AUSTRAC May Gain Powers to Ban Crypto ATMs in Australia
Australia is moving to grant sweeping new powers to its financial intelligence agency. Home Affairs Minister Tony Burke announced draft legislation that would give the Australian Transaction Reports and Analysis Center (AUSTRAC) the authority to restrict or ban crypto ATMs.
Burke revealed the proposed changes during a speech at the National Press Club on Thursday. The minister emphasized that crypto ATMs represent a significant risk to national security. He stated that 85% of funds from top crypto ATM users were involved in scams, making these machines a priority target for regulators.
Crypto ATM Growth Sparks Regulatory Response
Australia’s crypto ATM count has exploded from 23 machines six years ago to over 2,000 today. This rapid expansion has caught the attention of authorities concerned about money laundering risks. The country is now the third-largest hub for crypto ATMs globally, with 2,008 machines as of recent counts.
Over half the crypto ATMs in Australia are operated by three providers: Localcoin, with 868 machines; Coinflip, with 682; and Bitcoin Depot, with 267. The surge began after private companies entered the market near the end of 2022. This explosive growth has created challenges for regulators attempting to monitor transactions.
Why AUSTRAC Wants Crypto ATM Restrictions
Minister Burke linked crypto ATMs to money laundering, scams, fraud, illicit drug trade, and child exploitation. The machines allow users to convert cash into cryptocurrency with relative anonymity. AUSTRAC specifically highlighted that crypto ATMs enable money launderers to convert cash into digital currency that can be sent instantly across the globe.
Burke explained that authorities have limited success in policing and tracking illicit funds through crypto ATMs. Unlike traditional banking systems, these machines operate outside conventional oversight mechanisms. This makes them attractive to criminals seeking to move funds without detection.
AUSTRAC has already imposed $5,000 transaction caps and enhanced customer due diligence requirements across the sector. The agency also revoked one operator’s license in June. However, these measures have not addressed the broader concerns about systemic misuse.
Draft Legislation Targets High-Risk Products
Amendments to the Anti-Money Laundering/Counter Terror Financing Act will give AUSTRAC the power to restrict or prohibit high-risk financial products, including crypto ATMs. The legislation provides flexibility for the agency to respond to emerging threats. Burke emphasized that he wants AUSTRAC to have discretion in how it addresses these risks.
Burke said the government won’t push for an outright ban on crypto ATMs because it might result in legal challenges. Instead, the proposed law empowers AUSTRAC to make independent decisions. The agency can choose between restriction, regulation, or prohibition based on its assessment of risks.
Industry Response to Crypto ATM Crackdown
Crypto ATM operators have defended their business models. Coinflip stated that crypto ATMs are already subject to strict Know Your Customer verification, requiring valid government identification before transactions. The company also noted that machines have cameras and real-time scam warnings.
A Coinflip spokesperson said crypto ATMs serve as an important bridge between the physical and digital world. They argued that these machines provide legitimate services to users who prefer cash transactions. Some industry observers believe better collaboration between regulators and operators could address concerns without eliminating the technology.
James Volpe from Melbourne-based Web3 education firm uCubed told media outlets that crypto ATMs don’t represent a significant risk compared to banks or casinos. He suggested that most crypto ATMs already require KYC verification. Volpe called for smarter collaboration between AUSTRAC, law enforcement, and ATM providers.
Broader Anti-Money Laundering Measures
The crypto ATM provisions are part of a broader crackdown on financial crime. The government plans to update visa entitlement verification systems to help banks identify and shut down money mule accounts, which are sometimes rented by international students or visa holders.
Burke stated the changes aim to legitimize good actors while shutting out bad ones, giving business certainty and consumer confidence. The comprehensive approach signals that regulators are taking a multi-pronged strategy. They recognize that financial crime requires coordinated responses across different sectors.
Conclusion
AUSTRAC established a crypto taskforce to address these concerns systematically. The agency reported that its investigations into crypto ATMs uncovered a hidden ecosystem of scams and illicit activity. These findings informed the push for expanded regulatory powers.
