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Australian Senate Crypto Report - Recommendation 5: AML/CTF and the travel rule



The Senate Select Committee Report into Australia as a Technology and Financial Centre's Final Report examined Australia's Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) regulations and obligations under the Financial Action Task Force (FATF) guidelines, including the 'travel rule'.


The Committee, in their Final Report, recommended that Australia clarifying it's AML/CTF guidelines in light of the so called travel rule:

The committee recommends that the Anti-Money Laundering and Counter-Terrorism Financing regulations be clarified to ensure they are fit for purpose, do not undermine innovation and give consideration to the driver of the Financial Action Task Force 'travel rule'.

FATF are a global inter-governmental body designed to advise countries on AML/CTF matters. The Australian Transaction Reports and Analysis Centre (AUSTRAC) is responsible for implementing FATF guidance.


One of the most discussed guidance's released is the 'travel rule', which requires institutions to include verified information about the originator (payor) and information about the beneficiary (payee) for wire transfers and other value transfers throughout the payment chain.


Submissions to the Report noted that, should the travel rule be implemented in a strict way, it may place unnecessary burdens on cryptocurrency service providers and stifle innovation in this rapidly growing space. Specifically, cryptocurrency service providers will need to acquire detailed user information which they do not presently have access to and will add complexity and red-tape to a fast and highly traceable payment system.


It is the belief of many that by its very nature, blockchain technology and analysis has the potential to be a more effective tool at preventing money laundering and terrorism financing than manually collecting user information.


Other submissions pointed out that some form of the travel rule is necessary and that AUSTRAC should accelerate engagement with the industry to create an outline that prevents money laundering/terrorism financing but also encourages growth and innovation.


Ultimately, the Report notes that AUSTRACs interpretation of the AML/CTF regulations and FATF guidelines must strike a balance between managing risks without implementing the travel rule in a way that undermines the operation of legitimate digital asset businesses. The best available evidence is that money laundering in cryptocurrencies is extremely small and appears far below that occurring in the cash economy.