Australia proposes stricter crypto rules to curb financial crime

Australia has proposed stricter Anti-Money Laundering and Counter-Terrorist Financing (AML/CTF) rules aimed at tightening oversight of the cryptocurrency industry to combat financial crime.

The proposed rules, introduced by the Australian Transaction Reports and Analysis Center (AUSTRAC), follow on the heels of amendments to the AML/CTF Act passed by parliament in November. 

The updated framework aims to close regulatory gaps, improve oversight of high-risk sectors, increase customer due diligence (CDD) measures, enforce stricter reporting obligations and implement tighter rules for businesses.

The draft rules are open for public consultation until Feb. 14, 2025, as AUSTRAC calls on industry stakeholders — particularly those in crypto and financial services — to provide feedback to inform the final version of the framework.

Related: Australia fines Kraken operator $5M for regulatory breaches

Proposed increased oversight

The proposed rule reforms introduce expanded regulatory oversight of high-risk sectors, including cryptocurrency exchanges, legal services and real estate businesses.

The updates would mandate stricter CDD, improved reporting group definitions and tighter Travel Rule obligations for international transfers.

Under the proposed framework, businesses must verify customer identities via risk-based processes, monitor suspicious transactions and maintain transparency for cross-border asset transfers.

Related: Australian fintech landscape shrinks, blockchain, crypto take 14% hit

Reduced compliance burdens

The framework also seeks to decrease compliance burdens by adopting an outcomes-based compliance model, replacing the current prescriptive structure.

This change would allow businesses to tailor compliance measures based on size, structure and risk profile while maintaining rigorous standards.

The AML/CTF General Rule 2025 and the AML/CTF (Exemptions) Rule 2007 were both introduced in the proposal, aiming to retain the necessary exemptions from the previous regime while removing outdated requirements to maintain stability and continuity.

Related: Australia to crack down on crypto ATM providers, citing money laundering risk

Next steps

AUSTRAC opened the draft framework from Dec. 11 to Feb. 14, 2025, for stakeholders — including financial institutions, legal practitioners and crypto exchanges — to provide feedback.

The proposal follows a pattern of steadily increasing regulatory focus on the crypto industry by Australian authorities, witnessed recently on Dec. 6 when the AUSTRAC created a task force to crack down on crypto ATM providers.

The task force will ensure that crypto ATM operators meet minimum standards to negate the risk of illicit finances passing through the machines in the country’s “first step […] to reduce the criminal use of cryptocurrency in Australia.”

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