Digital currency exchange providers, who are now covered by the anti-money laundering regulator Austrac, will have to file suspicious matter reports even in situations where a transaction does not occur.
Austrac hosted a webinar earlier this month to provide guidance for players in the digital currency sector. It says suspicious matter reporting obligation arises not only when a service is provided but also when a customer requests a service or inquires about whether a business would be willing to provide a service.
A transaction may not take place, but if the service provider a suspicion it should be reported. “Inquiries from a prospective customer can be the reason for reporting,” Austrac says.
Since May, digital currency exchange prviders with a business located in Australia have had to register with Austrac and meet AML/CTF compliance and reporting obligations.
Providers have to report suspicious matters and they will have to report transactions that involve cash amounts of more than $10,000. They have to keep records relating to customer identification, transactions and their AML/CTF program.
Digital currency has been broadly defined as a digital representation of value that, among other things, is not issued by a government, is interchangeable with money and is generally available to members of the public without restriction on its use.
Austrac says a broad range of activities that can trigger a suspicious matter report, including proceeds of crime, tax avoidance, terrorism financing, money laundering and fraud. The focus is not just terrorism financing or money laundering, Austrac says.
The number of suspicious matter reports has grown strongly over the years. In 2005 Austrac received just over 18,000 reports. The number was around 100,000 in the year to June.
Austrac says some reporting entities worry that suspicious matter reports reflect badly on them. However, it says reporting “does not indicate that the business is involved in criminal activity.”
If anything, it indicates that the business has a robust monitoring system and AML/CTF system, Austrac says.
“There is no threshold of value. You just have to suspect there is a crime happening. Higher value is a higher priority but any value transaction that raises suspicion should be reported.
“You don’t have to be sure, your report has to be based on suspicious activity that you can demonstrate.
“You do not need to end the business relationship. You has to make that judgment. We don’t tell people to end business relationships. Having a suspicion does not mean they are involved in criminal activity.”