AUSTRAC Puts 50 Firms, Including Crypto Exchanges, On Notice

An Australian Financial Review (AFR) report has revealed that Australia’s financial crimes watchdog, the Australian Transaction Reports and Analysis Centre (AUSTRAC), has written to over 50 Australian finance firms — many of them involved in crypto — over concerns they’re being used to launder the proceeds of crime.

AUSTRAC said the crypto exchanges involved have failed to fully comply with anti-money laundering and counterterrorism funding laws, allowing suspicious transactions to go unreported.

We have a real concern about the risks cryptocurrency transactions create for large volumes of money to move quickly between jurisdictions and disappear off the radar.

Brendan Thomas, AUSTRAC CEO

The firms will have 28 days to respond to the regulator’s letter or risk having their registrations stripped. The watchdog revealed it has already taken action against 13 crypto exchanges this year after finding key people involved in these organisations had been convicted, prosecuted or charged with undisclosed criminal offences.

Related: New AUSTRAC Task Force to Combat Crypto ATM Use in Money Laundering

Regulator Looks to Clean Up Aussie Crypto Industry

AUSTRAC hasn’t made public the list of crypto exchanges it’s targeting for flouting anti-money laundering laws, but it has named some of the exchanges who’ve failed to disclose the criminal histories of key employees, including:

• Auasia Trading
• Amco Travelling and Exchange
• Blue Star Exchange
• B-Paywize
• W Solution Group
• TSS Farms & Group. 

Not exactly household names. 

The regulator said if these exchanges can’t adequately explain the lack of disclosures their registrations will be cancelled. AUSTRAC has also recently cancelled the registration of the Australian arm of the failed FTX exchange and the registration of Zipmex Australia, which has also collapsed.

The watchdog recently cracked down on some non-crypto related companies, such as international money transfer service, Currencyfair, which has had conditions placed on its registration for failing to comply with AUSTRAC’s directives.

Coinbase Says Regulator Must Discern Good from Bad 

The ease, speed and convenience of transferring assets directly, which crypto allows, is precisely what the regulators are concerned about — while it’s great for consumers AUSTRAC says it also makes crypto more attractive for criminals.

However, John O’Loghlen, the Australian head of Coinbase, told the AFR this crackdown risks throwing the baby out with the bathwater by confusing the legitimate players with dodgy ones.

O’Loghlen said an issue is that complying with AUSTRAC’s reporting requirements is not easy, and in many cases is unaffordable for smaller exchanges. While Coinbase and other leading exchanges have the resources to comply with the requirements, many smaller operators, even those that are AUSTRAC-registered, may not:

Platforms can claim they’re registered with AUSTRAC, but it doesn’t necessarily mean much in terms of what their internal controls and government compliance is.

John O’Loghlen, Coinbase Australia CEO

O’Loghlen also made the claim that while crypto is often widely disparaged in the media it actually has a much lower rate of illicit transactions than traditional finance — less than 1% for crypto compared to around 4% for TradFi. 

Related: Stand With Crypto Expands to Australia in Effort to Educate Local Policymakers

The Aussie Coinbase boss said he welcomes proper regulation, but said the view of the digital assets industry is that crypto technology is much more suited to detecting and preventing fraud than traditional financial systems are:

We want more regulation but as an industry we feel our controls and technology for dealing with bad actors, frauds and scams are actually vastly advanced on the traditional banks.

John O’Loghlen, Coinbase Australia CEO