- AUSTRAC targets inactive crypto exchanges, warning non-compliant firms of deregistration to prevent criminal exploitation.
- Inactive DCEs pose money laundering risks; AUSTRAC urges updates or withdrawal to ensure public safety and regulatory accuracy.
- AUSTRAC to publish a public DCE register, boosting transparency and helping users avoid unregistered or dormant crypto services.
Australia’s financial intelligence agency, AUSTRAC, is taking action against inactive digital currency exchanges (DCEs) by asking them to withdraw their registrations. Those who fail to comply could see the agency deregister them. The decision forms part of AUSTRAC’s wider efforts to shield the public from criminal exploitation of inactive crypto enterprises.
There are 427 DCEs registered with AUSTRAC, although AUSTRAC has discovered a large proportion that are no longer in a trading operation. If these inactive platforms are not updated or withdrawn, they may be used for criminal purposes such as money laundering, scamming, and moving proceeds of crime. AUSTRAC has begun calling out to businesses that appear dormant to confirm their business status and ensure they comply with registration obligations.
Risks of Criminal Exploitation
Cryptocurrency services take place in a high-risk environment, and any registration with AUSTRAC adds legitimacy and could draw the wrong crowd, noted AUSTRAC CEO Brendan Thomas. Inactive registrations are vulnerable; criminals can purchase inactive registrations and employ them to commit criminal operations while purporting to be legitimate.
Businesses are legally required to keep their registration information current, including removing details of any services they are no longer providing to prevent such exploitation. However, failure to comply with these rules means that AUSTRAC can cancel registration. In addition, ten firms have been deregistered since 2019.
Enforcement Measures and Public Transparency
According to AUSTRAC, registration will be canceled when there is reasonable evidence to believe the business no longer provides a digital currency exchange service. Once it is deregistered, the cancellation will be published on AUSTRAC’s website. The aim is to limit consumer harm from third-party services that may obtain this data and to improve the integrity of the agency’s regulatory register.
AUSTRAC will introduce a publicly searchable register of all active DCEs to enable the public to confirm that a digital currency exchange is registered under regulatory oversight. The aim is to reassure consumers and minimize the threat of scams with unregistered or dormant providers.
Regulatory Oversight and Future Compliance
AUSTRAC’s enforcement action is but one piece in a broader approach to enhancing the reliability and accuracy of the register and reducing opportunities for illicit financial activity. Recently, the agency held 13 remittance and crypto providers to action on potential non-compliance, with over 50 more under investigation.
Under current laws, a business providing services that convert cash into cryptocurrency or vice versa must register with AUSTRAC. Although Australia has not introduced crypto-based regulations yet, the agency helps monitor movements in the digital space to protect people from ill practices.
Businesses whose deregistration has been canceled still wish to reapply for registration. AUSTRAC, however, argues that any DCE aiming to carry on offering services must initiate contact with AUSTRAC before proceedings to cancel commence. The regulator’s message remains clear: Inactive businesses will either comply or exit the register.
