Australian fintech industry welcomes passage of anti-money laundering legislation for digital currencies

Australia is set to further grow its world-leading blockchain and digital currency industry following the Australian Parliament’s approval of anti-money laundering legislation last night, according to Australian fintech leaders.

The Australian Senate passed legislation extending anti-money laundering and counter-terrorism financing regulation to digital currency exchanges.

The legislation requires these exchanges to monitor and report certain transactions to theAustralian Transaction Reports and Analysis Centre (AUSTRAC).

This follows the Parliament’s approval of legislation in October that recognised digital currencies as equivalent to money for the purposes of good and services tax and therefore removed (from 1 July 2017) the potential that the use of these currencies would be subject to double taxation.

Australia is understood to be one of only a handful of countries – one other being Japan – to have made amendments to both its tax and justice laws to recognise digital currencies.

FlashFX chief enabling officer and FinTech Australia Blockchain Working Group Co-lead Nicolas Steiger (pictured right) said: “To enable further growth of the digital currency industry in Australia, this is a milestone achievement that will allow for an equal regulatory playing field and should only solidify consumer trust in this new industry.”

Scott Williamson, CEO of biometric identity verification solutions company PRIMEiD (pictured left) said: “Digital currencies are the wave of the future for payment systems, but they also have the potential to provide a powerful new tool for criminals. This new regulation, supported by innovative regtech firms, will significantly mitigate the risks and allow the digital currency industry to continue to excel.”

Leigh Travers, CEO of ICO and blockchain consultancy DigitalX and Deputy Chair of the Australian Digital Commerce Association (ADCA), said: “This is a reform that ADCA has been calling for. We have been delighted to work with the Attorney-General’s Department and AUSTRAC on a sensible regime to provide business certainty and confidence to consumers.”

Sam Lee, the CEO of Blockchain Global (pictured right) said: “As a venture builder in the blockchain industry, we welcome regulatory clarity to uplift the investability of blockchain enabled startups in Australia.”

Paul McKenzie, Operations Manager of digital currency exchange ACX.io said: “ACX.io applaud the Australian Government’s update to the Anti-Money Laundering and Counter-Terrorism Financing Bill, further legitimising cryptocurrencies. This will stamp out fraud and allow innovation to flourish; a bold move that will benefit Australian’s for years to come.”

Danielle Szetho, CEO of fintech industry association FinTech Australia, said the legislation’s approval reaffirmed Australia’s ability to develop sensible and orderly fintech-friendly regulation, which both protected consumers and society and allowed new industries to thrive.

“The Australian Government has worked closely with the nation’s fintech industry over some time in developing and drafting this legislation,” Ms Szetho (pictured left) said.

“Now it is in place, the legislation will help bring further legitimacy to exchanges operating in Australia, unlocking the benefits of digital currency usage and trading whilst ensuring this is done in an appropriate way.

“Overall, this development is the latest in a series of important steps that will ensure Australia’s blockchain and digital currency industry remains one of the most highly regarded and vibrant in the world.”

Under the legislation, digital currency exchange providers will be required to:

  • enrol with the Australian Transaction Reports and Analysis Centre (AUSTRAC) and register on the Digital Currency Exchange Register maintained by AUSTRAC

  • adopt and maintain a program to identify, mitigate and manage the money laundering and terrorism financing risks they may face

  • identify and verify the identities of their customers

  • report suspicious matters, international transactions and transactions involving physical currency that exceeds $10,000 or more (or foreign equivalent) to AUSTRAC, and

  • keep certain records related to transactions, customer identification and their program for seven years.

The digital currency legislation passage comes after the Australian Stock Exchangeannounced on Thursday that it was going to use distributed ledger technology to manage its clearing and settlement system for equity transactions.