In Australia, digital currency exchange providers are only governed by anti-money laundering and counter-terrorism financing (AML/CTF) regulations when transactions involve the exchange of digital currency (cryptocurrency) for fiat currency (such as AUD) or the reverse are conducted.
To comply with the FATF’s Travel Rule, the Australian Attorney-General’s Department has initiated discussions regarding extensive changes to the AML/CTF system. The proposed reforms could update the Travel Rule concerning digital currency exchanges and remittance providers, requiring them to collect originator and beneficiary information for transfers on behalf of customers to other entities.
This could potentially impact the responsibilities of digital currency exchanges and remittance providers under the Australian AML/CTF regulations, among other considerations.
The reforms aim to tackle the regulation of digital currency exchanges and modernise Travel Rule obligations.
*At the time of print, the reforms were being reviewed.
**Digital currency exchange providers are the Australian equivalent to virtual asset service providers (VASPs).
What is the scope of the Travel Rule in Australia?
The Travel Rule is not yet live in Australia. However, digital currency providers do need to fulfil specific requirements. All digital currency exchange providers need to be registered with AUSTRAC, comply with the Australian AML/CTF regime and capture cryptocurrency trading for the purposes of capital gains tax collection.
A digital currency exchange provider is defined as an individual, business or organisation that exchanges:
money (Australian or foreign currency) for digital currency
digital currency for money (Australian or foreign currency)
It is illegal for a digital currency exchange provider to operate if it has not registered with AUSTRAC. Additionally, registrations need to be renewed every 3 years.
To date, it has not been clarified if the Australian Travel Rule will apply to self-hosted wallets.
Who is the supervisory body for VASPs in Australia?
The Australian Transaction Reports and Analysis Centre (AUSTRAC)
When do you need to comply with the Travel Rule in Australia?
The date is to be defined
Which regulations are applicable to the Travel Rule in Australia?
Anti-Money Laundering and Counter-Terrorism Financing Act 2006
Select Committee on Australia as a Technology and Financial Centre
Digital Currency Exchange Providers
What else do you need to know about the Travel Rule in Australia?
The proposed reforms aim to align with the global recommendations set forth by the FATF. The suggested reforms may also extend the AML/CTF regulations to encompass the following activities:
Exchanges involving one or more alternative forms of digital currency
Transfers of digital currency on behalf of a client
Custody or management of digital currency
Provision of financial services related to the issuance and/or sale of a digital currency by an issuer (e.g., Initial Coin Offerings, where startups sell investors a new digital token or cryptocurrency to fund projects).
