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Chapter 5B - Digital currency exchange registration requirements

Contents


Introduction

Reporting entities providing a digital currency exchange service (under item 50A, table 1, section 6, Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act)) must enrol and register with AUSTRAC before providing this service to their customers. Digital currency exchange providers that register with AUSTRAC are placed on the AUSTRAC Digital Currency Exchange Register.

This chapter provides an overview of the registration requirements. Information on enrolling with AUSTRAC is available in Chapter 4 - Enrolment requirements.

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Background

Registration with AUSTRAC is not automatic. A person seeking registration on the Digital Currency Exchange Register must provide AUSTRAC with information about their business and key personnel, which will be used to assess their suitability to be registered.

Under Part 6A of the AML/CTF Act, AUSTRAC can refuse, suspend or cancel the registration of digital currency exchange providers where the business poses an unacceptable risk of money laundering, terrorism financing or other serious crime risk.

Which digital currency exchange services are required to be registered with AUSTRAC?

Businesses providing digital currency exchange services under item 50A (table 1, section 6, AML/CTF Act) must apply to register with AUSTRAC.

Can a digital currency exchange provider offer a digital currency exchange service without being registered with AUSTRAC?

A digital currency exchange provider must be registered with AUSTRAC before it can provide digital currency exchange services.

It is an offence to provide digital currency exchange services without being registered on the Digital Currency Exchange Register. The penalty is imprisonment, a fine, or both.

Are digital currency exchange providers also required to enrol with AUSTRAC?

All digital currency exchange providers must enrol with AUSTRAC as a 'reporting entity', and can apply for registration at the same time as enrolling with AUSTRAC. See Chapter 4 - Enrolment requirements for further information.

How often must a digital currency exchange provider renew their registration with AUSTRAC?

Digital currency exchange providers must renew their registration with AUSTRAC every three years.

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Applying for registration

How does a digital currency exchange provider register with AUSTRAC?

Digital currency exchange providers can apply to register with AUSTRAC by completing and submitting the registration section of the AUSTRAC Business Profile Form to AUSTRAC. Additional information and assistance about applying for registration is available on the Enrolment and registration page.

A digital currency exchange provider that is already enrolled with AUSTRAC as a reporting entity can apply for registration by completing and submitting the registration section of the AUSTRAC Business Profile Form.

What information must be provided when applying for registration?

A digital currency exchange provider applying for registration must provide AUSTRAC with information about their business and key personnel. The AML/CTF Rules specifies the registration requirements. Digital currency exchange providers must also disclose to AUSTRAC details about certain criminal, civil and enforcement action relevant to their key personnel.

What information must a digital currency exchange provider obtain and keep when applying for registration?

Digital currency exchange providers must also obtain and keep specific information about their business and key personnel. The AML/CTF Rules specifies the required information.

Business information

Digital currency exchange providers must keep information about their business and business structure, including information about their management structure and any other entities in the corporate structure.

The AUSTRAC Business Profile Form - explanatory guide, available on the Enrolment and registration page, contains a full list of information that must be obtained and kept.

National police certificates and national police history checks

Digital currency exchange providers applying to be registered with AUSTRAC must obtain and keep national police certificates (or foreign equivalent) or national police history checks for all key personnel. Digital currency exchange providers must keep the original certificate or a certified copy.

All national police certificates (or foreign equivalent) or national police history checks must be issued no more than six months before the business applies for registration. The business must declare that national police certificates or national police history checks have been obtained for all key personnel when submitting their registration application to AUSTRAC.

If the individual listed as key personnel is resident in a foreign country, a national police certificate issued by a police force of that country is required.

Businesses must also obtain and retain a national police certificate or a national police history check for any new key personnel appointed during the period of registration. The business must declare to AUSTRAC any changes to their key personnel during the registration period and whether they have:

  • obtained a national police certificate or national police history check in relation to the key personnel; or
  • made an application to obtain a national police certificate or national police history check.

The national police certificate or national police history check is also an aid to the business in assessing whether any of their key personnel may be a money laundering, terrorism financing or other serious crime risk.

