It has been around a month since PLAAK announced its approval and registration with AUSTRAC. While AUSTRAC’s CEO Nicole Rose has said that “regulation will help strengthen public and consumer confidence in the sector”, many users are asking whether registration with AUSTRAC in fact translates to the Government acting as “Big Brother” and watching every transaction they make.
What does AUSTRAC approval mean for the owner of an exchange?
The approval is an acknowledgement with the company/owner of the exchange that they will be held accountable to look after its consumers and remain on top of any suspicious or criminal activity. The complete compliance guide that needs to be followed can be found on AUSTRAC’s website, however the key duties are as follows:
Key staff members must undergo rigorous registration including police checks. This helps prohibit and prevent the facilitation of money laundering or financing of terrorism offences.
Implement an anti-money laundering program.
Report suspicious transactions including those that fall above the threshold of $10,000(AUD) or occur between countries considered “high-risk” by AUSTRAC.
Getting AUSTRAC approval also includes getting an Australian Financial Services License. This authorises a business to provide a particular financial service to consumers in relation to a specific financial product.
What does the approval mean for a user?
AUSTRAC approval does not translate to being “watched” or “observed”. The approval should instil confidence, because the regulation is put in place to protect users. Only two main areas involve users:
Registration may be stricter, however that is to ensure that criminal activity is minimised from the outset.
Regular deposits over $10,000(AUD) may be followed up to ensure that it is not financing terrorism or being laundered. In most cases there is no sinister activity, but for the safety of a country’s security it is better to be safe than sorry.
Why is approval necessary?
It is recognised that the reforms put in place by Australia’s financial intelligence agency and anti-money laundering and counter-terrorism financing (AML/CTF) regulator will “protect business operations from money laundering and terrorism financing.” The approval also holds companies/owners more accountable, which with ICO and crypto fraud should help create trust between consumers and exchanges. To actively seek approval shows that the owner is transparent about its operations and wants to ensure the security of its users. Additionally it also shows a positive progression forward toward the integration and further acceptance of cryptocurrency use in Australia.