A government review of the federal anti-money-laundering regime has concluded that the use of digital currencies such as bitcoin to evade monetary controls poses a “significant” risk.
The review of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 found that features of bitcoin and other digital currencies “make them attractive to individuals and businesses who wish to utilise them for both legitimate and illegitimate purposes”.
Currently the definition of money in the act includes ‘e-currency’; however, that definition does not capture cryptocurrencies. E-currencies are defined to include digital money backed either directly or indirectly by precious metal, bullion or a thing.
The review states that cryptocurrencies are “backed by an algorithm rather than a physical thing”.
“This means if a reporting entity was to sell over AUD10,000 worth of bullion in exchange for bitcoin there would be no obligation to submit a threshold transaction report,” the review states.
Currently the only oversight of digital currencies is when they are converted to or from fiat currencies.
The review concludes that bitcoin-style currencies should be brought under the aegis of the AML/CTF legislation.
One change would be to expand the definition of e-currency to money that is not backed by a thing. The new definition should not capture