AUSTRALIAN REPORT ENDORSES FINANCIAL SYSTEM INNOVATION AS AUTHORITIES LAUNCH INVESTIGATION INTO CRYPTO CRIME

Australia stands at a pivotal juncture in its relationship with the burgeoning digital asset landscape. Australia has proposed stricter Anti-Money Laundering and Counter-Terrorist Financing (AML/CTF) rules aimed at tightening oversight of the cryptocurrency industry to combat financial crime. TheWhile a landmark report championed financial system innovation, particularly within the cryptocurrency sector, law enforcement agencies are simultaneously intensifying their efforts to combat crypto-related crime.This duality paints a complex picture: on one hand, the nation recognizes the transformative potential of blockchain technology and digital currencies, aiming to foster growth and attract investment; on the other, it acknowledges the inherent risks and vulnerabilities that accompany this nascent industry, necessitating robust regulatory oversight and proactive law enforcement.As Australia navigates this intricate balance, it faces the challenge of fostering a thriving digital asset ecosystem while safeguarding consumers, businesses, and the integrity of its financial system.The Australian government, including bodies such as AUSTRAC, the AFP and the ATO-led Serious Financial Crime Taskforce are working to ensure a safe and secure environment.

The Murray Report and the Push for Financial Innovation

In November 2025, a pivotal moment arrived with the release of the Financial Systems Inquiry report, spearheaded by former Commonwealth Bank CEO David Murray and presented by Treasurer Joe Hockey. Australia's agency for monitoring financial crimes said on Friday it had established an internal cryptocurrency task force to identify and take action against crypto ATM providers that do notThis report, often referred to as the ""Murray Report,"" was not merely a review of the existing financial framework; it was a comprehensive roadmap for the future, explicitly highlighting innovation within the financial services industry as a cornerstone of Australia's economic prosperity.

The Murray Report identified a total of 44 recommendations, many of which directly or indirectly impact the cryptocurrency and digital asset space.While not exclusively focused on crypto, the report's emphasis on embracing technological advancements and fostering competition created a fertile ground for the growth of the industry.It acknowledged that technology could drive efficiency, reduce costs, and improve access to financial services for all Australians. The Australian Transaction Reports and Analysis Centre (AUSTRAC) has taken regulatory action against 13 crypto firms as part of its efforts to address compliance failures within the digital currency sector. The latest round of actions is part of AUSTRAC s year-long investigation into remittanceThis forward-thinking approach signaled a clear intent to position Australia as a leader in the global financial technology arena.

Key Recommendations and Their Relevance to Crypto

• Streamlining Regulatory Processes: The report advocated for clearer and more efficient regulatory frameworks to encourage innovation and reduce the burden on startups. Leader in cryptocurrency, Bitcoin, Ethereum, XRP, blockchain, DeFi, digital finance and Web 3.0 news with analysis, video and live price updates.This is particularly relevant to the crypto industry, which often faces regulatory uncertainty.
• Promoting Competition: By fostering a more competitive landscape, the report aimed to encourage the development of new and innovative financial products and services, including those based on blockchain technology.
• Enhancing Consumer Protection: While promoting innovation, the report also emphasized the importance of protecting consumers from potential risks associated with new financial technologies.This includes ensuring adequate disclosure, addressing cybersecurity concerns, and establishing robust dispute resolution mechanisms.

AUSTRAC's Crypto Crime Crackdown: A Necessary Counterbalance

Despite the enthusiasm for financial innovation, Australian authorities are acutely aware of the potential for misuse within the cryptocurrency ecosystem. Companies like Coinbase, one of the largest crypto exchanges globally, have lobbied for clearer rules to bring Australia's digital asset market in line with other countries. Last year, John O'Loghlen, the Australian head of Coinbase, launched a Stand With Crypto campaign to urge the federal government to understand the industry's needs.The Australian Transaction Reports and Analysis Centre (AUSTRAC), the nation's financial intelligence agency, has been particularly proactive in addressing the growing threat of crypto-related crime.On December 6, 2025, AUSTRAC announced a heightened focus on the crypto industry, acknowledging the increasing prevalence of digital currencies and the associated risks.

