AUSTRAC: Preventing Money Laundering and Terrorism with cryptocurrencies in Australia

Austrac previniendo estafas y actividades delictivas

The regulations on cryptographic activity will continue to grow. It is an understandable need and more when criminal events such as scams have occurred. However, regulations must be taken with criteria to protect investment and promote technological development. In this opportunity we will talk about the Australian case.

The Australian financial intelligence agency, AUSTRAC, will be the official administrative entity that will regulate the activity of the cryptocurrency exchange companies in that nation. The intention is to help minimize the use of cryptocurrencies for illegal purposes such as money laundering and terrorism, among others.

The new legislation, which is effective immediately, requires digital currency exchange entities to register with the AUSTRAC, and comply with the obligations of compliance and reporting on money laundering and the fight against terrorism (AML / CTF ). These regulations also seek to encourage the trust of users.

These new anti-money laundering and anti-terrorism laws (AML / CTF) require all financial institutions to collect data on the identity of their clients and monitor their transactions, and even report suspicious activities.

The activity under scrutiny of this regulatory entity will undoubtedly monitor something that it does not clearly define, and it is about what they call “suspicious movements”. This opens a disastrous possibility of discretionary action on the part of the officials who, without the proper handling and preparation in the cryptographic subject, could commit abuses against individuals and against companies of exchanges of cryptocurrencies and related financial services.

Austrac new regulations

Although the main focus of prevention is aimed at serious crimes such as terrorism and money laundering, especially because of the pseudo-anonymous characteristics of cryptocurrencies, it also seeks to prevent other types of illicit behavior related to cryptocurrencies. According to a report by the Australian Criminal Intelligence Commission, “virtual currencies are increasingly used by organized criminal groups”.

In fact, the pseudo-anonymous nature of cryptocurrencies is an incentive for criminals, which allows them to operate under the protection of this technological possibility. This has led to relate to the cryptocurrency industry with what is known as the deep web in which illegal behavior of all kinds.

Also the practice of online piracy via ransomware involved ransom payments with cryptocurrencies to cover traces and avoid captures.

The Australian government rightly believes that the key is to have a complete understanding of digital currencies to prevent criminals from taking advantage of this technology. With this criterion, the application of the new regulations can be made, an effective mechanism not only for the fight against organized crime that relies on the use of cryptocurrencies, but also will encourage the necessary security and confidence in the users.

Like any new legislation, a prudential adaptation is expected, which will ultimately lead to a more secure environment.

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