The Australian Transaction Reports and Analysis Centre (Austrade) will be monitoring cryprocurrency exchanges after the Australian Senate passed the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2017 on Thursday.
The amendment bill, which was introduced in August, was approved by the House of Representatives on Wednesday, and took the Senate one day to pass.
Under the amended legislation, digital currency exchange providers will be required to enroll with Austrac and register on the Digital Currency Exchange Register, the government agency now maintains.
Exchanges will also need to adopt and maintain a program to identify, mitigate, and manage the money laundering and terrorism financing risks they may face. Similar to a bank, the exchange must also identify and verify the identities of their customers; and report suspicious matters, international transactions, and transactions involving physical currency that exceeds AU$10,000 to Austrac.
They will also be required to keep certain records related to transactions, customer identification, and their program for seven years.
The updated Anti Money Laundering and Counter Terrorism Financing Act 2006 defines a digital currency as a digital representation of value that functions as a medium of exchange, a store of economic value, or a unit of account that is not issued by, or under the authority of, a government body, and is interchangeable with money in that it may be used as consideration for the supply of goods or services.
The changes to the legislation means that for the purpose of investigating money laundering and terrorism, digital currency and the exchanges it is hosted on are to be treated in-line with physical cash kept in a bank.
The federal government announced that it would be aligning the GST treatment of digital currency, including Bitcoin, with regular money as of July 1, 2017, in a bid to promote the growth of Australia’s fintech industry.
“This measure will ensure purchases of digital currency are no longer subject to the GST. Removing double taxation on digital currencies will remove an obstacle for the financial technology (fintech) sector to grow in Australia,” the government said while delivering its 2016-17 Budget.
According to FinTech Australia, a not-for-profit body focused on fintech development, Australia is one of only a handful of countries, alongside Japan, to have made amendments to both its tax and justice laws to recognise digital currencies.
FinTech Australia CEO Danielle Szetho said the legislation’s approval reaffirms Australia’s ability to develop “sensible and orderly fintech-friendly regulation”, which both protects consumers and society, while allowing new industries to thrive.
“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,” she said.
“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.”
According to Bradley Brown, acting deputy CEO of International & Policy at Austrac, despite not having a central blockchain and distributed ledger technology (DLT) governing body, inter-agency engagement to sort out the regulatory requirements is “definitely” occurring.
“We are definitely working with individual businesses on different elements that are relevant in our space and I dare say other government agencies would be doing the same,” Brown told ZDNet at CeBit Australia in Sydney earlier this year.
“I think what we’re trying to do as regulators is actually really bring that together so when we speak, we don’t speak as individuals.
“You have to walk before you run and I think that’s where we’re really moving to.”
The price of one Bitcoin at time of publish is $16,276.