REGULATIONS

Crypto Travel Rule
in

Australia

by

The Australian Transaction Reports and Analysis Centre‚Äć (AUSTRAC)

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Travel Rule required from
Travel Rule regulation still pending

The crypto travel rule was not yet transposed into national law in Australia. Cryptocurrencies and related activities have been covered by the country’s anti-money laundering and counter-terrorist financing framework since 2017, in line with the guidance issued by the Financial Action Task Force (FATF) in 2015. Since then, Australia has shown a slow adoption of the newest FATF recommendations targeting the crypto industry. Most relevantly, crypto-to-crypto exchanges are still not covered by Australia’s AML/CTF laws. The Australian Department of Home Affairs and Australian Transaction Reports and Analysis Centre stated in August 2021 that technological solutions have not yet enabled the adoption of the Travel Rule.

Is cryptocurrency legal in Australia?

Yes. Cryptocurrencies are legal in Australia and explicitly recognized in different legal frameworks. For instance, under the country’s tax regime, capital gains generated through the disposal of cryptocurrencies are subject to capital gains tax, and entities carrying out certain cryptocurrency-related activities are covered by the country’s AML/CTF framework.

Are there any AML crypto regulations in Australia?

Yes. The¬†Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2017¬†entered into force in Australia on 3 April 2018, extending AML/CTF obligations to digital currency exchanges, defined as ‚Äúbusinesses that exchange fiat currency for digital currency and vice versa.‚ÄĚ Furthermore, the¬†Australian Transaction Reports and Analysis Centre (AUSTRAC)¬†published a¬†guide¬†to preparing and implementing AML/CTF programs for digital currency exchange businesses.

It is worth noting that this AML/CTF framework does not cover crypto-to-crypto exchanges. However, in a joint submission of the Australian Department of Home Affairs and Australian Transaction Reports and Analysis Centre (AUSTRAC) from July 2021, the authorities recognize that the “FATF standards from June 2019 require AML/CTF regulation beyond the exchange of fiat currency for cryptocurrency or vice versa to also include regulation of:

  • exchanges between one or more forms of cryptocurrency
  • transfers of cryptocurrency on behalf of customers
  • safekeeping or administration of cryptocurrency or instruments enabling control of cryptocurrency (e.g., custodial wallet providers), and
  • participation in and provision of financial services related to an issuer‚Äôs offer and/or sale of cryptocurrency (e.g., Initial Coin Offerings or ICOs).‚ÄĚ

Who regulates cryptocurrency in Australia?

Australia does not have a legal framework specifically dedicated to cryptocurrencies and related activities. Hence, different authorities have supervisory/regulatory powers over different aspects of such activities. However, it is worth noting that crypto exchange providers must be registered with the Australian Transaction Reports and Analysis Centre (AUSTRAC).

Who is the Crypto Travel Rule Regulator in Australia?

In Australia, the crypto travel rule was not yet transposed into national law. It is expected that the authorities responsible for enforcing the crypto travel rule in the country will be the Australian Transaction Reports and Analysis Centre (AUSTRAC) and the Australian Department of Home Affairs.

Are there licensing or registration requirements for VASPs in Australia?

Yes. In Australia, the provision of ‚Äúregistrable digital currency exchange services‚ÄĚ requires registration with the¬†Australian Transaction Reports and Analysis Centre¬†(AUSTRAC) (Anti-Money Laundering and Counter-Terrorism Financing Act 2006¬†(AML Act), ¬ß76A/(1), ¬ß76B/(1)).

A registrable digital currency exchange service consists of carrying out fiat-to-crypto or crypto-to-fiat exchanges as a business (AML Act, Item 50A of table 1 in section 6). Notably, crypto-to-crypto exchanges are not covered by the definition.

exchanging digital currency for money (whether Australian or not) or exchanging money (whether Australian or not) for digital currency, where the exchange is provided in the course of carrying on a digital currency exchange business

More information about registration obligations is provided by AUSTRAC here.

FATF Travel Rule requirements in Australia

Is the Crypto Travel Rule mandated in Australia?

The crypto travel rule is not yet in force in Australia. On 27 August 2021, the¬†Australian Department of Home Affairs¬†stated that there are not yet enough technical capabilities to implement the crypto travel rule. This assessment was corroborated by Bradley Brow, the national manager of the¬†Australian Transaction Reports and Analysis Centre (AUSTRAC). The two authorities also mentioned the technological limitations in a¬†joint submission¬†from July 2021:technological solutions to enable VASPs to comply with the ‚Äėtravel rule‚Äô are still under development and only beginning to be rolled out globally.

Why choose Notabene for Crypto Travel Rule Compliance in Australia

Notabene’s solution is live and can be used by VASPs to comply with local Travel Rule requirements today. Most relevantly, through Notabene, VASPs are able to identify whether the counterparty wallet is custodial or self-hosted and take the measures appropriate to each scenario. Complying with the Travel Rule requires significant changes to VASPs’ existing UX and data flows. Bearing this in mind, we allow for a staggered implementation of our solution and promote testnets for VASPs to take their first steps towards compliance in a simulated environment.

Relevant Links:

Last updated
October 20, 2021

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