Australia is continuing its efforts to transform Sydney into a technology hub on par with the likes of Silicon Valley in California, US, while at the same time taking a harder stance on financial crime.

In the wake of a scandal that has shaved billions off the market value of one of Australia's biggest banks, the Australian government is looking to increase penalties and lengthen prison terms for financial crime and hand more power to regulators. At the same time, the country is weighing legislation that would let financial technology companies operate without a full licence, a measure it says will spur innovation without compromising consumer protection.

Penalties for financial crimes should be more than doubled, fraudulent gains seized and maximum jail sentences lengthened, the government said earlier this week in an interim report. 

The proposals include increasing maximum civil penalties for individuals to A$525,000 ($411,023) from A$200,000, and A$2.63 million for corporations from A$2.1 million; and giving ASIC powers to deal with a wider range of offences.

The government is aiming to bolster public confidence in Australia's financial services sector, which has recently been rattled by an alleged money laundering scandal at Commonwealth Bank of Australia (CBA). The saga triggered a landslide in CBA's share price, sparked a string of lawsuits and helped renew calls for a public inquiry into Australia's banking sector, which allegedly washes some $4 million of dirty cash a day through its four largest banks. 

The government is accepting submissions on its proposed changes until mid-November.

Meanwhile, there is more positive news for fintech firms looking to tap the Australian market. 

Under new draft laws, companies could test “a broad scope of activities...without the need to meet all the existing licensing requirements of the Australian Securities and Investments Commission,” treasurer Scott Morrison said in a statement, referring to the nation's securities regulator.

Fintech firms would be able to test products in a pared-back regulatory environment to “overcome the initial regulatory burden and costs of licensing that may otherwise hinder innovative offerings,” Morrison said. 

Australia is actively encouraging innovation in a bid to develop Sydney as a technology hub similar to Silicon Valley in the US. To help this venture, the country has entered into numerous agreements with other jurisdictions to strengthen ties and ease access for innovative firms into each other's market.