Owing to a rise in financial scams linked to cryptocurrencies, several traditional banks in Australia have decided to pull back support for crypto exchanges. The National Australia Bank (NAB) has joined others in halting payments to crypto exchanges that have been frequently named in scam-related complaints. Earlier this month, Australia’s largest lender, the Commonwealth Bank, had also announced that it was holding on to some crypto-related payments due to financial risks.
Almost 50 percent of scam funds reported to the Australian Financial Crimes Exchange in the last one month were related to cryptocurrency, leaving investors scared and confused.
In fact, between March and July of 2023, users of NAB were alerted of scams that could have resulted in the loss of $184 million (roughly Rs. 1,510 crore), the lender said in an official post.
“Introducing payment prompts, taking action on spoofing and stopping the use of links in unexpected text messages are among key measures we’ve introduced recently. We’re now also taking action to block some payments to high-risk cryptocurrency exchanges in a further effort to stop scammers,” said Chris Sheehan, Executive for Group Investigations and Fraud, NAB.
As of now, names of the exchanges facing the brunt of this situation remain undisclosed. Kraken, CoinSpot, CoinJar, and Cointree are among exchanges still operating in Australia.
Crypto scammers have been actively fishing for Australian victims for a while now. Australian crypto investors lost over $81.5 million (roughly Rs. 670 crore) to crypto scams between the months of January and May last year. This was officially revealed by the Australian Competition and Consumer Commission (ACCC) in an alarming report.
Currently, over 4.6 million residents of Australia are estimated to own cryptocurrencies.
In order to protect its crypto investors from financial risks, the Australian government is planning to bring laws to govern crypto token mapping, strengthen legal oversight on crypto transactions, and ensure crypto user protection.
Back in February, Australian Treasurer Jim Chalmers and Assistant Treasurer Stephen Jones had issued a joint statement, saying that unsustainable business models used by some companies dealing in crypto assets had left consumers exposed to financial risks.
For months now, Australian regulators have been working to strengthen their focus on crypto asset providers to ensure that they meet their obligations to Australian consumers.
“These scammers are part of organised, transnational crime groups. Increasingly, we’re seeing them use cryptocurrency platforms to send stolen funds quickly and often overseas. We want to make it as hard as possible for these criminals and reduce the impact on our customers,” Sheehan said, explaining why Australian banks are pulling back support for crypto exchanges.
Last September, the federal police of Australia put in place a new unit tasked with a one-track job to identify and tackle illicit money transfers being facilitated through crypto assets.