Ex-Austrac regulator warns agency has eyes on cryptocurrency, non-bank lender operators

A former senior regulator at Austrac has warned the agency is looking seriously at non-bank lenders and cryptocurrency in the wake of enforcement action against two gaming platforms.

Former general manager of compliance at Austrac and manager of Kroll’s forensic investigations team Amanda Wood warns the regulator is keen to flex its muscles on crypto operators and non-bank lenders. Picture: AFP

A former senior regulator at Austrac has warned the agency is looking seriously at non-bank lenders and cryptocurrency in the wake of enforcement action against two gaming platforms.

Kroll forensic investigations and intelligence managing director Amanda Wood said Austrac had clearly flagged its priorities with recent action against Bet365 and Sportsbet, warning that companies who failed to take money laundering and counter terrorism financing seriously risked huge penalties.

The former general manager of Austrac’s compliance team, and a key figure in the regulator’s enforcement functions, Ms Wood said the regulator was now clearly taking an interest in non-bank lenders.

“ (Austrac) put out a risk assessment on (non-bank lenders) last year; that sector is exposed,” she said. “They’ve obviously done some work already, with the Bell Securities matter.”

Austrac hit three companies in the Bell Financial Group in February this year, ordering them to put in place an external auditor to report on the company’s AML/CTF compliance and Austrac reporting.

Bell said in October that it had handed over the reports into its AML/CTF compliance to Austrac, which will now deliberate on the next course of action.

Ms Wood said Austrac would not stop at using its intervention powers and would act when it identified serious issues.

“If Austrac comes in and sees an entity is aware of where its non compliance lies and has in place a remediation plan that seems to be reasonable and ticking along as required, then Austrac will sit back and allow the entity to remediate,” she said.

“Entities which are found to not even have the basics in place, that’s where Austrac starts to think they need to bring the entity into a state of compliance.”

Ms Wood said the recent ructions around cryptocurrency also showed that space clearly had issues with AML compliance. But she said the recent inclusion of crypto regulation in Austrac’s remit meant hard action was some time off.

“With any new regulatory regime they’ll take a while to go through a process of education with the entity and then before they ramp up,” she said.

“Action by Austrac will come from one of two sources they’ll either decide on their own that they need to do some supervision, they’ll no doubt find some entities that are not compliant, or alternatively their law enforcement partners will find something significant in relation to these exchanges and they’ll co-opt Austrac to take action.”

Ms Wood said smaller entities operating were exposed due to the boilerplate systems many of them had put in place.

“I‘ve done quite a bit of work in that space, securities firms and things of that nature, a lot of those entities really only have AML programs in name,” she said.

“They’ll have gone to a law firm, and got an AML program off the shelf but they don’t have any processes that underlie it.”