The Australian Financial Compliance Agency, AUSTRAC has published two new guides to help entities detect when customers are using cryptocurrencies for illicit purposes or when they are being forced to pay ransomware creators..
However, he has warned that unseating customers on the mere suspicion of such activity is a harmful practice with serious negative effects.
In an announcement published today, AUSTRAC noted that the growing acceptance, value and adoption of cryptocurrency and blockchain technology has been accompanied by an increase in cybercrime.
“Cyber-enabled crime is a growing threat to Australians. According to the Australian Cyber Security Center (ACSC), 500 ransomware attacks were reported in fiscal year 2020-21, an increase of nearly 15% from the previous year”declared AUSTRAC.
Ransomware and “criminal abuse of digital currencies” guides are not only designed to help detect bad actors, but also to make it easier to report suspicious activity to AUSTRACsomething companies must do after reporting the matter to the police.
Blockchain Australia CEO Steve Vallas welcomed the new guidesstating that the “use of digital currencies for criminal purposes has no place in our industry.”
“Open dialogue, proactive guidance and strong government-industry relationships are necessary to ensure companies can identify and report behavior that puts Australians at risk of harm.”
In the ransomware guide, AUSTRAC highlighted multiple indicators that a customer may be trying to quickly pay a ransom. The list included behaviors such as impatience with the speed of transactions, sudden large transactions from start-ups, and transferring entire holdings with no account activity afterwards.
Although the indicators may seem obvious, AUSTRAC noted that most “victims are often reluctant to report” as they seek to get their businesses out of the clutches of attackers and back up and running as soon as possible..
“Whenever possible, encourage your customers to report ransomware incidents to the ACSC’s ReportCyber service and law enforcement,” the guide says.
In the guide focused on illicit crypto users, AUSTRAC listed activities such as tax evasion, money laundering, scams and the purchase of illegal products on the darknet.. The regulator paid most attention to money laundering as it outlined its key components including “placement, layering and integration”.
After buying digital assets with fiat (placement), the criminal will try to convert the assets to different accounts and platforms (layering) to “distance the funds from the source”.
Decentralized finance (DeFi) platforms, mixers, and privacy coins were noted as methods of doing so. Lastly, the bad actor will use the final variant of the funds to reintroduce capital into traditional financial services or products (integration).
“Conversion to and from government-issued currency is the point at which a criminal is most exposed and identifiable”it reads in the guide.
In particular, The guide also urged traditional financial institutions to move away from unbanking customers, as this has been a key issue in the local cryptocurrency sector and could have important consequences if a legitimate person has been incorrectly identified as a criminal.
“The debanking of legitimate and legal businesses can have a negative impact on people and companies. It may also increase money laundering and terrorist financing risks and negatively impact Australia’s economy.”
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