AUSTRAC Takes Action: Cracking Down on Dormant Crypto Exchanges in Australia

Australia’s financial intelligence agency, AUSTRAC, is stepping up its efforts to enhance the integrity of the local cryptocurrency market. The agency has announced a significant initiative targeting inactive or dormant crypto exchanges operating within Australia, aiming to prevent them from being exploited for illicit activities like money laundering and crypto scams Australia.

Why is AUSTRAC Targeting Dormant Crypto Exchanges Australia?

AUSTRAC currently has 427 digital currency exchanges (DCEs) registered. However, the agency suspects a large number of these registered entities are no longer actively trading. This inactivity creates a vulnerability. Criminals could potentially acquire these dormant registrations to gain a veneer of legitimacy, making it easier to conduct fraudulent activities and perpetuate crypto scams Australia.

Brendan Thomas, CEO of AUSTRAC, emphasized the need for registered businesses to maintain accurate and up-to-date details. He stated that the agency is contacting DCEs that appear inactive, issuing a clear message: “use it or lose it.” Businesses must inform AUSTRAC if they are no longer providing services; failure to do so could result in registration cancellation.

What Does This Mean for Registered Crypto Exchanges in Australia?

For crypto exchanges Australia that are currently registered but inactive, the path is clear: either resume operations and comply with reporting obligations or voluntarily withdraw their registration. If they fail to do either, AUSTRAC has the authority to cancel their registration. Since 2019, ten firms have had their AUSTRAC registration canceled, including FTX Express, the local arm of the collapsed FTX exchange, in June 2024.

Registration with AUSTRAC is mandatory for businesses offering conversions between cash and crypto in Australia, including crypto ATM providers. This registration is a key component of Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) framework.

How Will Australia Crypto Regulation Improve Transparency?

Following this blitz on inactive firms, AUSTRAC plans to publish a public list of registered crypto exchanges. This initiative is designed to help Australians easily identify legitimate providers and avoid potential crypto scams Australia. By making the register publicly accessible, AUSTRAC aims to increase transparency and make it harder for unregistered or illegitimate entities to operate.

AUSTRAC CEO Brendan Thomas highlighted that this public register will improve the accuracy of their database and provide confidence to the public that they are dealing with regulated entities. He reiterated that any DCE intending to offer services must contact AUSTRAC, or their registration will be canceled and noted on the public register.

Context: Broader Australia Crypto Regulation Efforts

This action against dormant exchanges is part of broader efforts to strengthen Australia crypto regulation. In February, the AML regulator took action against 13 remittance and crypto service providers, with investigations ongoing for over 50 others regarding compliance issues. Six providers had their registration renewal refused due to key personnel having serious offense convictions or charges.

Australia is still working towards a comprehensive crypto regulatory framework. The government initiated consultations in August 2022 and proposed regulating exchanges under existing financial services laws in March. While specific legislation is pending, AUSTRAC’s current actions demonstrate proactive enforcement using existing AML/CTF powers to address risks in the crypto sector, particularly concerning dormant crypto exchanges and the potential for crypto scams Australia.

Summary: Cleaning Up the Crypto Landscape

AUSTRAC’s crackdown on dormant crypto exchanges is a crucial step towards cleaning up the Australian digital currency landscape. By forcing inactive firms to clarify their status and publishing a public register, the agency is enhancing transparency, reducing opportunities for criminals to exploit the system, and helping protect Australians from crypto scams Australia. This move signals a commitment from the regulator to ensure that only legitimate and compliant businesses operate in the country, contributing to stronger Australia crypto regulation.