Australia's current financial services regulatory & compliance landscape is changing rapidly - Clyde & Co's weekly Regulatory Roundup will ensure you are up to date with the most important changes. In each edition, we will set out key developments from the past week for you to consider. 

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1. Australian crypto regulation:  key updates from the Blockchain Australia week just held include: 1) ASIC is engaging more with market participants & advisers in 1:1 meetings (including us), and broader meetings.  Dr Bollen is heading up the team, and hiring to build the team. ASIC also has $7.5M in funding from the recent budgetary process as we previously reported; 2) ASIC has hinted at more enforcement in the crypto space in the near term; 3) ASIC has exhorted entities to obtain advice, with Dr Bollen stating “When did you last review the tokens that you list on your platform? When was the last time you reviewed the products and services that you are making available? How recently have you consulted with your lawyers about where the law currently sees the most current understanding based on cases over the last six months or so. If you haven't done that in the last four months you need to consider where you are”;  4) the exposure draft legislation for regulating crypto is expected before the end of the year, though the legislation for regulating stablecoins sits within payments reform piece (in essence, payment services providers will need an AFSL too), and may come first.  Start preparing now! 

2. Crypto & gambling: a new ban on using crypto and credit cards for online gambling has come into effect from 11 June 2024, with a 6-month transition and steep fines for non-compliance. Interestingly, it will not apply to other gambling products such as lotteries. Communications minister Michelle Rowland said the government would have more announcements on gambling prevention in the future, and that “Australians should not be gambling with money they do not have".  

3. APRA and the ICA's Roundtable on Risk Governance: APRA has released its notes from the APRA/ICA “Roundtable on Risk Governance”, held on 13 May 2024. At the roundtable, APRA spoke directly to the industry about the emphasis it places on effective risk governance in its supervision activities. APRA Chair John Lonsdale promoted the elevation of risk governance, and the fostering of deeper self-reflection for executives and directors when mistakes do occur, to ensure that root causes are effectively addressed. APRA also highlighted how important the insurance industry is, and its crucial role in supporting households and businesses, and how a thriving insurance industry helps bolster the broader economy. Discussions also centred on proportionality in regulation, the importance and value of improving transparency by insurers, and insurers also emphasised the significance of continual collaboration between government agencies to achieve efficient outcomes. 

4. SkyCity Adelaide Pty Ltd ordered to pay $67 million penalty by the Federal Court: the Federal Court of Australia has ordered SkyCity Adelaide Pty Ltd (SkyCity) to pay a $67 million penalty after it was found to have breached the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (AML/CTF Act). Specifically, the Court found that SkyCity’s AML/CTF Programs failed to meet the requirements under ss 81(1), 84(2)(a), 84(2)(c) and 84(3)(b) of the AML/CTF Act, and that SkyCity did not carry out appropriate ongoing customer due diligence (contrary to s 36(1) of the AML/CTF Act). SkyCity admitted that its contraventions of the legislation made it vulnerable to criminal exploitation, and exposed the Australian community and financial system to money laundering and terrorism financing risk. AUSTRAC acting CEO, Peter Soros, said that “Businesses who ignore their obligations are affecting the Australian community by leaving the door open to criminal activity.” For example, SkyCity failed to carry out required checks on 121 customers where there were indications that some posed a higher risk of money laundering, including customers who SkyCity knew were the subject of law enforcement interest. The penalty took into account SkyCity’s cooperation during the investigation and admissions enabling early resolution of the proceedings. 

International perspective: at the Blockchain Australia conference, Dr Bollen stated that ASIC is regularly meeting with regulators from the EU, Singapore, Malaysia, Hong Kong, and North America i.e the SEC to understand more about the cases they have filed against digital asset firms. No call out of the UK?  Perhaps not surprising given the slower, iterative process the UK has taken to digital assets, and focus on marketing through the financial promotions regime (as opposed to bespoke licensing).