Australia is very close to introducing regulations for the cryptocurrency market, with the country’s Parliament scheduled to vote on a new anti-money laundering bill this week.
The news comes as bitcoin hit a new all-time high over the weekend, breaching the $6,100 level on Saturday. The cryptocurrency’s surge is unprecedented, as just a year ago it was trading at $630.
But, many analysts believe that bitcoin is doomed to fail, largely due to threats posed by possible government regulations.
In a recent report, Goldman Sachs said that bitcoin is not to be trusted because its future is unknown due to “significant regulatory risks.”
For example, China introduced a ban on initial coin offerings (ICOs) and shut down some cryptocurrency exchanges last month. And in October, Russian President Vladimir Putin also spoke in support of regulating cryptocurrencies.
Now Australia is looking close to introducing its own new laws, which, if passed, will grant additional authority to the national financial intelligence regulator AUSTRAC to oversee digital currency exchanges.
According to the proposed bill, it will be illegal for any “unregistered person” to offer digital currency exchange-related services.
“Businesses that trade digital currencies for money, and vice versa, will be required to enroll and register with AUSTRAC,” Justice Minister Michael Keenan said in August when describing the new laws.
All registered persons will also be required to “report threshold transactions and suspicious matters to AUSTRAC, and keep appropriate records.”
Australia has expressed concern over digital currencies in the past.
“Virtual currencies, such as Bitcoin, are increasingly being used by serious and organized crime groups,” the Australian Criminal Intelligence Commission (ACIC) said in a report released in August.
Such regulation is welcome before the ICO market her goes gaga.
But what about the other money-laundering ponzi scheme? John Cassara, a former US Treasury official and undercover intelligence agent, is the latest to shame Australia for failing to enact global anti-money laundering (AML) rules for real estate gatekeepers. From The ABC:
Allegations that the Commonwealth Bank breached anti-money laundering laws on almost 54,000 occasions have raised concerns that Australia’s financial system is exposed to criminal elements, including the likes of drug runners…
John Cassara has come face-to-face with money launderers over a 26-year career, and he warned that both the US and Australia were losing the battle in enforcing money laundering laws.
Mr Cassara said the recent case of the Commonwealth Bank just proved how exposed Australia was to sophisticated money laundering gangs…
A perceived loophole in Australian law means lawyers, accountants and real estate agents do not have to declare anything over $10,000.
Australia’s anti-money laundering law in fact does not cover those industries, despite promises when the law was enacted in 2006 the legislation would be widened.
Mr Cassara said it was essential for such designated professionals to be made to adhere to anti-money laundering guidelines.
“Unfortunately this is taking a lot of time, there’s a lot of pushback from the industry, there’s a lot of lobbying going on,” he said.
“Eventually it will happen, but I just hope it’s sooner rather than later.”
In March this year, Transparency International ranked Australia as having the weakest AML laws in the Anglosphere, failing all 10 priority areas. By comparison, the US failed nine out of 10 priority areas, ranking second worst in the Anglosphere.
However, unlike Australia, the US is at least taking action to tighten their AML laws, according to CNBC:
The Treasury Department said that 30 percent of high-end real estate deals that were subject under a new watchdog program involved people who had been targeted by the government for “suspicious activity” and potential money laundering.
Treasury this week expanded and extended a program targeting luxury real estate deals in New York, Miami, Los Angeles and other big markets to prevent the use of real estate for money-laundering by overseas buyers. The program was designed to prevent buyers from using shell company’s or LLC’s to hide the identities of the real buyers.
…the program was extended in February and is now being expanded to close loopholes. It also added the city and county of Honolulu.
Real estate experts say the expanded program could put pressure on high-end real estate markets…
The most important part of this week’s rule was closing a massive loophole involving wire transfers. Brokers say that ever since the rules were first imposed in 2016, buyers could easily avoid them by using wire transfers. Now, wire transfers will also be subject to the rule — closing the loophole.
Now compare this reform program to Australia, where money launderers continue to roam free.
In 2015, the global regulator of money laundering – the Paris-based Financial Action Taskforce (FATF) – released its mutual evaluation report, which found Australian homes are a haven for laundered funds, particularly from China. In June this year, FATF also placed Australia on a watch list for failing to comply with money laundering and terrorism financing reforms.
Legislation to implement the second tranche of AML legislation covering real estate gate keepers has been gathering dust in Canberra for a decade.
Accordingly, realtors, lawyers, accountants and other real estate gate keepers are currently exempted from AML requirements. And this exemption has provided an easy avenue for foreign buyers to launder funds through Australian property.
Sure, the Australian Government is currently undertaking yet another consultation on implementing the second tranche of AML legislation, and has promised to finalise the new rules by the end of this year. However, the Government set similar deadlines 2008, 2010, 2012 and 2014, all of which failed to deliver legislation.
Moreover, The AFR reported in August that any reforms would likely exclude real estate agents, thus leaving the door ajar for laundering through property [my emphasis]:
George Brandis, federal attorney-general, is expected to make an “imminent” announcement about boosting powers and resources of Austrac, the government agency that combats money laundering, according to a department spokesman.
But it is expected to fall short of extending existing laws to cover real estate agents…
Under existing law, real estate agents and other businesses involved in buying and selling real estate do not need to identify where the money comes from or who is paying.
The law does not require real estate agents, lawyers, accountants or any other person involved in the deal to identify the beneficial owner of the deal. A beneficial owner enjoys the benefits of ownership though title is in another name, such as a company…
Real estate agents report unprecedented numbers of overseas’ buyers of residential and commercial property in Melbourne and Sydney paying cash…
An estimated 70 per cent of Chinese buyers pay in cash, according to Transparency International, an international non-government organisation targeting corruption.
By failing to ratify the second tranche AML rules, as promised more than a decade ago, the Australia’s Government remains tacitly complicit with the dirty foreign money flooding into Australia’s homes and robbing young Australians of a housing future.