existing 2006 law didn’t accommodate “e-currencies” not backed by some kind of physical asset. Digital currencies such as Bitcoin, it says, “are backed by a cryptographic algorithm”.

The new provision will be within the purview of the Australian financial intelligence agency and watchdog AUSTRAC.

Growth of Bitcoin in Australia

Adoption and awareness of cryptocurrency have seen an increase throughout 2017. Many industry watchers have indicated the increase in investors have made the Australian authorities to think more about the regulatory landscape regarding Bitcoin in the country.

SydneyAccording to Adrian Prezelozny, CEO of Independent Reserve, a Sydney based bitcoin exchange, claims “we are getting between 100 and 200 new users every day.” He told Australian media that the company is now managing around $3.16 daily.

Australian officials are advancing with revisions of the anti-money laundering and counter-terrorism financing bill that permits bitcoin exchanges under the jurisdiction of the Australian legislation.

As part of the government’s AML and CTF laws, updated provisions were issued by the Australian Parliament. Digital currency is prioritized as per the newly updated document by the Senate Legal and the Constitutional Affairs Legislation Committee.

Important points of the bill that relate to digital currencies are:

As per the bill, AUSTRAC has the power to “make rules to expand or narrow the scope of the digital currency definition.”

  • Unregistered operators of digital currency exchange services will suffer from civil penalties and subject to severe liability.
  • Within six months of the bill’s enactment, new services and a register will be established to regulate digital currency exchanges.
  • The law also demands imprisonment for aggravated offenses.

Low-Value Payment Under A$1,000 Exemption

The committee also looked into an appeal from Australian bitcoin company Living Room of Satoshi, and said:

“AGD (attorney-general’s department) observed that the report on the Statutory Review recommended the application of the AML/CTF Act and the Regulations to digital currencies and digital exchange provider.”

Living Room of SatoshiLiving Room of Satoshi, a startup payments company that allows Australians to pay bills via BTC, called to exempt low-value digital currency payments (under $1,000 AUD or $784 USD) from the regulations.

Since its launch in 2014, the company has seen rapid growth. According to its team, it has processed $5 million AUD ($3.92 million) in bills.

The Senate committee’s response to Living Room of Satoshi’s application read:

“Living Room of Satoshi submitted that the application of AML/CTF regulations of low-value payments would be a significant hindrance to retail businesses that accept payment under $1000 in digital currency form. It submitted that an exemption for low-value payment should be included as part of the bill to limit the impact on small businesses.”

Finally, the committee recommended the bill be passed.

Amendments to Australian Bitcoin Regulations

In July this year, the country removed a much-loathed “double taxation” on bitcoin, leading new legislation identifying the decentralized currency as a legitimate means of payment.

In August, the government announced regulations overseeing the operation of cryptocurrency exchanges to fortify the Anti-Money Laundering and Counter-Terrorism Financing Act. This is to strengthen the overall power of the Australian Transaction and Reporting Analysis Center (AUSTRAC).

As per Prezelozny, the regulatory work on the cryptocurrency has made people more confident in the non-fiat currency. He added: “The amount of regulatory work in Australia has people feeling much more confident in bitcoin so we’re seeing all different kinds of people investing. This is a global trend too… These kinds of regulations give new investors confidence.”

Stargroup, Australia’s second largest traditional ATM company, signed a joint venture accord with DigitalX, a blockchain payment services provider. The project aims to convert all existing ATMs into bitcoin ATMs.

According to the agreement, it will convert 500 ATMs owned by Stargroup. Additionally, it will also convert 2,400 terminals currently administrated by Starlink, Stargroup’s subsidiary.

Is more regulation good news for the Australian cryptocurrency industry? Let’s hear your thoughts.

Images via Pixabay

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