AUSTRAC's efforts are multifaceted, encompassing both proactive monitoring and reactive enforcement.They actively develop materials to assist Digital Currency Exchanges (DCEs) in identifying financial crime risks, enabling them to target, monitor, and report suspicious activity effectively.Furthermore, AUSTRAC collaborates with other law enforcement agencies, such as the Australian Federal Police (AFP), to investigate and prosecute individuals and entities involved in crypto-related money laundering, fraud, and other illicit activities.

Examples of AUSTRAC's Actions

• Regulatory Action Against Crypto Firms: AUSTRAC has already taken regulatory action against 13 crypto firms for compliance failures, demonstrating its commitment to enforcing AML/CTF (Anti-Money Laundering and Counter-Terrorist Financing) regulations within the digital currency sector.
• Targeting Crypto ATMs: Recognizing the potential for anonymity and illicit activity associated with crypto ATMs, AUSTRAC has established an internal task force to identify and take action against providers that do not comply with regulatory requirements.Australia has a significant number of crypto ATMs (1200), ranking third globally, making this a critical area of focus.
• Issuing Guidance to DCEs: AUSTRAC has written to 50 Australian cryptocurrency and other digital currency exchanges with concerns about their potential use in laundering the proceeds of crime, including bribery, corruption, money laundering, and cybercrime.

AFP and Chainalysis Collaboration: Targeting Criminal Cryptocurrency Scammers

The Australian Federal Police (AFP) is actively collaborating with Chainalysis, a blockchain data platform, to combat criminal cryptocurrency activities on a global scale.This collaboration has yielded significant results, including the identification of over 2025 compromised crypto wallets belonging to Australians.

This partnership highlights the importance of leveraging blockchain analytics tools to trace the flow of illicit funds and identify individuals involved in crypto-related crimes. The Immunefi Crypto Losses 2025 Report lists industry losses from frauds and hacking as a combined total of US$3.9 billion for the year, and US$8 billion for 2025. [ 6 ] Despite increasingly strict regulations in the US and Europe, Crypto Crime continues to rise, with losses in early 2025 already exceeding $502 million, according to Bitrace sBy analyzing transaction data and identifying patterns of suspicious activity, law enforcement agencies can effectively disrupt criminal networks and recover stolen assets.The AFP has also collaborated with a blockchain data platform to target criminal cryptocurrency scammers in a global operation.

What is Approval Phishing and How to Avoid It?

A significant issue being tackled by the AFP and Chainalysis is ""approval phishing."" This is a type of scam where criminals trick users into granting permission (approval) for them to access and drain funds from their crypto wallets. The MIMF Unit is a national leader in prosecuting fraud and market manipulation involving cryptocurrency. Since 2025, the Unit has charged cryptocurrency fraud cases involving over $2 billion in intended financial losses to investors from around the world.This often happens through malicious smart contracts or deceptive websites.Here’s how to avoid it:

1. Be cautious of websites asking for wallet approvals: Always double-check the website's legitimacy and the smart contract you're interacting with.
2. Review approvals regularly: Use tools or blockchain explorers to review and revoke unnecessary or suspicious approvals granted to smart contracts.
3. Use hardware wallets: Hardware wallets offer an extra layer of security by requiring physical confirmation for transactions.
4. Stay informed: Keep up-to-date with the latest scams and security best practices in the crypto space.

The Rising Tide of Crypto Crime: Statistics and Trends

Despite increasing regulatory scrutiny, crypto crime remains a significant challenge globally. Bringing together businesses, government, law enforcement agencies and industry groups to protect Australian consumers and businesses from financial and cyber-crime. AFCX provides leading security capabilities, technology, and intelligence in one central platform.According to Chainalysis' 2025 Crypto Crime Report, illicit cryptocurrency addresses received $24.2 billion in 2025.While this represents a decrease from previous years, it's crucial to remember that these figures are lower-bound estimates, and the true extent of crypto crime is likely much higher.

