the risks associated with these digital assets, with some countries attempting to regulate them while some others banning them altogether. In Australia, the federal government has ramped up its efforts to regulate the crypto space, with plans to launch a new market licensing regime for digital currency exchanges to lift consumer protection. Last week, the Australian Transaction Reports and Analysis Centre (AUSTRAC) issued what is referred to as a ‘financial crime guide’, as part of these efforts.
Under the new guidance, the agency is asking banks and digital currency exchanges to adopt a more rigorous process to monitor transactions conducted by customers who may be using cryptocurrencies to facilitate crimes and to report any suspicious activity to the authorities. Accordingly, AUSTRAC provided the firms with behavioural and financial indicators that may call for enhanced due diligence. “The pseudo-anonymous and borderless nature of digital currencies presents a risk for the facilitation of serious crimes,” the government’s financial intelligence arm said in the new guidance.
It went on to warn of the potential use of cryptocurrencies to launder money, finance terrorism, purchasing of illicit products on the darknet and for other crimes like tax evasion, ransomware attacks and scams. “The increased use of digital currencies for various financial activities has created opportunities for criminals to operate outside of the traditional financial sector,” it added.
In its new guidance, AUSTRAC singled out decentralised finance (DeFi) and non-fungible tokens (NFTs) as emerging risks, pointing out that the anonymity and volatile pricing attract criminals. Accordingly, the agency expects banks and exchanges to monitor activity and report any suspicious crypto transactions via the ‘suspicious matter reporting’ (SMR) regime, to help law enforcement authorities take legal action.
