New Zealand plans to ban cryptocurrency ATMs as part of its efforts to enhance the anti-money laundering and counter-terrorist financing (AML/CFT) system.

This decision addresses concerns about the potential misuse of these machines for illegal activities.

Associate Justice Minister Nicole McKee said that the ban is part of a broader strategy to modernize the country’s AML/CFT framework.

Authorities have identified 157 crypto ATMs in New Zealand. Police report these machines are often used in money laundering, particularly by drug traffickers.

In addition to the ban, a US$5,000 cap will be placed on international transfers to limit the illegal movement of funds.

The government intends to introduce legislation that will grant enhanced enforcement powers to police and regulators.

This bill will establish a new financial sanctions supervisory regime.

🔗 Source: The Block

🧠 Food for thought

1️⃣ Crypto ATM bans are emerging as a targeted regulatory approach worldwide

New Zealand’s crypto ATM ban follows similar concerns expressed in other jurisdictions, including Vancouver, where officials also proposed banning these machines due to money laundering risks1.

Vancouver police reported a significant increase in cryptocurrency-related crime between 2016-2017, followed by another jump in 2018, highlighting the specific security challenges these machines present1.

This targeted approach contrasts with the global landscape, where crypto ATMs have grown significantly, with current data showing 38,537 machines operating across 67 countries2.

Regulators worldwide are increasingly viewing cash-to-crypto conversion points as particularly high-risk vectors for financial crime, with law enforcement identifying these machines as potential vehicles for anonymous transactions1.

The decision to ban rather than regulate reflects the challenge of implementing effective verification systems at physical machines compared to online exchanges, where digital identity verification can be more comprehensive.

2️⃣ New Zealand is crafting a balanced regulatory framework amid global experimentation