How does a person obtain a national police certificate or national police history check?

A national police certificate (or foreign equivalent) is a document issued by an Australian Police Force (or foreign equivalent) that contains a certification that the person to whom it relates has no disclosable convictions or those disclosable convictions which are detailed in the Certificate.

An Australian national police certificate can be obtained through the Australian Federal Police or state and territory police services.

A national police history check is an alternative to obtaining a national police certificate. National police history checks can be obtained through an agency that has been accredited by the Australian Criminal Intelligence Commission (ACIC), which is the Australian Government agency that administers the national police checking process and information database.

A list of accredited agencies through which a national police history check can be obtained is available on the ACIC  website.

How are digital currency exchange providers notified about the outcome of their registration application?

AUSTRAC advises the applicant in writing about the outcome of its registration application.

If AUSTRAC approves the registration application, the digital currency exchange provider is placed on the Digital Currency Exchange Register and receives a registration number. If AUSTRAC refuses the registration application or approves the application subject to conditions, the digital currency exchange provider is notified about its rights to seek an independent review of the decision.

How long does it take to process a registration application?

Under the AML/CTF Act, AUSTRAC is required to make a decision within 90 days from the day the registration application is received by AUSTRAC. If AUSTRAC requests further information about the application, the decision must be made within 90 days of receiving that information.

AUSTRAC can extend the processing period by 30 days if the application cannot be dealt with properly within 90 days. AUSTRAC must notify the applicant in writing of this extension before the 90 day period ends.

If AUSTRAC does not make a decision within 90 days, the application is considered to be refused under the AML/CTF Act. The digital currency exchange provider can request an internal review of the application if this occurs.

Can AUSTRAC request further information about an application for registration?

Under the AML/CTF Act, AUSTRAC may, in writing, request further information from any person (including the applicant) when making a decision to register. AUSTRAC is not required to make a decision until the additional information is provided.

What does AUSTRAC consider when assessing an application for registration?

AUSTRAC considers whether allowing the person to operate as a digital currency exchange provider involves a significant risk of money laundering, terrorism financing or other serious crime. Relevant factors include whether the person has a criminal history, or has repeatedly failed to comply with their AML/CTF obligations, or has been disciplined by another regulator.

Can AUSTRAC impose conditions on registration?

AUSTRAC may impose conditions on a digital currency exchange provider's registration to address any issues AUSTRAC identified when assessing the digital currency exchange provider's application. AUSTRAC may also impose conditions at a later time to address any subsequent issues AUSTRAC identifies with the digital currency exchange provider (see section 76G of the AML/CTF Act).

A digital currency exchange provider may seek an independent review of a decision by AUSTRAC to impose conditions on its registration.

On what grounds can AUSTRAC refuse registration?

AUSTRAC can refuse a registration application, based on the risk of money laundering, terrorism financing or any other serious crime.

A digital currency exchange provider may seek an independent review of a decision by AUSTRAC to refuse its registration.

Does AUSTRAC have the power to suspend or cancel registration of a digital currency exchange provider?

Cancelling registration

AUSTRAC can cancel the registration of a digital currency exchange provider if the business poses an unacceptable risk of money laundering, terrorism financing or other serious crime. Section 76J of the AML/CTF Act sets out these powers.

AUSTRAC must consider several factors before deciding to cancel the registration of a digital currency exchange provider.

The digital currency exchange provider will be notified in writing if AUSTRAC cancels the registration. The cancellation takes effect from the date of the notice.

AUSTRAC can publish the names of persons whose registration has been cancelled and the date of cancellation. This enhances the transparency of the sector and enables consumers to access information about cancellations.

A digital currency exchange provider may seek an independent review of a decision by AUSTRAC to cancel its registration.

Suspension of registration

The AUSTRAC CEO can suspend a registration.

Subsection 76K of the AML/CTF Act and the AML/CTF Rules outline arrangements for suspending registration. Subsection 76K(2) provides a non-exhaustive list of matters the Rules may include.

