The Australian government has announced plans to strengthen its anti-money laundering rules with new reforms that will include digital currencies for the first time.
The plan follows the recent scandal involving its biggest bank, the Commonwealth Bank of Australia (CBA), which fell foul of rules around anti-money laundering and terrorist financing.
The new legislation will also strengthen the remit of the financial intelligency agency Australian Transaction Reports and Analysis Centre (Austrac), the agency which initiated the legal action against the CBA earlier this month.
“Stopping the movement of money to criminals and terrorists is a vital part of our national security defences and we expect regulated businesses in Australia to comply with our comprehensive regime,” said Michael Keenan, Australia’s justice minister.
Keenan also stressed that the new laws would be balanced - bolstering the threat against organised crime and money laundering but not hindering the development of legitimate financial organisations or Australia's fintech ambitions.
The proposal follows the introduction of similar measures in Japan this year that stipulates crypto-currency exchanges must conduct annual audits and comply with the same Know Your Customer and Anti-Money Laundering rules applied to traditional exchanges and institutions.
Japan was the first national government to take such action, prompted by the 2014 bankruptcy of Mt Gox, the world's largest virtual currency exchange. By granting virtual currencies full legal status as a payment method, analysts say it has helped to raise the price of bitcoins in Japan.
The proposed legislation has been welcomed by the Australian Digital Currency & Commerce Association which said it will increase safeguards and provide regulatory certainty to digital currency businesses.
It is also hoped that new laws will help to promote the Fintel Alliance, a private public partnership between banks and other institutions to provide intelligence to Australia's regulators - an initiative that was undermined by the recent CBA case, in which the bank was alleged to have failed to report more than 50,000 questionable transactions to Austrac.