Category Archives: AUSTRAC

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Bank of Queensland Rules out Crypto Purchases Using Mortgage Equity

The Australian Financial Review has reported that the Bank of Queensland will prohibit its customers to use loan equity to purchase cryptocurrency.

The Bank of Queensland, one of Australia’s largest banks, which is publicly traded on the country’s stock exchange, has made the move as it believes recent crypto price instability has made amendments to its rules necessary. Other banks have discouraged its borrowers using real-estate mortgages for crypto purchases, but as yet haven’t officially prohibited the activity.

The bank has stated in its new rules “any loan purpose that involves the acquisition of or usage of cryptocurrency is unacceptable”.

Australian regulators are increasing scrutiny over crypto space. Austrac, the country’s financial intelligence agency, has announced new rulings which have mandated further customer scrutiny across cryptocurrency exchanges. Added to this, the Australian tax office has sought public feedback regarding crypto earnings.

Also, the ATO reported that it would be enforcing its tax requirements this year by using 100-point checks, a security checking system long favored by the Australian government and other sectors, and also call on bilateral agreements with other countries to identify users for tax payment purposes. There are currently over 40 countries who have such agreements with Australia including the US and the UK.

It’s been reported that some lenders are now monitoring borrowers accounts in order to check if such accounts are being used for cryptocurrency trading. An anonymous broker reportedly claimed, “They (banks) are concerned because the Australian Taxation Office, Treasury, the Reserve Bank of Australia and Austrac are crawling all over it.”

In a similar move, but in this case focusing on customer credit, banks such as JP Morgan Chase, Citi and Bank of America have suggested bans on credit being used to purchase cryptocurrency due to the volatility of the market.

Reserve Bank of Australia (RBA) official Tony Richards in a speech to the Australian Business Economists recently expressed his admiration of Bitcoin but thought it would not be adopted into the country’s mainstream financial system.

 

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Embarrassment for Aussie Bank with $530M AML Fine After Positive Blockchain Spin

The Commonwealth Bank of Australia (CBA) is to pay settlements of USD 530 million for breaching anti-money laundering (AML) and counter-terrorism financing laws, writes the BBC.

The Commonwealth Bank is one of Australia’s big four banks along with Australia and New Zealand Banking Group (ANZ), National Australia Bank and Westpac Banking Corp.

The settlements are being paid to the Australian Transaction Reports and Analysis Centre (AUSTRAC) for failing to report 53,506 bank transactions, improperly monitoring 778,370 accounts for money laundering red flags, and filing 149 suspicious matter reports over a period of three years.

The CBA argues that a single coding error had led to the failure to report the 53,506 transactions and that it wasn’t aware that the bank had violated AML laws, although it did admit to lack of due diligence.

“Our agreement today is a clear acknowledgement of our failures and is an important step towards moving the bank forward. On behalf of Commonwealth Bank, I apologize to the community for letting them down,” said CBA current chief executive, Matt Comyn.

Given bank demands for tougher regulation on cryptocurrencies because of digital currency’s perceived susceptibility to being used for money laundering, this news comes as somewhat of an embarrassment for those banks calling for tougher AML legislation on crypt assets. Endless media reports have suggested that Bitcoin is used for criminal activity.

A recent panel held by the US Senate Judiciary on modernizing anti-money laundering laws discovered that only a small percentage of such activity involves cryptocurrency. Columbia University’s economics professor Edgar Feige cited last month that 50% of the world’s fiat currencies contribute towards illegal activity such as drug and arms trafficking, writes Bitcoinist.

A further embarrassment to the CBA is the fact that two years ago, the now-ousted CBA executive, Ian Narev was extolling the “transformational” potential of blockchain for the bank’s customers:

“Our intention is to be right in the middle of the early stage R&D, because it has the potential to be that transformational for the business – both for customer benefits and for processes and costs,” adding that DLT tech could be, “…more significant than anyone even thought they were. That is something we would expect to pan out over the next couple of years [for distributed ledger technology].”

A CBA ledger built on the blockchain would’ve made it much more difficult to conceal 53,506 transactions, saving AUSTRAC a lot of time and money investigating the breach.

If a court approves the fine, it will be the largest civil penalty in Australian corporate history. The bank, Australia’s largest lender, said it would also cover AUD 2.5 million in legal fees accrued by investigators, according to the BBC.

 

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New Aussie Cryptocurrency Rules Start Today

As from 3 April 2018, cryptocurrency exchanges throughout Australia must now follow new rules designed to combat money laundering and terrorism financing.

New obligations for exchanges to adhere to are clearly laid out in the Australian Transactions and Reports and Analysis Centre’s (AUSTRAC) new webpage. Digital currency exchange providers registering with Austrac will be required to identify and verify the identities of their customers and report suspicious matters. Transactions involving physical currency or more must also be reported.

Providing digital currency services without registration will be deemed a criminal offence under the new laws. This follows the Anti-Money Laundering and Counter-Terrorism Financing Bill 2017 passed last year by the Australian Senate. It was the second new bill to successfully pass through the Senate concerning cryptocurrency regulation. The first dealt with Australia’s controversial and unpopular double taxation of cryptocurrencies.

The Australian ministry of justice suggests that the new legislation will “close the regulatory gap,… with the authority of AUSTRAC” and ‘”strengthen investigation and execution powers, to expand the search and capture opportunities for police and customs at the border and provide regulatory assistance to the industry”.

Attempts to bring a legislative base to the cryptocurrency market were conducted since the middle of 2016, when the government issued a large-scale statement on financial technologies. Although these new measures give AUSTRAC the power to prosecute non-compliant exchanges they state that a “policy principles” period will be in place from 3 April. During this time, AUSTRAC can only take punitive action if a cryptocurrency exchange fails to comply with the new rules or fails to at least take “reasonable steps” to do so.

2017 was the year of the blockchain for Australian cryptocurrency enthusiasts. In 2018, Australia ‘s private sector continues to explore a range of blockchain applications as the industry continues to grow from state to state. On 12 May, the Sydney Showground has scheduled a Bitcoin and Blockchain Fair which promises a place where the public can learn about “exciting new opportunities in the growing ecosystems of cryptocurrency and blockchain”.

 

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