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Applications for review of a decision to refuse, cancel, suspend or impose a condition on a registration

Can a digital currency exchange provider request a review if a registration application is refused, suspended, cancelled or made subject to conditions?

Under section s233B of the AML/CTF Act, a person may apply for an internal review of a decision that was made under subsection 76D(4), or sections 76E, 76G and 76J of the AML/CTF Act. These include decisions to:

  • refuse an application for registration
  • cancel a registration
  • impose conditions on a registration.

A digital currency exchange provider can also seek an internal review if the application is refused because AUSTRAC did not make a decision within the time frames specified under subsections 756D(4) and 76D(5).

A request for an internal review of a decision must be submitted to AUSTRAC within 14 days of receiving the notice to refuse, cancel or suspend the registration or to impose conditions on the registration.

What are the processes of a review?

The process for reviewing a decision to refuse, cancel or impose conditions on a registration is as follows:

  • AUSTRAC must (except in cases of urgency) give written notice of a proposed decision and provide the business an opportunity to respond. The written notice must contain key information about the decision, including rights of review.
  • The business may seek internal review of the original decision.
  • The AUSTRAC CEO can delegate review decisions to an AUSTRAC staff member. The AUSTRAC CEO must ensure the decision is independently reviewed by an AUSTRAC officer who is senior to the original decision maker and who was not involved in making the original decision. The reviewer may affirm, vary or revoke the original decision.

A notice of a proposed decision to refuse, cancel or impose conditions on a registration is not required to be given if AUSTRAC is satisfied that it is inappropriate to do so because of the urgency of the circumstances; for example, if a serious crime is about to occur.

How does a digital currency exchange provider seek an external review of a decision made by AUSTRAC?

A business that is not satisfied with the internal review of a decision by AUSTRAC may apply for review by the Administrative Appeals Tribunal (AAT). Visit the AAT website for information about AAT processes and procedures.

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Maintaining registration information

Is a digital currency exchange provider required to advise AUSTRAC of any changes to their details or circumstances?

A digital currency exchange provider must advise AUSTRAC of any material changes in its circumstances through its AUSTRAC Online account.

The AML/CTF Rules details the changes a digital currency exchange provider must report to AUSTRAC. For example:

  • changes to the registration details
  • changes to the key personnel and a declaration that a national police certificate or national police history check has been obtained, or an application has been made for a national police certificate or national police history check for the new key personnel.
  • if the business (including its key personnel) has been charged, prosecuted or found guilty of an offence including money laundering, terrorism or terrorism financing, or another serious offence, an offence under the AML/CTF Act or under the Financial Transaction Reports Act 1988
  • if the business has been the subject of a civil penalty order issued under the AML/CTF Act
  • if the business has been the subject of civil or criminal proceedings or enforcement action, in relation to the management of an entity, or commercial or professional activities, which were determined adversely to the person or any of its key personnel.

How does a digital currency exchange provider notify AUSTRAC of changes to their registration details?

A registered digital currency exchange provider can advise AUSTRAC of a change to its details electronically through its AUSTRAC Online account or using the AUSTRAC Business Profile Form.

Can AUSTRAC change a digital currency exchange provider’s details on the Digital Currency Exchange Register?

AUSTRAC can change information recorded on the Digital Currency Exchange Register in limited circumstances. AUSTRAC may change a registration details if AUSTRAC considers the details incorrect or incomplete.

AUSTRAC must notify the business of the changes to its details and the date the changes were made within 14 days of making the changes.

Can a digital currency exchange provider request to be removed from the Digital Currency Exchange Register?

A registered digital currency exchange provider can request, in writing, for AUSTRAC to remove it from the Digital Currency Exchange Register.

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Renewal of registration on the Digital Currency Exchange Register

A registration with AUSTRAC must be renewed after three years to enable the digital currency exchange provider to continue to provide digital currency exchange services.

See the AML/CTF Rules in relation to renewal of registration requirements.

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Last modified: 07/01/2019 12:43