Regulatory Crackdown on Payment Platforms and Exchanges in 2024: AUSTRACs Vigilance Mandate

Highlights:

• Major payment platforms and digital currency exchanges, including Binance and Swyftx, are set to face heightened scrutiny in 2024.
• AUSTRAC's Acting CEO, Pete Soros, emphasized the necessity of engaging early with platforms to prevent criminal exploitation.
• The recent enforceable undertaking with the Perth Mint, Australia's largest gold bullion supplier, underscores AUSTRAC's commitment to enforcing compliance.

As digital services continue to proliferate, major payment platforms and digital currency exchanges, including Binance and Swyftx, are set to face heightened scrutiny in 2024. The Australian Transaction Reports and Analysis Centre (AUSTRAC), the country's financial crime watchdog, will launch a comprehensive crackdown on poor compliance, aiming to curb potential misuse by criminal entities.

Early Engagement to Thwart Criminal Activity

AUSTRAC's Acting CEO, Pete Soros, emphasized the necessity of engaging early with platforms to prevent criminal exploitation. Citing the vulnerability of businesses with weak anti-money laundering (AML) settings, Soros stressed the importance of fostering a culture of vigilance at all levels within organizations.

Regulatory Priorities for 2024

AUSTRAC is scheduled to release its regulatory priorities statement for 2024, expressing concern over the significant variation in AML and counterterrorism financing (CTF) compliance across different companies in the sector. The watchdog will focus not only on enduring priorities such as banking, gambling, and remittance services but will also shine a spotlight on bullion and non-bank lenders and financial providers.

Enforcement Actions and Intelligence Partnerships

The recent enforceable undertaking with the Perth Mint, Australia's largest gold bullion supplier, underscores AUSTRAC's commitment to enforcing compliance. Intelligence partners, including the Australian Federal Police, Australian Criminal Intelligence Commission, and Border Force, have raised concerns, contributing to the areas under scrutiny.

Boards Warned Against Off-the-Shelf Compliance

AUSTRAC issued a warning to boards against relying on off-the-shelf compliance products, emphasizing the need for tailored solutions to meet local AML/CTF laws. Boards are reminded of their ultimate responsibility for compliance and urged to ensure that third-party services align with Australian standards.

Potential Massive Penalties for Non-Compliance

Companies failing to comply with AML/CTF laws, including basic "know your customer" checks, face substantial fines, potentially reaching millions of dollars. AUSTRAC's history includes significant penalties, such as Tabcorp's $45 million fine in 2017 and Westpac's record-setting $1.3 billion settlement in 2020. The regulator continues its vigilance, signaling that all industry sectors should expect engagement and interaction.

While compliance remains a priority, AUSTRAC's focus on early engagement and tailored solutions underscores its commitment to creating a robust financial ecosystem resilient to criminal exploitation.

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