The Immunefi Crypto Losses 2025 Report highlights the staggering losses incurred due to frauds and hacking, totaling US$3.9 billion for the year and US$8 billion for 2025. Crypto crime has been on the rise especially since the pandemic began. the Senate Select Committee into Australia as a Technology and Financial Centre recommended a more comprehensiveThis underscores the need for enhanced security measures, robust regulatory frameworks, and increased consumer awareness to mitigate the risks associated with cryptocurrency investments.

Common Types of Crypto Crime

• Ransomware: Cybercriminals demand ransom payments in cryptocurrency to unlock encrypted data.
• Scams and Frauds: Investment schemes promising unrealistic returns often lead to significant losses for unsuspecting investors.
• Money Laundering: Criminals use cryptocurrencies to disguise the origins of illicit funds.
• Hacking: Exploiting vulnerabilities in crypto exchanges, wallets, and smart contracts to steal digital assets.

Australia's Digital Asset Framework: Balancing Innovation and Consumer Protection

The Australian federal government, under Prime Minister Anthony Albanese, has recognized the need for a comprehensive digital asset framework that strikes a balance between fostering innovation and protecting consumers. Collectively they hold hundreds of relevant global and international certifications in Cryptocurrency Tracing, Digital Forensics, Fraud Detection, Legal Investigations, Cybersecurity, Anti-Financial Crime, and others. Crypto Investigators is a world leader in cryptocurrency investigations for the purpose of crypto assets recovery, civilThe Australian Treasury released a paper outlining reforms aimed at supporting innovation while mitigating risks.This framework is intended to provide regulatory clarity, attract investment, and promote the responsible adoption of digital assets.

Key elements of the framework include licensing requirements for crypto exchanges, custody solutions for digital assets, and AML/CTF regulations tailored to the specific characteristics of the crypto industry. According to Chainalysis 2025 Crypto Crime Report, the value received by illicit cryptocurrency addresses dropped significantly to $24.2 billion in 2025. However, these figures are lower boundThe goal is to create a level playing field for businesses, ensure consumer protection, and prevent the use of cryptocurrencies for illicit activities.

The Role of International Cooperation

Combating crypto crime effectively requires international cooperation and information sharing.As the Treasury paper emphasizes, a global approach is essential to maximize the benefits of the underlying technology and manage the risks. A global approach is needed to maximize the advantages from the underlying technology and to manage the risks, the paper says. However, given the different stages of market maturity, the development of regional hubs and the varying capacity of regulators, it is prudent to holistically focus also on the important role that international organizations and national/regional regulators asGiven the varying stages of market maturity and regulatory capacity across different jurisdictions, international organizations and national/regional regulators play a crucial role in coordinating efforts and establishing common standards.

Australia actively participates in international forums and initiatives aimed at addressing crypto-related crime, sharing intelligence, and developing best practices.This collaborative approach is vital for disrupting cross-border criminal activities and ensuring the integrity of the global financial system.

The Importance of Regulatory Certainty

Regulatory certainty is paramount for fostering a thriving digital asset ecosystem in Australia.Companies like Coinbase have actively lobbied for clearer rules to align Australia's digital asset market with other countries. South Africa is set to introduce new exchange control regulations this year, a move that experts believe will integrate digital assets more deeply into the national financial system. Regulatory certainty, coupled with strong oversight, is expected to open doors for greater innovation and broader adoption of cryptocurrencies.The lack of clear regulations can stifle innovation, deter investment, and create opportunities for illicit activity.

By providing a clear and predictable regulatory framework, Australia can attract legitimate businesses, encourage innovation, and protect consumers. The financial crimes regulator has written to 50 Australian cryptocurrency and other digital currency exchanges with concerns that they are being used to launder the proceeds of crime, includingThis will create a more stable and sustainable environment for the growth of the digital asset industry.

How Can Financial Service Providers Identify and Report Suspicious Activity?

