Australia’s financial watchdog has expressed concerns over the surge in digital currency usage in facilitating illicit transactions.

Per the 2024 Money Laundering National Risk Assessment from the Australian Transaction Reports and Analysis Centre (AUSTRAC), a financial intelligence agency, the nation has seen an uptick in criminal use of cryptocurrency and crypto exchanges. The report labeled crypto as a “high” risk factor.

Meanwhile, digital currency exchanges were awarded a “medium” risk factor.

Interestingly, most unlawful activities were facilitated by traditional channels like cash, real estate, and luxury goods. These were given the “very high” risk status, with cash leading the pack.

Similar sentiments were recently echoed by Jim Lee, former US Internal Revenue Service Criminal Investigation chief, during his appearance at a Yahoo Finance Future Focus episode. According to Lee, “Cash is still king” due to the “transparent” nature of blockchain technology.

While AUSTRAC categorized cryptocurrencies as less risky, the report urged crypto exchanges to register with the agency under the AML/CTF Act. AUSTRAC expects digital currency use in illicit activities to pose a high risk over the “next three years.”

“As the use of digital currency expands for legitimate use, opportunities for criminal use will also increase,” the report added.

Further, the agency called for international collaboration and stringent regulations to combat these issues effectively.

Australia witnessed multiple crypto crimes in the first half of 2024 alone. In June, the YouTube channel for Australia’s 7News was hacked to promote a crypto scam featuring a deep-fake Elon Musk. Prior to that, security firm Cybertrace issued an alert warning of a crypto scam featuring Australian mining tycoon and entrepreneur Andrew “Twiggy.”

The AUSTRAC assessment follows a ban on using cryptocurrencies as a payment method for online gambling in Australia.

In a bid to tighten its grip on the crypto sector, Australia’s tax office has also been targeting crypto inventors seeking their personal information and details from crypto exchanges. The Australian Securities and Investments Commission (ASIC) has also been going after crypto entities that it believes have offered unregistered securities.