Australia to give AUSTRAC new powers on high risk products and channels

In a move to strengthen Australia’s money laundering defences, Minister for Home Affairs Tony Burke has announced proposed legislative amendments that would grant the CEO of the Australian Transaction Reports and Analysis Centre (AUSTRAC), Brendan Thomas, new powers to restrict or prohibit high-risk financial products, services, and delivery channels. The legislation would also include provisions for banks to access visa status information to help identify mule accounts.

The media release focuses on the rapidly expanding network of cryptocurrency ATMs which have become a focal point for curbing money laundering and scam operations across the country. This reflects broader efforts by regulators internationally to prohibit or restrict the offering of these machines. AUSTRAC had already taken steps under existing powers to impose additional conditions on the use of the machines.

Brendan Thomas welcomed the proposed changes, stating that the agency is prepared to act swiftly to target crypto’s integration into money laundering methodologies if Parliament passes the law.

Thomas stated:

We’re still seeing an unacceptable risk of money laundering across some channels… Having a power like this enables the CEO to adapt to the evolving risk environment in more responsive ways.

In the media release, Thomas highlighted the rapidly expanding network of cryptocurrency ATMs, which allow users to convert cash into digital currency, noting that they have surged from just 23 machines in 2019 to over 2,000 today.

AUSTRAC’s Crypto Taskforce estimates that nearly 150,000 transactions occur annually in Australia through these machines, moving approximately $275 million in value. It is estimated that 99% of crypto ATM transactions are cash deposits, which indicate a high risk for money laundering. In AUSTRAC’s sample of the 90 most frequented crypto ATM users, 85% were found to be either scam victims or money mules coerced into transferring funds.

Burke stated to the National Press Club that with these new changes:

If a bank suspects mule activity, they will be able to check visa-holder status and use this to inform decisions about whether the account is being used by criminals. It’s about equipping banks with the right information to help them manage risk, and prevent their accounts falling into the hands of criminals.

 The demographic most affected are Australians aged between 50 to 70, who are believed to account for nearly 72% of transaction value at crypto ATMs. These individuals are particularly vulnerable to scams, often being coached over the phone during transactions or misled into sending money to unknown recipients.

Meanwhile, AUSTRAC has also released an updated list indicators of suspicious activity for the cryptocurrency sector.

Red flags associated with crypto ATM misuse, include:

• Confused or coached customers;

• Use of flagged wallet addresses linked to scams or illicit activity;

• Multiple small-value payments or large transfers to high-risk jurisdictions;

• Transactions at odd hours or on machines without security cameras;

• Discrepancies between users and their ID photos;

• Use of multiple machines in separate locations;

• Undertakes a transaction pattern that does not match the individuals source of wealth; and

• Moving cryptocurrency to a third part wallet not controlled by the user.

The proposed powers appear to be exceptionally broad in scope, yet details remain scarce. There is no draft legislation at this stage. Legislation could give the AUSTRAC CEO the power to impose a de facto ban on certain products and types of activity, which marks a departure from AUSTRAC historic focus on close industry cooperation to target money laundering by improving AML/CTF risk management and compliance. This ambiguity raises important questions about the potential reach of AUSTRAC’s authority, and may foreshadow future disputes over legitimate space for peer-to-peer activity in decentralised finance. The breadth of the proposed power may offer valuable flexibility in addressing emerging financial crime threats, but it also highlights the need for transparency in the exercise of those powers and to balance risk based approaches to AML/CTF compliance and broader legal rights and policy goals.

Written by Steven Pettigrove, Luke Higgins and Tahlia Kelly