Recently, the Australian Transaction Reports and Analysis Centre (Austrac) reported that “an emerging terrorism financing risk” was emanating out from electronic, online and other new payment methods. In a bid to curb the threat, the country plans to regulate these methods under the strict anti-money laundering and counter-terrorism laws. This includes Bitcoin.
According to the agency’s report, terrorist groups that were involved in communication, recruitment and radicalization online were also very likely to use digital currencies and online payments for their transactions. To this end, Bitcoin and its peers must be regulated under stricter laws, since they are considered to be an emerging threat.
Australia’s anti-money laundering and counter-terrorism finance laws is currently being overhauled and in less than no time the issue of regulating the popular currency (Bitcoin) which is already being seen as an emerging threat by its financial intelligence agency will be treated.
Although some global incidents were incited by Austrac’s acting manager for strategic intelligence and policy, Brad Brown where Bitcoin was misused, such as the closed Silk Road, an online black market where illegal drugs were being sold and the inside scam Mt. Gox where hundreds of millions of dollars were lost in Bitcoins, however, no credible evidence has been provided on how terrorist groups use Bitcoins for funding.
Yet, the report gave rise for a proposal to revise Anti-Money Laundering and Counter-Terrorism Finance Act that currently exists in the country. As part of efforts to regulate activities relating to digital currency, a bill to amend the act was tabled by Justice Minister Michael Keenan. With these anti-money laundering and counter-terrorism laws, Australia would be one of the first countries to place regulations on the use of Bitcoin and other digital currencies if this bill is passed.
The report also added that even without passing through the formal financial sector, convertible digital currencies can still be transferred. According to the report, digital currencies have obvious legitimate uses however they allow for the easy flow of illicit funds that could be used for the purchase of illicit goods and services by criminals and terrorist financiers, and stored beyond the reach of law enforcement agencies and other authorities.
According to Brown, where this is a potential risk of abuse of money laundering and terrorism financing, then it is important to regulate digital currencies and online payments. So, since money can be transferred anonymously and terrorist financiers are now gravitating toward e-currencies, it is important for the country to consider enacting regulations under existing anti-money laundering and counter-terrorism financing laws to crack down on digital currencies like Bitcoin.
In response to new and emerging threats, Mr. Keenan disclosed that strengthening an already robust legal framework as recommended by the report is necessary. Currently, the sector is experiencing growth and innovation facilitated by the government but this development can only be sustained once an appropriate anti-money laundering and counter-terrorism financing regulation is enacted.
This week, a counter-terrorism financing summit will be held in Bali with Indonesia where Justice Minister Michael Keenan is expected to speak on the country’s commitment to improving its anti-money laundering and counter-terrorism financing laws. In a bid to regulate activities relating to digital currency, Mr. Keenan recommends that the act should be amended for which he has tabled a statutory review of the Anti-Money Laundering and Counter-Terrorism Financing Act in Parliament on April 29.
Also, he recommends a broadened definition of e-currency including digital currencies that are no backed by a physical asset such as Bitcoin.
Several Bitcoin start-ups left Australia in 2014 when rather than a currency, it was subject to GST and designated as an “intangible asset.” However, there are no proper regulatory frameworks for digital currencies in many other countries.
The first country to regulate Bitcoin and other digital currencies was Canada. In 2014, the country subjected digital currencies the same record keeping under its anti-money laundering and counter-terrorism financing laws. Just like other money services businesses, they were suspicious transaction reporting and verification.
The future of Bitcoin remains unsure despite having improved significantly since Bitfinex’s hack by nearing the $600 mark. Nevertheless, since its release years ago, the Bitcoin market has witnessed significant improvement which is now driven by legitimate commerce, payments, and services. This implies that the currency has evolved.
