Crypto Businesses in Australia: An Overview
Australia is considered to be one of the most stable and neutral jurisdictions when it comes to crypto businesses. This has allowed crypto businesses to flourish over the years in Australia. The growth of the crypto businesses in Australia can be attributed to the overall approach of the Australian government towards the financial technology sector and their support towards new and innovative financial services and products. Historically, the Australian government has taken a minimal intervention approach towards the regulation of crypto businesses which is one of the major reasons why innovation and development in the field of cryptocurrency have not been hampered.
Regulation of Crypto Businesses in Australia
Crypto businesses in Australia are regulated by AUSTRAC if they are offering digital currency exchange services wherein digital currency (cryptocurrency) is exchanged for money or money is exchanged for digital currency. Such crypto businesses have obligations to follow under the Australian Anti-Money Laundering and Countering Terrorism Financing legislation. Thereafter, these businesses need to enrol themselves and obtain registration with AUSTRAC. Starting and operating crypto businesses in Australia without obtaining a registration with AUSTRAC is an offence.
Who are digital currency exchange providers?
A digital currency exchange provider can be a business, an individual or an organisation that exchanges:
- Digital currency for money (foreign currency or AUD); and/or
- Money (foreign currency or AUD) for digital currency
as part of operating their digital currency exchange business.
Procedure of Registration of Crypto Businesses in Australia
The following process has to be followed by crypto businesses in Australia to register their businesses with the AUSTRAC:
- Enrol, register and create an online account
The first step in the registration of crypto businesses in Australia begins with enrolling and creating an online account with the AUSTRAC. This form is called AUSTRAC Business Profile Form (ABPF) which has to be created online. In case you are not sure whether you are obligated to submit this form or not, please look up the criteria mentioned above.
- Enrol as a Digital currency exchange provider:
You must register your crypto business as a digital currency (cryptocurrency) exchange (DCE) provider. Offering exchange services before registration may attract penalties and it would be considered against the law. AUSTRAC may take up to ninety days to assess the application and can even ask for additional information for their satisfaction. AUSTRAC has the power to refuse, cancel or suspend your registration if it believes that your business poses unacceptable risks of terrorist financing, money laundering and other serious crimes.
Additionally, digital currency exchange provider services fall in the category of a designated service under section 6 of the AML/CFT Act and such crypto businesses in Australia have to enrol within a period of 28 days of providing a designated service.
- Information required for registration:
As part of the enrolment and registration process, crypto businesses in Australia have to furnish information related to their business and their key managerial personnel. The following information is required by AUSTRAC:
- Services offered by your business
- Business model/structure of your business
- Contact details of your business
- Name and contact details of the key managerial personnel of your business such as details of the office holders and directors
- Financial statements of the business in the most recent years
- Registration number of the business such as ABNs or ACNs, if you have them
- Registration details of your business if it is registered in a foreign jurisdiction
- List of any civil, criminal or enforcement action against your business and its key managerial personnel
- Additional Information required for registration with AUSTRAC:
Some additional documents may also be required by AUSTRAC such as an official police document for each of the key managerial personnel of your crypto business in Australia. It must be noted that this document must have been issued within six months prior to the date of making an application for registration with AUSTRAC. The acceptable documents in this regard can be:
- National Police History Check
- National Police Certificate
- Foreign Equivalent of National Police Certificate
You are also required to inform the date from which you plan to start offering your digital currency exchange services.
- Existing Accounts and Additional Accounts:
If your business has already been providing designated services under the AML/CTF Act, then you can use the same account. In case that account is not functional, you will have to create a new account and provide all the information about your identity and that of your organisation.
In case you have a new business with a different Australian Business Number (ABN) to your existing business, you will be required to add a new business to your existing account.
- Procedure after completing the form:
After completing the registration form, AUSTRAC sends you a confirmation message wherein you have the option of downloading a copy of the completed form. A confirmation email is sent by AUSTRAC advising you about the date of your enrolment. AUSTRAC can also contact you seeking more information about your business.
Implementation of an AML/CTF programme
As per the requirements of the AML/CTF Act, all the entities that are providing designated services under section 6 of the AML/CTF Act are considered reporting entities under the Act. These reporting entities are required to meet the AML/CTF obligations mentioned under the Act. As we have already discussed above, digital currency exchange services are considered as designated services under section 6 of the AML/CTF Act; therefore, now, in order to continue their businesses, they have to meet the obligations under the AML/CTF Act and, accordingly, implement an AML/CTF programme to prevent and report money laundering and terrorist financing activities through their business.
Such an AML/CTF program has to be a written document showing how your business will identify, respond, manage and mitigate the risks associated with the services or products your business offers, which can further be used for committing the crimes of money laundering and terror financing. The programme that is implemented must be prepared keeping in mind the level of risks associated with your business or is likely to face.
The AML/CTF programs are important to prevent, identify and prevent money laundering and terror financing activities. This, in turn, protects your business, your organisation and Australia from illegal and criminal activities.
Consequences for Not meeting AML/CFT obligations for Crypto Businesses in Australia
If you fail to meet the prescribed obligations under the AML/CTF act and in implementing the AML/CTF program in your business, then AUSTRAC has the power to take steps to enforce compliance and may even seek penalties for non-compliance.
Enforcement Actions are the specific legal actions that are undertaken by the AUSTRAC to ensure that the reporting entities comply with the prescribed legal obligations. Some of the enforcement actions that are available to AUSTRAC are as follows:
- Enforceable undertakings
- Civil penalties
- Remedial directions
- Infringing notices
Some of the other types of actions that can be taken by AUSTRAC include sending a written notice directing your business to:
- You can be directed to appoint an external auditor in order to review your organisation’s anti-money laundering/ terrorist financing risk management programme or AML/CTF compliances, or
- Ask you to undertake an AML/CTF risk assessment
AUSTRAC is also empowered to take harsher steps such as refusing, suspending and even cancelling your registration for digital currency exchange provider services if they believe that your business poses an unacceptable risk of money laundering, smuggling people, financing terrorism or other types of crimes.
Enterslice is an international consulting firm offering Crypto business advisory services across the globe.