AUSTRALIA Trends and Developments Contributed by: Steven Pettigrove, Katrina Sharman, Luke Higgins and William Deeb, Piper Alderman
CTF Act uses the FATF-aligned concept of “virtual assets”. It is worth noting that these are distinct statu- tory definitions that will not always map neatly onto one another. Expansion of designated services The amended AML/CTF Act introduces a new suite of virtual asset-designated services, set out in Table 1, Section 6. These services are deliberately framed to capture platform-based intermediation and custody risks, rather than focusing solely on fiat on and off ramps. The new virtual asset-designated services include: • Item 50A – exchanging virtual assets for money (fiat on/off ramps) or making arrangements for such exchange; • Item 50B – exchanging virtual assets for other virtual assets (ie, crypto-to-crypto) or making arrangements for such exchange; • Item 46A – providing virtual asset safekeeping services, which includes controlling or managing virtual assets or private keys, including the ability to hold, trade, transfer or spend the virtual asset according to the owner’s instructions; • Items 29-31 – accepting instructions to transfer virtual assets on behalf of customers or making transferred virtual assets available to customers as an ordering, intermediary or beneficiary institution; and • Item 50C – financial services in connection with the offer or sale of a virtual asset where the business is participating in that offer or sale. Governance and core compliance uplift VASPs are subject to the full suite of AML/CTF obliga- tions applicable to reporting entities, including: • the new obligation to maintain a risk assessment; • initial and ongoing customer due diligence (CDD); • transaction monitoring; • suspicious matter reporting (SMRs); and • threshold transaction reporting (TTRs). The reforms also place increased emphasis on risk– based governance, requiring boards and senior man- agement to actively supervise financial crime risk,
rather than treating AML compliance as a downstream operational function. Travel rule A central element of the reforms is the extension of the “travel rule” to VASPs through new Section 66A of the AML/CTF Act. Under this rule, a VASP facili- tating a virtual asset transfer must collect, verify and transmit identifying information about both the payer and the payee. Ordering and beneficiary institutions (items 29-30) are also required to conduct counter- party due diligence to determine whether an originat- ing or recipient wallet is: • custodial or self–hosted; and • controlled by a regulated VASP, an unregulated VASP, an illegally operating VASP or an individual using a self–hosted wallet. There are limited statutory carve–outs. Sections 66A(9) and (10) of the AML/CTF Act permit the omission of travel rule information where an Australian entity has reasonable grounds to believe that the counterparty: • cannot securely comply with the travel rule; or • cannot safeguard the confidentiality of the trans- mitted data. Travel rule compliance commences from 1 July 2026. Transitional arrangements also apply as AUSTRAC phases out international funds transfer instructions (IFTIs) in favour of the new international value trans- fer service (IVTS) reporting regime (see further below). Transfers to self-hosted wallets Additional due diligence and reporting obligations will apply to VASPs that facilitate transfers to unverified self-hosted wallets, as these wallets are considered higher risk from a money laundering/terrorism financ- ing perspective. Where such a service is provided, the VASP will be required to submit a report to AUSTRAC within 10 business days from 31 March 2029. Further guidance is expected from AUSTRAC in the coming months.
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