Digital currency exchange providers need to identify every customer, even if a customer is exchanging a very small amount, AUSTRAC explains.
There have been new requirements for digital currency exchange providers in Australia for several months already and AUSTRAC, the body that such entities have to register with, has been seeking to clarify the new rules. Some quite useful and detailed information has just been published on AUSTRAC’s website, as several AUSTRAC representatives explain what obligations digital currency exchange providers have.
The Questions & Answers session at the end of the webinar is particularly interesting.
The first question was:
“Do we have to identify every customer even if they are exchanging a very small amount?”
AUSTRAC’s Director of Compliance, Richard Lee replied:
“Yes. The threshold is zero. So any exchange of digital currency to fiat or traditional currency or the other way around requires identification to be completed”.
Another interesting question concerned whether a DCE provider should cease doing business with a customer if the entity has a suspicion this customer is involved in money laundering or terrorist financing or other crime. Mr Lee replied that the Act does not require firms to do so. However, they need to determine, make that decision based on their ML/TF risk of continuing to provide that service.
Another question concerned the scope of the new legislation:
“If we only exchange one way, for example money to digital currency, are we still captured by the new legislation?
Richard Lee: Absolutely, you are”.
Let’s recall that, under the new regulation, DCE providers are required to:
- enroll and register with AUSTRAC;
- establish, implement and maintain an AML/CTF program, which sets the framework for businesses to comply with their obligations, including customer due diligence requirements;
- report threshold transactions and suspicious matters to AUSTRAC, and
- keep appropriate records.
Let’s note, however, that the registration by AUSTRAC of a digital currency exchange or remittance service provider does not constitute endorsement of that business or compliance with any anti-money laundering and counter-terrorism financing (AML/CTF) obligations. DCE providers are not allowed to put AUSTRAC’s logo on their websites even if they are registered.