Following on from the draft Amendment Instrument released in December 2017, AUSTRAC has now registered the changes, and although they come as no surprise, those working with digital currencies are now required to look at their AML/CTF Program to ensure that they are compliant with the updated requirements, and if not, to amend their policies and procedures.
AUSTRAC has confirmed that they will grant a transitional period from April 3 2018 to October 2 2018 for all new and existing digital currency exchange providers, to allow them time to comply with their new obligations. However, this does not mean that digital currency providers can rest on their laurels for the next six months. Policy Principles have been released from the Minister for Law Enforcement and Cyber Security which set out restrictions on AUSTRAC enforcement action, subject to the digital currency provider meeting certain conditions (e.g. taking ''reasonable steps'' to comply with the new requirements).
What is Digital Currency?
Digital Currency is defined by the Rules as being a representation of value that functions as a medium of exchange, economic value or a unit of account. It is interchangeable with money and may be used as consideration for the supply of goods and services. What this really means is that the Amendment Instrument targets the growing digital currency market and the more frequent use of crypto currencies such as Bitcoin.
What are the New Requirements?
The Amendment Instrument primarily introduces mandatory registration and compliance obligations for existing and new digital currency providers including customer due diligence, suspicious matter reporting, threshold transaction reporting and record keeping obligations. This reform is designed the close a regulatory gap within the digital currency field. Chapter 76 introduces a new Digital Currency Provider Register which is mandatory for all providers, and AUSTRAC will oversee all registration requests.
If you are a digital currency provider, it is vital that you read and understand these new amendments. Given AUSTRAC expects you to be fully compliant at the end of the transitional period; it is likely that harsh penalties will be issued for any breaches.
Additional AUSTRAC Powers
In addition, the AUSTRAC CEO has, importantly, been granted the power to issue remedial directions to a reporting entity to retrospectively comply with an obligation that has been breached in respect of the Remittance Industry.