Last week, the Australian Senate Legal and Constitutional Affairs Committee published a paper which recommending the passing of the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2017.
The bill was introduced earlier in August 2017 by the Senate and then referred to the Legal and Constitutional Affairs Legislation Committee who will investigate the bill and write a recommendation based on their findings. The bill in question includes measures which will amend the Anti-Money Laundering and Counter-Terrorism Financing Act of 2006 (AML/CTF Act). The amendments were introduced in order to strengthen the position of the Australian Transactions and Reporting Analysis Centre (Austrac).
In addition, the bill also included several provisions which will serve to regulate cryptocurrency exchange platforms. One such provision “seeks to introduce a new designated service and register in order to regulate digital currency exchange.” The regulatory framework was recommended to be implemented within six months of the bill’s commencement.
The document stated that the bill will effectively amend the existing AML/CTF Act, and in doing so, will establish civil penalties pertaining to unregistered individuals or entities who provide cryptocurrency exchange services. Moreover, all unregistered person will be subject to liability.
During the review process, the committee opened the proposed bill for public views and commentary. The committee stated that those who submitted their views were generally positive and very receptive to the proposed bill, including all its reforms and implications.
A total of nine submissions were received on the subject and made available by the Parliament of Australia's website. Two submissions directly addressed cryptocurrencies. One submission was given by the prominent criminal law firm, Nyman Gibson Miralis. The firm stated that the proposed bill did not take into account the likely scenario that an individual participating in cryptocurrency exchange could freely choose to exchange with any other international exchanges that fell outside of Australia’s jurisdiction. Additionally, the bill was unclear as to what would happen to those individuals who used cryptocurrency exchange platforms which were not Australian-based. The firm stated that the decentralized nature of bitcoin and other cryptocurrency means that the digital currencies are inherently able to transcend Australia’s national jurisdiction.
Another noteworthy submission came from an Australian Fintech firm, Living Room of Satoshi, which allows Australian-based users to pay bills using bitcoin. The firm's CEO, Daniel Alexiuc, stated that the proposed bill will effectively demand Know Your Customer (KYC) procedures from their customers regardless how small the transaction is.
According to Alexiuc, the majority of transactions conducted through his firms are less than $1,000 AUD. He also confirmed that all transactions beyond $1,000 AUD are subject to KYC requirements. Alexiuc stated that adding KYC requirements to low-value payments would add unnecessary friction and discourage all payments of this nature. Introducing KYC requirements to low-value payments is likely to discourage customers as it adds an unnecessary obstacle. Once bitcoin payments are discouraged, it will also significantly reduce all competition in this sector.
Alexiuc wrote in his statement that the proposed bill would negatively affect his firm and will stifle Australian innovation in this industry. Alexiuc proposed that the proposed bill be amended in such a way that it exempts low-value payments from KYC requirements. To this end, he suggested his firm's threshold of $1,000 AUD to be considered as the standard low-value payments.
The bill was introduced earlier in August 2017 by the Senate and then referred to the Legal and Constitutional Affairs Legislation Committee who will investigate the bill and write a recommendation based on their findings. The bill in question includes measures which will amend the Anti-Money Laundering and Counter-Terrorism Financing Act of 2006 (AML/CTF Act). The amendments were introduced in order to strengthen the position of the Australian Transactions and Reporting Analysis Centre (Austrac).
In addition, the bill also included several provisions which will serve to regulate cryptocurrency exchange platforms. One such provision “seeks to introduce a new designated service and register in order to regulate digital currency exchange.” The regulatory framework was recommended to be implemented within six months of the bill’s commencement.
The document stated that the bill will effectively amend the existing AML/CTF Act, and in doing so, will establish civil penalties pertaining to unregistered individuals or entities who provide cryptocurrency exchange services. Moreover, all unregistered person will be subject to liability.
During the review process, the committee opened the proposed bill for public views and commentary. The committee stated that those who submitted their views were generally positive and very receptive to the proposed bill, including all its reforms and implications.
A total of nine submissions were received on the subject and made available by the Parliament of Australia's website. Two submissions directly addressed cryptocurrencies. One submission was given by the prominent criminal law firm, Nyman Gibson Miralis. The firm stated that the proposed bill did not take into account the likely scenario that an individual participating in cryptocurrency exchange could freely choose to exchange with any other international exchanges that fell outside of Australia’s jurisdiction. Additionally, the bill was unclear as to what would happen to those individuals who used cryptocurrency exchange platforms which were not Australian-based. The firm stated that the decentralized nature of bitcoin and other cryptocurrency means that the digital currencies are inherently able to transcend Australia’s national jurisdiction.
Another noteworthy submission came from an Australian Fintech firm, Living Room of Satoshi, which allows Australian-based users to pay bills using bitcoin. The firm's CEO, Daniel Alexiuc, stated that the proposed bill will effectively demand Know Your Customer (KYC) procedures from their customers regardless how small the transaction is.
According to Alexiuc, the majority of transactions conducted through his firms are less than $1,000 AUD. He also confirmed that all transactions beyond $1,000 AUD are subject to KYC requirements. Alexiuc stated that adding KYC requirements to low-value payments would add unnecessary friction and discourage all payments of this nature. Introducing KYC requirements to low-value payments is likely to discourage customers as it adds an unnecessary obstacle. Once bitcoin payments are discouraged, it will also significantly reduce all competition in this sector.
Alexiuc wrote in his statement that the proposed bill would negatively affect his firm and will stifle Australian innovation in this industry. Alexiuc proposed that the proposed bill be amended in such a way that it exempts low-value payments from KYC requirements. To this end, he suggested his firm's threshold of $1,000 AUD to be considered as the standard low-value payments.