4 September 2019

Government seeks to introduce cash payment limit legislation

Cash (payment) is being replaced with various forms of electronic non-cash payments, to create records of transaction.
Australia Finance and Banking
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In brief - A wind of change for the regulation of digital currencies may soon arrive

Australian Treasury recently consulted on a regulatory framework to effectively make mandatory electronic payments or payment by cheque for transactions exceeding AUD$10,000. This follows a recommendation in the Black Economy Taskforce's final report that the Government introduce a $10,000 cash payment limit for transactions between businesses and individuals. If the Currency (Restrictions on the use of cash) Bill 2019 becomes law, the cash payment limit will start on 1 January 2020 and for certain AUSTRAC reporting entities from 1 January 2021.

In the 2018-19 Budget, the Government stated that it would introduce an economy-wide cash payment limit of $10,000 for payments made or accepted by businesses for goods and services. Transactions equal to, or in excess of this amount would need to be made using the electronic payment system or by cheque. If the new law is implemented:

  • new technology providers in the financial services sector may require significant changes to business as usual
  • business operators in non-technology sectors will also need to comply
  • payment technology platforms that utilise banking infrastructure are likely to be at an advantage

How will digital currencies be affected by the proposed cash payment limit legislation?

The draft explanatory memorandum explains that cash (payment) is increasingly being replaced with various forms of electronic non-cash payments, typically debt or credit arrangements facilitated by banks and other payment system providers. These alternative forms of payment are more convenient and typically create records of transaction.

Other electronic forms of payment, particularly in the form of new technologies, are clearly a concern for the Government:

  • The draft explanatory memorandum notes that cryptocurrencies and other digital currencies are generally unregulated and do not create clear records of transactions in a form that can easily be used to identify the parties to a transaction.
  • Under the proposed framework, "cash" includes digital currency and is defined by reference to the definition in the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth). This is a clear intention by the Government for cryptocurrency and other digital currencies to be captured by the proposed framework.

Minister will have power to specify which transactions may be excluded

The regulatory framework for the restrictions on the use of cash applies by casting a broad prohibition on "cash" payments and then providing power to the Minister to specify transactions for which the prohibition does not apply. The framework also applies to a series of transactions, liability is on a strict basis and criminal sanctions apply.

Broadly, under the framework, it is proposed that the Minister will specify exclusions from the prohibition for all cash deposits and withdrawals from a bank account with an authorised deposit-taking institution (ADI), exchanging foreign currency, circumstances where an AML/CTF entity is required to provide a threshold transaction report under the Anti-Money Laundering and Counter-Terrorism Financing Act, and all personal or private (consumer-to-consumer) transactions such as selling a second-hand car but excluding real property transactions.

Hamish Ratten Toby Blyth Michael Bracken
Banking and Finance
Colin Biggers & Paisley

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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