Sam Bankman-Fried had turned FTX into the world's second largest crypto exchange platform before it all came crashing down
Sam Bankman-Fried turned FTX into the world’s second-largest crypto exchange before its collapse in late 2022, raising concerns about transparency in crypto operations. AFP

Australia's anti-money laundering regulator, the Australian Transaction Reports and Analysis Centre (AUSTRAC) recently took action against 13 remittance and digital currency exchange providers for failing to report suspicious transactions on their platforms.

Over 50 more companies were under investigation for potential non-compliance, as AUSTRAC was wrapping up a year-long effort to tackle underreporting and non-reporting of suspicious transactions in the industry.

While AUSTRAC did not name the 50 companies that received the "please explain" letters, these operators have 28 days to respond or risk losing their registration.

AUSTRAC CEO Brendan Thomas explained that these alerts serve as a warning to companies that may not be following proper reporting practices.

The regulator is concerned that some operators may not be reporting suspicious activities, which could lead to further action.

"Late last year AUSTRAC cancelled, suspended and refused renewals of registration for 9 providers that had failed to meet their obligations under the Anti-Money Laundering and Counter-Terrorism Financing Act," Thomas said. "A further 2 providers had conditions placed on their registrations and are now on notice - a failure to meet these conditions may lead to suspension or cancellation of their registrations."

Regulatory actions

Several companies have already faced significant consequences:

  • Key personnel at Auaisa Trading Pty Ltd, Amco Travelling and Exchange Pty, Blue Star Exchange Pty Ltd, B-Paywize Pty Ltd, W Solution Group Pty Ltd, and TSS Farms & Group Pty Ltd have been convicted, prosecuted, or charged with serious offenses.
  • DIGI-SEND E-Money Pty Ltd, Rootie Technology Pty Ltd, and Jinte Net Blockchain Pty Ltd have stopped operating businesses that require registration.
  • Currencyfair Australia Pty Ltd and Currencyfair Limited missed registration deadlines but are now registered under conditions.
  • Zipmex Australia Pty Ltd and FTX Express Pty Ltd were removed from the Digital Currency Exchange Register following their insolvencies.

Rising concerns in the digital currency sector

AUSTRAC -- the Australian government agency dedicated to preventing the criminal misuse of the financial system -- currently oversaw 417 digital currency exchanges and 5,112 remittance registrations across the country, The Australian Financial Review reported.

Since January 2024, the regulator has sent reminders to 106 entities about their obligations, signaling a continued push for compliance.

"AUSTRAC uses the reports submitted by our reporting entities to generate actionable financial intelligence, which is used by our law enforcement partners in thousands of criminal investigations every year. This means remittance service providers and digital currency exchanges play a vital role in detecting and disrupting criminal abuse of Australia's financial system," Thomas stated.

The cryptocurrency sector, which has grown significantly in value since Bitcoin's launch 16 years ago, now includes over 40 digital currencies with a market cap of more than $1 billion. Australians currently hold over AU$14.6 billion in digital assets, mostly in Bitcoin.

However, regulators worldwide have struggled to keep pace with the rapidly evolving sector. The collapse of the FTX exchange in late 2022 and the arrest of its CEO, Sam Bankman-Fried, had raised concerns about the lack of transparency in crypto operations.

Last year, AUSTRAC created the Crypto Taskforce to address money laundering risks within the digital currency exchange sector.

Call for regulation

The Australian cryptocurrency industry has long called for more regulation to protect its interests.

Companies like Coinbase, one of the largest crypto exchanges globally, have lobbied for clearer rules to bring Australia's digital asset market in line with other countries.

Last year, John O'Loghlen, the Australian head of Coinbase, launched a "Stand With Crypto" campaign to urge the federal government to understand the industry's needs.