Financial Authority Warns of Cryptocurrencies as Primary Peril in Financial Crime Suppression Efforts in Australia
In a significant move to combat financial crime, Australia is undergoing its largest anti-money laundering (AML) law reform in a generation. The Australian Transaction Reports and Analysis Centre (AUSTRAC) has identified cryptocurrencies as the primary threat in this fight, signalling a shift towards tougher regulation and enforcement, particularly targeting digital currency exchanges and virtual asset service providers [1][4].
This regulatory push comes amidst significant developments in the digital asset sector. AUSTRAC is bringing approximately 80,000 new businesses under AML obligations, a move known as the "Phase Two" expansion. These businesses include real estate agents, lawyers, conveyancers, accountants, trust and company service providers, and dealers in precious metals and gemstones [1][2].
Current reporting entities must meet the enhanced AML compliance standards by March 31, 2026, while the newly covered businesses ("Phase Two") must comply by July 1, 2026 [1][2][3]. The reforms are designed to close gaps in Australia's AML/CTF (Counter-Terrorism Financing) regime and align with international Financial Action Task Force (FATF) recommendations, ensuring stronger safeguards against illicit finance activities and protecting Australia's access to global financial markets [3].
AUSTRAC CEO Brendan Thomas has signalled a shift from compliance checks to targeting "substantive risks and harms" at the industry level, focusing on actual risk mitigation efforts by companies [2][3]. This outcome-oriented approach expects firms to assess their specific risk exposure to money laundering, terrorism financing, and proliferation financing, and implement controls proportional to that risk [3].
Industry leaders have welcomed the increased regulatory clarity, but concerns remain about implementation timelines and access to traditional banking services for digital asset firms. Manhar Garegrat, country head for India & Global Partnerships at digital asset custody platform Liminal, views the regulatory evolution in Australia positively, believing that the country is addressing digital asset risks head-on and will work alongside the industry to mitigate those risks [5].
Meanwhile, OKX Australia CEO Kate Cooper has expressed the need for clear rules to unlock capital and confidence in the digital asset industry, while pointing to licensing clarity and debanking issues as key barriers to digital finance adoption [5].
In a notable development, the Australian Securities and Investments Commission (ASIC) has approved 14 firms to pilot real-money transactions using central bank digital currency and stablecoins in Project Acacia. Testing for this project is running for six months, with findings to be published in Q1 2026 [2].
With these changes, Australia's anti-money laundering regulations for digital currencies are becoming more stringent and comprehensive, reflecting the government’s heightened commitment to tackling financial crime in the evolving digital and crypto landscape [1][2][3][4][5].
- The Australian regulatory body, AUSTRAC, is introducing tougher cryptocurrency regulation, specifically targeting digital currency exchanges and virtual asset service providers, as a response to financial crime concerns.
- The Phase Two expansion is bringing approximately 80,000 businesses under AML obligations, including real estate agents, lawyers, and digital asset firms.
- Current reporting entities must meet enhanced AML compliance standards by March 31, 2026, while the newly covered businesses must comply by July 1, 2026, aiming to close gaps in Australia's AML/CTF regime and align with international FATF recommendations.
- AUSTRAC's CEO, Brendan Thomas, is shifting focus from compliance checks to risk and harm mitigation at the industry level, expecting firms to assess their specific risk exposure and implement proportionate controls.
- Industry leaders have welcomed increased regulatory clarity but have expressed concerns about implementation timelines and traditional banking services access for digital asset firms.
- The Australian Securities and Investments Commission (ASIC) has approved 14 firms to test real-money transactions using central bank digital currency and stablecoins, reflecting the Australian government's commitment to navigating the evolving digital and crypto landscape.
