Home Affairs and Austrac think blockchain can reduce compliance costs
The Department of Home Affairs, alongside the Australian Transaction Reports and Analysis Centre (Austrac), has highlighted blockchain as a means to help reporting entities comply with their compliance and regulation requirements.
The comments were made in a joint submission [PDF] to the Select Committee on Financial Technology and Regulatory Technology and its probe into the opportunities the two vectors present to Australia.
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"The portfolio is of the view that blockchain technologies have the potential to significantly reduce the costs of compliance and regulation imposed on reporting entities," they wrote.
"This technology can ensure that sensitive financial data used for intelligence purposes remains secure, transparent, and protected through the use and application of encryption."
Standards Australia, the country's non-government standards body, was charged with managing the secretariat of an international technical committee for the development of blockchain standards by the International Organization for Standardization (ISO) in September 2016, with 16 ISO member bodies including Germany, the United States, the United Kingdom, France, Canada, Estonia, Japan, and South Korea also participating in the development of ISO/TC 307 Blockchain and electronic distributed ledger technologies.
"Austrac participates in Standards Australia's Technical Working Committee on Blockchain and Distributed Ledgers, and actively engages with members of that committee including Blockchain Australia on issues related to blockchain technologies and digital currencies," the submission from Home Affairs and Austrac continued.
The submission also said both government entities have "actively participated" in the development of international standards that relate to Virtual Asset Service Providers -- which are similar to digital currency exchange providers in the Australian context -- through its membership of the Financial Action Task Force (FATF).
As explained in their submission, the FATF is an intergovernmental organisation that sets international standards to combat money laundering and the financing of terrorism and proliferation.
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Australia is a founding member of the FATF.
"Following the new international standards being adopted, the portfolio is also part of a FATF sub-group that is working hand-in-hand with industry to ensure that the new obligations can be effectively implemented," they wrote.
"Since 2016, the FATF has engaged in constructive dialogue with the fintech and regtech sectors, with the overall objective of supporting innovation in financial services, whilst addressing the regulatory and supervisory challenges posed by emerging technologies."
According to Home Affairs and Austrac, one of the FATF's current products being developed in the fintech space is guidance that they expect will help governments, financial institutions, and other relevant entities apply a "risk-based approach to the use of digital identity for CDD purposes".
The Australian government last week launched a Blockchain Roadmap which focuses on the opportunities across the economy that can be seized and enabled by the use of blockchain technology.
The roadmap was pursued despite the Digital Transformation Agency (DTA) giving advice over a year ago to those getting lost in the buzz of blockchain that they should turn their attention elsewhere.
DTA chief digital officer Peter Alexander also dunked on its use, adding to the above that "for every use of blockchain you would consider today, there is a better technology -- alternate databases, secure connections, standardised API engagement".
"Blockchain: Interesting technology but early on in its development, it's kind of at the top of a hype cycle," he said.
The government entity has even published a questionnaire for organisations to self-evaluate before bothering with something that can just be stored in a secure database.
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