Australia Tightens Crypto ATM Rules As Scams and Frauds Are Uncovered

Key Takeaways

Reports indicate that Australians are losing millions of dollars each year to scams associated with cryptocurrency ATMs.

Financial crime and money-laundering regulator AUSTRAC has announced new controls on crypto ATM operators, including AUD 5,000 transaction limits.

The rapid growth of crypto ATMs has outpaced regulation, with the machines increasingly used for illicit purposes.

The Australian Transaction Reports and Analysis Center (AUSTRAC) has introduced new crypto ATM rules affecting withdrawal and deposit limits in countries with over 1,700 functional crypto-automated teller machines.

According to a press release by AUSTRAC, there will be a deposit and withdrawal limit of $3,250 (AUD 5,000). The crypto ATM rules also carry a proposal asking regional cryptocurrency exchanges to consider adopting a similar limit if they accept cash for crypto transactions. The rules aim to curb the use of cryptocurrency automatic teller machines, as the surging number of kiosks increasingly attracts fraudsters and scammers.

Reduce the Criminal Misuse of Crypto ATMs

There are currently over 1,700 crypto ATMs located in various strategic places throughout the country, including takeaway shops, convenience stores, petrol stations, and supermarkets. The kiosks enable cryptocurrency holders to convert their digital assets, such as Bitcoin, into cash, which is then transferred to a digital wallet. Some of the machines are also designed to allow holders to convert their crypto to actual fiat currency. As banks have been continuously under pressure from the government to crack down on scams and money laundering, authorities warn that criminals are now exploiting crypto ATMs. The press release said:

“In light of the risks and harms, we consider it necessary to ensure the sector meets minimum standards and reduces the criminal misuse of crypto ATMs […] we will continue to monitor the effectiveness of these conditions and adjust them if needed.”

Transactions Traced to Scam Hot Spots

AUSTRAC says it conducted a three-month data analysis involving nine cryptocurrency ATM operators and alleges it has evidence the machines were being used for scam and fraud-related transactions. According to the regulator, they traced some of the crypto ATM transactions to known scam hotspots in Europe and Asia, including groups linked to organized criminal activities.

According to the new crypto ATM rules, operators are subject to a $5,000 limit on cash deposits and withdrawals to mitigate the financial fallout of scams. AUSTRAC added that it would enforce enhanced customer due diligence requirements, mandatory scam warnings, and more robust transaction monitoring obligations on the operators.

Millions of Dollars Lost Each Year

The enforcement of the new control measures comes hot on the heels of fresh data from the Australian Federal Police (AFP), showing that Australians are losing millions of dollars each year to scams involving crypto ATMs. Commenting, AUSTRAC chief executive Brendan Thomas stated:

“These conditions are designed to help protect individuals from scams by deterring criminals from directing them to a crypto ATM, as well as to protect businesses from criminal exploitation.”

Conclusion

The new crypto ATM rules in Australia come at a time when lawmakers in the US are considering new legislation to regulate the industry. Several lawsuits have already been filed in various locations, including one by the state of Iowa, which is suing operators Bitcoin Depot and CoinFlip for $20 million due to scam losses. In Australia, AUSTRAC has established a dedicated task force to investigate the cryptocurrency sector and introduced new compliance requirements aimed at stopping misuse.

Frequently Asked Questions

Is cryptocurrency legal in Australia?

Cryptocurrencies are not considered legal tender in Australia. This means they are not officially recognized as a form of currency that must be accepted for payment of goods and services. However, cryptocurrencies are legal to buy, sell, and use in the country.

Is Australia a crypto-friendly country?

Australia’s government has announced plans to introduce a new regulatory framework for cryptocurrency exchanges, custody services, and brokerage firms. The proposed rules will bring these platforms under existing financial services laws.