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Digital Currency Exchange Providers

AUSTRAC commenced its regulation of 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 business with AUSTRAC?

Ongoing Compliance Obligations

What is a Digital Currency Exchange Provider?

A digital currency exchange provider is an individual or business that, as part of operating a digital currency exchange business, exchanges:

Money for Digital Currency

Australian or foreign currency

Digital Currency for Money

Australian or foreign currency

Do I have to be enrolled or registered with AUSTRAC?

If your business:

  • exchanges money (whether Australian or foreign currency) for digital currency, or digital currency for money; and
  • satisfies one of the criteria of the ‘geographical link’  requirements,

then you will be captured by the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 and have obligations under the Act.

The three ‘geographical link’ tests are as follows:

geographical link
test 2

The digital currency exchange service is provided to clients at or through a permanent establishment of your business in Australia

Your business is a resident of Australia and the digital currency exchange service is provided at or through a permanent establishment of the business in a foreign country

Your business is a subsidiary of a company that is a resident of Australia and the digital currency exchange service is provided at or through a permanent establishment of the subsidiary in a foreign country

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.

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

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

During the process of registration, you will be required to:

1

Prepare and implement an AML/CTF Program, which complies with the AML/CTF Rules

2

Identify and develop controls to mitigate and manage ML/TF risk

3

Identify the types of customers you will deal with

4

Identify the jurisdictions you will deal with

5

Outline your procedures for making reports to AUSTRAC in respect of suspicious matters and transactions

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

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;
  • renewing your registration every three (3) years;
  • adopting and maintaining an AML/CTF Program, which complies with the AML/CTF Rules, to identify, mitigate and manage ML/CTF Risk;
  • identifying and verifying the identities of their customers;
  • keeping records relating to customer identification, transactions and the AML/CTF program for a period of seven years; and
  • reporting various transactions to AUSTRAC including Suspicious Matter Reports (SMRs) and Threshold Transaction Reports (TTRs).

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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