What is AUSTRAC?
If you’re trading financial investments including crypto, chances are you’ve heard of AUSTRAC. If you're wondering what AUSTRAC is and what AUSTRAC does, we've got you covered.
What is AUSTRAC?
Established in 1989, the Australian Transaction Reports and Analysis Center (AUSTRAC) serves as Australia’s financial intelligence unit (FIU). Its primary responsibilities include combating money laundering (ML), terrorist financing (TF), and other financial crimes.
AUSTRAC operates under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) and the Financial Transaction Reports Act 1988 (FTR Act), which set compliance requirements for entities providing at-risk services. Unlike some FIUs that only investigate potential suspicious activity reported to them, AUSTRAC has both regulatory and investigative powers.
What does AUSTRAC do?
AUSTRAC plays a key role in Australia's approach to AML/CTF, offering tools, guidance, and enforcement measures for entities under its supervision. It has been instrumental in enhancing Australia’s framework for combating money laundering and terrorist financing.
AUSTRAC processes reports from Australian financial institutions, including those on suspicious transactions, international funds transfers, and transactions exceeding A$10,000. It investigates these reports and monitors specific clients and accounts. Back in 2022, AUSTRAC announced an update to its reporting system for supervised entities, aiming to make the process more user-friendly and efficient. The Reporting Entity System Transformation (REST) program, set over four years, will enhance security and provide a more responsive interface for reporting entities. This update will also allow entities to view their reporting history and have greater control over their reports, including the ability to make corrections as needed.
To ensure these improvements meet the needs of regulated firms, REST has established a Customer Advisory Group (CAG) consisting of entities that report to AUSTRAC. The group actively seeks input and has conducted several workshops with CAG participants. AUSTRAC uses this feedback to implement improvements through the REST program, aiming to streamline and enhance the reporting process.
Additionally, AUSTRAC oversees the crypto industry, requiring digital asset businesses to maintain an active and accurate registration. Following an update to its legal approach to crypto assets in 2017, AUSTRAC collaborated with the Australian Digital Commerce Association (ADCA) to guide cryptocurrency firms in implementing an AML/CFT program. In 2022, AUSTRAC released a comprehensive guide on preventing criminal cryptocurrency activity, addressing the risks associated with criminal abuse of virtual assets.
Who needs to report to AUSTRAC?
Nearly all financial institutions in Australia must report any transaction they identify as suspicious to the government. These reports, known as Suspicious Activity Reports (SAR), are reviewed by AUSTRAC, which tracks suspicious customer accounts. Institutions and organizations that fail to report suspicious transactions face severe criminal sanctions and substantial fines. Additionally:
Financial institutions must immediately report any transaction exceeding $10,000 to AUSTRAC.
Financial institutions are required to report international funds transfers to or from Australia.
Both individuals and organizations must comply with AUSTRAC regulations, including implementing KYC procedures. Failure to report suspicious transactions can result in legal penalties for the individuals or entities involved.
Is crypto regulated by AUSTRAC?
Yes. Crypto exchanges in Australia are regarded as financial institutions and must therefore comply with AUSTRAC requirements and reporting regulations. This includes ensuring exchanges have KYC verification processes in place, reporting any cash transactions over $10,000, and reporting international fund transfers to or from Australia.
AUSTRAC isn’t the only authority with insight into your crypto transactions. The ATO also has a crypto data sharing program with crypto exchanges operating in Australia in order to ensure tax compliance. Data collected from crypto exchanges by the ATO as part of this program may include:
Name and DOB
Addresses
Contact information like email address, phone number, and social media accounts
Australian business number (if applicable)
Identify verification document details
registration IP Address and user ID
What transactions are reported to AUSTRAC?
Any cash transaction exceeding $10,000 is reported to AUSTRAC. As well as this, any international fund transfers to or from Australia are reported to AUSTRAC.
Which crypto exchanges are registered with AUSTRAC?
Any crypto exchange operating in Australia must be registered with AUSTRAC. This includes global giants like Coinbase, Binance, and Kraken, as well as Australia-based exchanges like CoinSpot, CoinJar, and Swyftx.
FAQs
Who governs AUSTRAC?
The Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) is the primary legislation regulating AUSTRAC's functions.
Are all international transactions reported to AUSTRAC?
No. All individuals and reporting entities must report cross-border movements (when monetary instruments are transferred into or out of Australia) if the combined value of the monetary instruments, in Australian or foreign currency, is AUD 10,000 or more.
What are the red flags for AUSTRAC?
Various types of customer transactions and indicators, or red flags, could suggest that your business or organization is being exploited for money laundering, terrorism financing, or other serious crimes. Effective Suspicious Matter Reports (SMRs) should outline all reasons for suspicion, including potential indicators, in a logical and readable format. Possible red flags include:
Structuring: The deliberate division of large amounts of cash into smaller deposits to avoid threshold reporting requirements.
Layering: Passing money through layers of transactions to legitimize and hide ownership. Examples include moving funds between multiple banks or financial institutions, purchasing and reselling high-value assets (such as real estate, luxury goods, or gold bullion), and investing in other legitimate business interests.
Sanctions: Restrictions on activities related to particular countries, goods and services, or persons and entities.
Transaction volumes: Transactions that are much larger or more frequent than usual.
Internal reporting policy: Transactions that trigger your internal reporting policies due to their size or nature.
High-risk areas: Transactions sent to or received from a high-risk country or region.
Sanctions list: Payments sent to or received from a person or organization on a sanctions list.
Suspicious identification: Using false or stolen identities to open or access bank accounts.
Unusual account activity: Any other unusual account activity that may indicate money laundering or terrorism financing, such as transactional activity inconsistent with the customer's profile or typical patterns of behavior.
Is Coinbase registered with AUSTRAC?
Yes, Coinbase is registered with AUSTRAC as a digital currency exchange.
Is Binance registered with AUSTRAC?
Yes, Binance is registered with AUSTRAC as a digital currency exchange.