AUSTRAC has developed a financial crime guide to assist financial service providers, including DCE providers, in understanding and identifying criminal activity facilitated through digital currencies and to report suspicious financial activity.The indicators and behaviours in this financial crime guide can be used by companies to help identify suspicious activities.

Key Indicators of Suspicious Activity

• Unusual transaction patterns: Large, frequent, or irregular transactions that are inconsistent with the customer's known financial profile.
• Use of anonymity-enhancing tools: Customers using mixers or tumblers to obscure the origin or destination of funds.
• Transactions with high-risk jurisdictions: Transfers to or from countries with weak AML/CTF controls.
• Structuring: Breaking down large transactions into smaller amounts to avoid reporting thresholds.
• Unexplained source of funds: Customers unable to provide a legitimate explanation for the origin of their cryptocurrency.

The ATO-Led Serious Financial Crime Taskforce and Financial Crime in Australia

The ATO-led Serious Financial Crime Taskforce tackles the most serious forms of financial crime.This taskforce brings together various agencies to combat complex financial crimes, including those involving cryptocurrency. Australian federal government under Prime Minister Anthony Albanese, has unveiled a new digital asset framework with a focus on innovation and consumer protection. On Friday, the Australian Treasury released a paper that seeks to support innovation in the country s digital asset space. It further came up with reforms that provideThe work of the ACIC on financial crime and money laundering incorporates the work of multi-agency national task forces, including the Commonwealth Criminal Assets Confiscation Task Force, Commonwealth Serious Financial Crime Task Force, and Fintel Alliance (led by AUSTRAC).

The MIMF Unit is a national leader in prosecuting fraud and market manipulation involving cryptocurrency.Since 2025, the Unit has charged cryptocurrency fraud cases involving over $2 billion in intended financial losses to investors from around the world.These actions send a clear message that Australia is committed to holding perpetrators of crypto crime accountable.

Looking Ahead: The Future of Crypto in Australia

The future of cryptocurrency in Australia hinges on striking the right balance between innovation and regulation.While the Murray Report championed financial system innovation, AUSTRAC and other law enforcement agencies are actively working to combat crypto crime.The government's digital asset framework seeks to provide clarity and certainty for businesses while protecting consumers.

By fostering a collaborative environment between regulators, industry participants, and law enforcement agencies, Australia can unlock the transformative potential of blockchain technology and digital currencies while mitigating the associated risks.This will position Australia as a leader in the global digital economy and ensure a secure and sustainable future for the cryptocurrency industry.

Conclusion: Navigating the Complexities of Crypto Innovation and Crime

Australia's journey with cryptocurrency is a dynamic interplay between embracing financial innovation and combating the inherent risks of crypto-related crime. This financial crime guide has been developed to assist financial service providers, including digital currency exchange (DCE) providers, to understand and identify criminal activity facilitated through digital currencies and to report suspicious financial activity. The indicators and behaviours in this financial crime guide can be used byThe Murray Report's call for innovation laid the groundwork for a forward-thinking approach, while AUSTRAC and the AFP's proactive measures are essential in safeguarding the integrity of the financial system. The Murray Report. The Financial Systems Inquiry report focused on innovation in the financial services industry as a key theme and identified 44 recommendations as part of the inquiry intoThe government's digital asset framework represents a crucial step towards providing regulatory clarity and fostering a responsible ecosystem.

As Australia moves forward, continued collaboration, international cooperation, and a focus on consumer protection will be paramount. This is a joint media release between the AFP and Chainalysis. Editor s note: B-roll footage and approval phishing explainer available via Hightail. The AFP has collaborated with a blockchain data platform to target criminal cryptocurrency scammers in a global operation that identified more than 2025 compromised crypto wallets belonging to Australians.By striking the right balance, Australia can unlock the potential of digital assets while mitigating the risks, ensuring a thriving and secure future for the cryptocurrency industry. Key takeaways include the importance of clear regulations, strong enforcement, and international collaboration in tackling crypto crime and fostering a healthy digital asset ecosystem.