New Zealand Bans Bitcoin ATMs to Curb Money Laundering

New Zealand has taken a significant step in its efforts to combat money laundering and terrorist financing by banning Bitcoin ATMs nationwide. The move, aimed at curbing illegal activities facilitated by these machines, comes as part of a broader strategy to enhance the country's anti-money laundering (AML) and counter-financing of terrorism (CFT) measures. Authorities have cited the lack of sufficient identity checks in cash transactions through these ATMs as a major concern, making them vulnerable to misuse by criminal elements.

The ban on Bitcoin ATMs is accompanied by a $5,000 limit on overseas cash transactions, further restricting the avenues for money transfers. This dual approach is designed to make it more difficult for criminal groups to move large sums of money covertly. The proposed reforms also aim to shift AML/CFT compliance requirements towards higher-risk companies, allowing legitimate enterprises to allocate resources more efficiently.

Nicole McKee, Associate Minister of Justice, led the initiative, emphasizing the government's commitment to targeting criminals rather than burdening legitimate businesses with unnecessary regulations. "We will make it more difficult for criminals to convert cash into high-risk assets such as cryptocurrencies by banning crypto ATMs," McKee stated. "This Government is serious about targeting criminals, not tying up legitimate businesses in unnecessary red tape."

Recent cases of money laundering involving cryptocurrencies have highlighted the need for stricter regulations. For instance, Australian authorities uncovered a crypto crime organization that laundered $123 million, converting the money into cryptocurrencies through a complex scheme. Similarly, Spokane, Washington, has prohibited cryptocurrency ATMs, citing their use by scammers to target vulnerable citizens, particularly in low-income areas. Additionally, the Ahmedabad Cyber Crime Branch collaborated with Binance to combat a digital arrest crypto scam targeting South and Southeast Asia, where scammers posed as law officials to force victims to transfer large amounts of cryptocurrency.

The Financial Intelligence Unit has been granted powers to monitor crypto activity and collect information on individuals of interest, increasing the involvement of police and regulatory agencies. The idea of charging a fee to fund the system is being explored by New Zealand authorities. This regulatory tightening follows a report by the Ministerial Advisory Group on Transnational, Serious and Organised Crime, which highlighted the use of cryptocurrency ATMs by criminals to swiftly transfer money offshore. With over 221 cryptocurrency ATMs already in operation, these machines will now be shut down completely as regulators work to close gaps exploited by criminal actors.

The ban on Bitcoin ATMs is expected to result in a reduction in crypto-related crimes within the country. However, it may also significantly restrict users' access to cryptocurrencies, particularly for those who rely on physical kiosks for on-ramping and off-ramping. The absence of over 220 machines will increase friction, KYC scrutiny, and limit opportunities for quick fiat-to-crypto conversion. This move is part of a broader trend towards more regulation of cryptocurrencies, suggesting that governments are strengthening restrictions over entry points into decentralized finance (DeFi). Despite the borderless nature of Web3, authorities are drawing new lines that limit cryptocurrency freedom.