The Australian Attorney General’s Department (AG) has released its statutory review of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML Act). Recommendations have been made to better incorporate digital wallets and digital currencies in the AML Act.
The AG has recommended that:
- the AML Act be amended to ensure that digital wallets are comprehensively captured. Some digital wallets are already caught by the AML Act where they are considered to be ‘accounts’ provided by traditional financial product providers such as banks and credit unions. However, a potential regulatory gap was identified for new types of digital wallets inspired by technological advances. For example, digital wallets which store digital currency are not regulated under the AML Act;
- the definition of ‘e-currency’ be expanded to include convertible digital currencies not backed by a physical ‘thing’. Digital currencies which are backed by a physical commodity such as bullion or mainstream currency are already caught by the AML Act. Expanding the definition will allow cryptocurrency such as Bitcoin to be regulated. The AG was careful to exclude non-convertible digital currencies from the definition such as frequent flyer programs as the risk of their use in money laundering is substantially lower; and
- the Australian Transaction Reports and Analysis Centre (AUSTRAC) and the AG develop an appropriate model for applying obligations under the AML Act to high risk designated services provided by offshore service providers. The AML Act applies to providers which have a geographical link to Australia. Currently providers providing services to Australian customers do not meet this test.
The AG’s report can be found here.