Digital Currency Exchange Providers

AUSTRAC commenced its regulation on digital currency exchange businesses on 3 April 2018. We have summarised some of the requirements for running your digital currency exchange business in a compliant manner below including:

  • What is a Digital Currency Exchange Provider?
  • Do I need to enrol and/or register my business with AUSTRAC?
  • How do I enrol and/or Register my Remittance business with AUSTRAC?
  • Ongoing Compliance obligations.

What is a Digital Currency Exchange Provider?

A digital currency exchange provider is an individual or business that provides digital currency exchange services in relation to digital currencies, for example cryptocurrencies.

Do I have to be registered with AUSTRAC?

If your business exchanges money (whether Australian or foreign currency) for digital currency, or digital currency for money, and also satisfies one of the ‘geographical link’ tests, you are then captured by Anti-Money Laundering and Counter-Terrorism Financing Act 2006 and have obligations under the Act.

If your business is captured by the AML/CTF Act, you must enrol and register your business with AUSTRAC in order to legally provide digital currency exchange services to your clients. Upon successful enrolment and registration with AUSTRAC, you will be required to meet ongoing compliance obligations.

If you are unsure whether you meet one of the three ‘geographical link’ Tests please refer here for further information. Once you have met one of the geographical link tests you are required to enrol and register your business with AUSTRAC as soon as possible.

How to enrol and/or Register your Digital Currency Exchange business with AUSTRAC?

Registering with AUSTRAC brings Digital Currency Exchange providers within the ambit of the AML/CTF Act and Rules and requires you to meet various obligations, including:

  • adopting and maintaining an AML/CTF program, which complies with the AML/CTF Rules, to identify, mitigate and manage ML/TF risk;
  • identifying and verifying the identities of their customers;
  • making reports to AUSTRAC in respect of suspicious matters and transactions involving physical currency of $10,000 or more; and
  • keeping records relating to customer identification, transactions and the AML/CTF program for a period of seven years.

When determining whether a Digital Currency Exchange provider has taken reasonable steps to comply, AUSTRAC will consider:

  • any transition plans or other measures in place outlining actions and timeframes to achieve compliance;
  • the extent of oversight by the Board or Chief Executive Officer of the Digital Currency Exchange provider of any transition plan;
  • whether sufficient resources have been allocated to enable compliance; and
  • whether the Digital Currency Exchange provider complies as soon as practicable in respect of any customer who is assessed to be high risk.

Sophie Grace can assist you with registering your Digital Currency Exchange business with AUSTRAC and implementing a robust AML/CTF Program tailored to your business.

To apply for enrolment and/or registration with AUSTRAC you must complete the AUSTRAC Business Profile Form available on AUSTRAC’s website.

Ongoing Obligations

Once you have successfully obtained enrolment/registration with AUSTRAC you will be required to meet ongoing compliance obligations. These obligations include:

  • Notifying AUSTRAC of any changes or updates to your AUSTRAC enrolment and/or registration;
  • Conducting regular compliance reviews;
  • Reporting various transactions to AUSTRAC including International Funds Transfer Instructions (IFTIs), Suspicious Matter Reports (SMRs) and Threshold Transaction Reports (TTRs); and
  • Complying with Anti-Money Laundering and Counter-Terrorism Financing regulations, including maintaining an AML/CTF Program.

At Sophie Grace, we are here to assist you with all of your compliance needs. If you would like further information or assistance, please contact Sophie Grace directly.

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