New Zealand Bans Crypto ATMs to Tighten AML/CFT Framework

New Zealand has implemented a comprehensive ban on cryptocurrency ATMs nationwide as part of a broader effort to strengthen its Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) framework. This move is aimed at closing loopholes that have allowed criminals to exploit digital assets for illicit activities. The ban, announced by Associate Justice Minister Nicole McKee, targets the anonymity-enabled money laundering facilitated by crypto ATMs, which have been identified as high-risk underpinners of financial crime.

The decision to ban crypto ATMs is part of a larger reform package that includes capping international cash transfers at NZD $5,000 per transaction. This measure is designed to prevent the illicit movement of funds offshore, a common tactic in complex money laundering operations. Additionally, the Financial Intelligence Unit (FIU) has been granted enhanced powers under the AML/CFT Act, allowing it to request constant data from banks, crypto exchanges, and other monitored entities. This will enable more vigorous intelligence gathering in the fight against money laundering.

For crypto companies, the new regulations mean greater data-sharing requirements, particularly around transaction monitoring, source-of-funds checks, and customer profiling. However, the government is also taking steps to ease regulatory burdens on low-risk businesses. Two amendment bills are before Parliament, aimed at removing some of the most onerous compliance requirements. Proposed changes include removing address verification for many low-risk customers, relaxing due diligence obligations for low-risk trusts, and simplifying reporting for small entities with limited exposure to financial crime.

These reforms were developed in consultation with industry stakeholders, who have long complained about compliance fatigue. McKee emphasized that the policies are not about lowering standards but about redistributing regulatory resources to focus on areas of higher risk. This dual-track approach aims to be tough on crime while making it easier for legitimate businesses to operate.

New Zealand's new policy could serve as a model for other Asia-Pacific countries grappling with similar tensions between innovation and risk control. With international watchdogs like the Financial Action Task Force (FATF) pressuring nations to close loopholes in crypto transactions, New Zealand's move is likely to be emulated as an example of effective governance. The direction of travel is clear, and New Zealand has just shifted it up a gear in its efforts to combat crypto-related financial crime.