New Zealand Bans Crypto ATMs Nationwide to Curb Money Laundering

New Zealand has implemented a comprehensive ban on crypto ATMs nationwide, aiming to curb money laundering and illicit financial activities. This move is part of a broader effort to strengthen the country's anti-money laundering (AML) measures and combat organized crime. The government has also set a limit of $5,000 on all international cash transactions, further tightening controls on financial crime.

The ban on crypto ATMs eliminates over 220 cryptocurrency kiosks that have been operating in the country. These machines have been identified as a significant vulnerability in the financial system, allowing criminal groups to easily convert cash into digital currencies and transfer funds across borders anonymously. This anonymity has facilitated activities such as drug dealing and fraud, making it difficult for authorities to track the flow of illicit funds.

A recent government report highlighted that criminals are increasingly using crypto ATM machines to obscure their financial trails and avoid the scrutiny that comes with traditional banking systems. By banning these machines, the government aims to cut off criminals' ability to convert cash into high-risk investments, including cryptocurrencies. This action is part of a broader transformation of the Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) system, which seeks to balance crime prevention with support for compliant businesses.

The enhanced AML/CFT revisions grant the Financial Intelligence Unit (FIU) expanded powers to monitor and investigate suspicious financial transactions. Banks and other reporting institutions are now required to continuously report details of individuals suspected of engaging in money laundering or financing terrorist activities. This increased surveillance is designed to ensure that any suspicious activity is promptly identified and addressed.

The $5,000 cap on international cash transfers is intended to restrict the flow of large sums of money, a common tactic used by organized crime groups. This ban applies to all forms of cross-border cash transfers, whether conducted through money remittance services or banks. The government's April report on transnational crime identified international cash transfers as a major channel for laundering money acquired through drug sales and online fraud. Parliament is currently reviewing two bills as part of the reform package, with plans to pass them by the end of the year.

These bills are designed to help legitimate businesses comply with the law while preserving the integrity of New Zealand’s financial system. The government emphasizes that the reforms are not about lowering standards but about using them effectively. Another key aspect of the AML/CFT overhaul is the risk-based approach to customer due diligence, which requires financial institutions to formally determine and document the risk profile of each customer. This approach aims to ensure that compliance measures are tailored to the specific risks associated with each customer.

The reforms will centralize AML/CFT supervision under one body and establish a new funding system. This will transfer part of the compliance expenses to reporting organizations, ensuring that the burden of compliance is shared more equitably. The ban on crypto ATMs and the enhanced AML measures are part of a broader effort to strengthen New Zealand's financial system and protect it from illicit activities. By taking these steps, the government aims to create a more secure and transparent financial environment for all stakeholders.