The Australian government has implemented a law mandating Bitcoin exchanges operating in the country to register with the anti-money laundering agency Australian Transaction Reports and Analysis Centre (AUSTRAC).

The move is aimed at imposing restrictions on digital currencies, particularly Bitcoin, due to their continuous growth and adoption in the mainstream financial sector.

The bill was first filed with the Australian parliament in August 2017 with an aim to fight the threat of financial crime in the country. The country’s parliamentarians felt that there was a need to do this after the discovery that one of the major banks, Commonwealth Bank, has violated laws related to money laundering.

The filing of the bill was also driven by the report of the Financial Action Task Force, which stated that the existing laws to combat money laundering have serious flaws and should be amended to eliminate loopholes.

Under the new law,the AUSTRAC is empowered to monitor the activities of all virtual currency exchanges operating in Australia’s jurisdiction. The main aim of the monitoring is to ensure that financial transactions are not related to money laundering or terrorism.

The law mandates that virtual currencies will receive the same treatment as physical cash in a bank with regards to money laundering and transactions suspected to be supportive of terrorism.

The directive also requires businesses offering cryptocurrency exchange services to verify their customers’ identities, keep a record of transactions and report any threshold transactions or suspicious deals. A threshold transaction is the transfer of virtual currencies worth AUD10,000 or more.

The new regulation also imposes both jail time and fines to any company found guilty of operating unregistered cryptocurrency exchanges. The penalty for unregistered exchanges starts with a two year jail term and/or a fine of $105,000, while violators of more serious offenses could face a fine of $2.1 mln for corporations and $420,000 for individuals.