Australia plans to strengthen its anti-money laundering laws and regulate digital currencies such as bitcoin in the wake of a financial scandal involving its biggest bank, Commonwealth Bank of Australia.
Under reforms published on Thursday, Canberra would bring digital currency exchanges under the remit of Austrac, Australia’s financial crime fighting agency.
New legislation would also bolster the investigation and enforcement powers of Austrac, which earlier this month initiated a civil legal action against CBA for alleged breaches of laws on money laundering and the financing of terrorism.
“Stopping the movement of money to criminals and terrorists is a vital part of our national security defences and we expect regulated businesses in Australia to comply with our comprehensive regime,” said Michael Keenan, Australia’s justice minister.
He said the reforms were balanced, dealing with the threat of organised crime and the financing of terrorism while ensuring that excessive regulation did not hinder legitimate financial sectors.
The proposed regulatory shake-up marks the first stage of a reform process aimed at updating Australia’s anti-money laundering and counter-terrorism financing law. It follows a high-profile money laundering scandal involving CBA, which was accused by Austrac this month of more than 50,000 breaches of the existing legislation.
Australia’s move to regulate cryptocurrencies, including bitcoin, follows a similar move by Japan. Under new rules introduced by Tokyo this year any bitcoin or “alternative coin” exchange or money transfer business that wants to operate must come under the regulatory supervision of the Japan Financial Services Agency by October 1.
In Japan, which was the first national government to take such action, exchanges may be given annual audits and are subject to “know your customer” anti-money laundering regulations.
Tokyo’s decision to regulate bitcoin follows the 2014 bankruptcy of Mt Gox — the world’s largest virtual currency exchange. Some 850,000 bitcoins from Mt Gox disappeared before its collapse — worth almost $3.5bn at today’s price of $4,080.
By regulating the currency, Japan has officially recognised bitcoin as a legal method of payment, a move that analysts say has helped the price of bitcoins surge to record highs.
The Australian reforms will also increase the search and seizure powers of police and customs officers at the border.
Mr Keenan said they would also provide regulatory relief to industry through the deregulation of low-risk industry sectors.
“The bill provides net regulatory relief to industry of A$36m annually, with the digital currency exchange sector being regulated for the first time, while deregulating low-risk industries such as cash-in-transit, which is already subject to state and territory licensing requirements.”