Cointree, Australian Crypto Exchange, Fined for Delaying Suspicious Activity Reports

Australia’s Financial Intelligence Unit has fined Melbourne-based crypto exchange Cointree $75.120. The penalty stems from the company’s failure to file suspicious activity reports on time, which is crucial in combating financial crime.

The Australian Transaction Reports and Analysis Centre (AUSTRAC) took the step following Cointree’s voluntary disclosure of delays in meeting its anti-money laundering reporting obligations. The incident highlights the need for timeliness in filing such reports, which are mandatory for regulated entities to flag criminal activity such as money laundering or terrorist financing. Cointree said the reporting delays have hampered law enforcement’s ability to respond quickly to emerging threats.

Timely reports are vital. AUSTRAC Chief Executive Officer Brendan Thomas emphasizes that this time pressure allows them to act quickly and alert partners to suspicious criminal behavior. Entities have an obligation to file suspicious reports within three business days for suspected money laundering and within 24 hours for suspected terrorist financing.

Cointree has fully cooperated and self-reported the issue, while now taking proactive steps to improve their systems and controls. Without this cooperation, the response from authorities may have been more severe.

It is clear that AUSTRAC is increasingly toughening its oversight of the digital currency sector, which is seen as vulnerable to criminal abuse. In 2024, AUSTRAC identified key risks, such as pseudonymity and rapid transfers, as key concerns in the sector. This has led to enforcement actions against thirteen crypto companies and warnings for more than fifty others about potential compliance issues.

Additionally, the regulator recently warned inactive crypto exchanges that they must “use it or lose it,” or risk cancellation or forced withdrawal. A public registry of registered providers is expected to be in place soon. In a broader effort to modernize crypto regulation and strengthen oversight of the digital asset sector, the Australian government recently appointed Andrew Charlton as Assistant Minister for Science, Technology and the Digital Economy.

Let's not forget to ask ourselves: how will the crypto sector develop further under this new regulations? And will more exchange platforms have to revise their compliance to meet the requirements? Only time will tell, but one thing is for sure: change is coming.

Frequently Asked Questions

What is the reason behind the fine for Cointree?
Cointree was fined for failing to file timely suspicious activity reports, which are essential in combating financial crime.

What steps is Cointree taking following the fine?
Cointree has stated that it is taking proactive measures to improve its internal systems and controls and has fully cooperated with authorities.

What are the broader implications of this enforcement for the crypto sector?
AUSTRAC’s stricter enforcement may prompt other crypto exchanges to review and adapt their compliance processes to also meet the new regulations.