Digital currencies: Managing risk in a dynamic and innovative sector

Digital currencies, also known as virtual assets, are dynamic and rapidly evolving. In 2018, AUSTRAC began regulating digital currency exchanges, also known as virtual asset providers, for anti-money laundering and counter-terrorism financing (AML/CTF) purposes. Since then, there’s been significant growth in digital currencies and investment in meeting AML/CTF regulation.

To help you to detect and prevent financial crime, Australia and other members of the international Financial Action Task Force (FATF) developed the Virtual Assets Red Flag Indicators of Money Laundering and Terrorist Financing which were published in September 2020.

FATF has also been working on updated guidance on the FATF Standards relating to virtual asset service providers. The FATF Standards set out international good practice for regulators and reporting entities, and inform the development of national legislation.

Following FATF’s public consultations in March and April this year, the guidance will give an indication of the direction of AML/CTF regulation of the sector around the world and provide further insights into evolving money ML/TF risks. Keep an eye on the FATF website for the updated guidance which is expected to be finalised later this year.

In Australia, we have just completed the first three years of regulating digital currency exchanges, and the first round of registration renewals. We are continuing to work with the sector on effective risk management and building on our guidance materials.

To keep up to date with this dynamic and innovative sector, you should regularly review your AML/CTF program and changing ML/TF risks by downloading AUSTRAC’s guidance materials for digital currency exchange providers.