Cryptocurrency and cryptocurrency related services is a rapidly developing market all over the world. At the same time there is no unified cryptocurrency regulation around the world, the countries are only working out standards and principals used in this area.

For that reason, when entering a new market, it is always necessary to study the specifics of the cryptocurrency regulation in the specific jurisdiction, as it may hold requirements, nuances and conditions that must be abided to.
The previous article looked at "USA Cryptocurrency Company".

In this article, we will review the existing legislative specifics currently active in Australia.

As of today, Australia has no specific cryptocurrency based regulation. The sale and use of cryptocurrency and other digital assets is regulated by the existing financial regulatory regime of the Australia.

Due to that, the applicable rules of the Australian legislation depend on the nature of the specific cryptocurrencies.

Companies that provide financial services in Australia must have an Australian financial services license if their services and products are considered "financial services" or "financial products" by the Australian law.

The Australian Securities and Investments Commission (ASIC) in its Information sheet – INFO 225 stated, that cryptocurrency with features similar to existing financial products or securities will trigger the relevant obligations as set by the law.

For that reason, it is important to first of all understand the nature of the cryptocurrency used and if it has similarities to the existing financial instruments regulated by the Australian law.

Should also be noted, that the terms "financial services" and "financial products" in Australian legislation are very broad. Thus, it is very likely, that the provisions of the Australian Law will be applicable and the company will require a license in Australia.

Overall, the regulatory guidance and standards in Australia are consistent with the position of regulators in other jurisdictions. ASIC does however greatly emphasise consumer protection and compliance with the relevant laws.

As such, any sale of cryptocurrency must be accompanied by a regulated disclosure document, that satisfies the requirements set by the Australian law, including the fee structure.

In order to provide financial services in Australia a foreign company (Foreign Financial Services Provider – FFSP) must acquire a license AFSL (Australian Financial Services License). Thus, even those companies that are regulated in other jurisdiction must apply and receive a local license in Australia.

There are countries and jurisdictions, that are exempt from this rule however. Those are: Denmark, France, Germany, Hong Kong, Luxembourg, Ontario in Canada, Singapore, Sweden, UK and USA.

Should be noted, that having a foreign AFSL from the abovementioned countries allows only to provide services to wholesale clients, similar in concept to the accredited investor under the legislation of the USA.

Also, companies that wish to provide cryptocurrency services in Australia or operate a platform to provide services in Australia may be required to incorporate a subsidiary in Australia.

From 2017 the Australia updated the AML/CTF Law, which brought the cryptocurrencies within the scope of the Australian AML regulatory network.

These regulations stated, that Digital Currency Exchanges (DCE) are required to register with the Australian Transaction Reports and Analysis Centre (AUSTRAC) to operate. Failure to register may result in a substantial fine or up to two years' imprisonment. Exchanges must implement relevant KYC (know your customer) procedures, adequately verify the identity of customers, monitor and report suspicious transactions.

Also, exchanges must maintain detailed records regarding KYC procedures and transaction for a period of up to seven years.

It is also important to remember, that any financial company in Australia, must abide to the existing AML legislation, which means that the company must employ the necessary measures to combat money laundering.

Companies providing financial services in Australia must have an AML programs drawn up in accordance with the requirements of the law.

AML/CTF program must include:

• how you collect and verify KYC information ;
• how you collect and verify information about the beneficial owners of your customers;
• how you identify customers who are politically exposed persons (PEPs) or who have beneficial owners who are PEPs;
• how you respond to discrepancies you find when verifying information you have collected;
• the risk-based systems and controls you use to work out whether you need to collect and/or verify further customer information;
• how you collect and verify information about agents acting for a customer, including details of the risk-based systems you use to do this.

The identity information you must collect and verify depends on the type of customer and the level of ML/TF risk posed by the customer.

For individual customers, this information includes, as a minimum requirement, their full name as well as either their residential address or date of birth. There are procedures for identifying customers who do not have conventional forms of identification in rare circumstances.

For customers who aren't individuals, you must collect information so that you are reasonably satisfied the customer actually exists.

Information about a customer can be verified using reliable and independent documents or reliable and independent electronic data or a mix of both.
The company must complete most of your applicable customer identification procedures before you provide any designated services to the customer. This applies to both one-off transactions and ongoing business relationships.

The required timeframe for identifying the beneficial owner of a customer and whether the customer or beneficial owner is a politically exposed person is different. You must do this either before you provide the designated service or as soon as possible afterwards.

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