Police are monitoring cryptocurrency ATMs as criminals exploit the growing technology for nefarious purposes.
Funding terrorism, aiding illegal firearms purchases and money laundering are just some of the threats the systems have been used for, and our top watchdog said similar plots have already been stopped on our shores.
More than 200 cryptocurrency ATMs now operate nationwide, with machines appearing at dairies, malls and petrol stations across the country.
1News spoke to several dairy owners, many not wanting to be identified, who confirmed the machines are being increasingly used. One Wellington dairy owner reported the cryptocurrency machine was being visited at least three times a day.
“Many people come and use it. I’m not keeping a count but, generally when I’m in the shop, I see many people come and use it,” another shop worker said.
Police’s financial intelligence unit Daniel Frost said the machines were vulnerable to criminal activity.
“We’re seeing criminals move away from more traditional forms of currency like cash to using cryptocurrency, because they believe, it’s an anonymous way of moving illicit funds,” he said.
“Scammers will encourage victims to deposit through those crypto ATMs as a way to circumvent the banking sector.”
The growing tech trend was another tool criminals were using to help orchestrate frauds and scams, while also connecting with wider international crime networks.
Cryptocurrencies could be used by criminals to launder money, finance crime and terrorism, and even purchase weapons. The financial intelligence unit said some of those threats have already been detected and stopped here.
“New Zealand is not so far removed from this now in an increasingly interconnected world,” Frost said.
“We’re starting to see evidence of these types of activities occurring close to New Zealand, if not even on New Zealand shores.”
There was no official tally detailing how much and how often some ATMs were being used.
Police said tighter regulations in the sector might be needed, but for now they were utilising all the help they had available, working closely with international authorities who already deal with criminal crypto transactions.
“The rise of crypto ATMs has been more prominent overseas, and we’ve been able to learn and observe from our partners overseas, and that’s really helped with how we conduct investigative techniques,” Frost said.
“It is not as anonymous as criminals believe it is. And, for those criminals, it is a matter of time before law enforcement catches up with them.”
A recent New Zealand national risk assessment report highlighted urgent work and research was needed in the sector.
“There’s always going to be system vulnerabilities somewhere, and criminals will seek and find those out, and obviously it’s a case … to find those vulnerabilities and work closely together with the crypto ATM service providers to shut them down,” Frost said.
What ATM operators say
In a statement, a spokesperson for FlipCoin, which owned more than half of the crypto ATM machines in New Zealand, said multiple user protections were in place to help track and stop criminal activity.
A spokesperson said the company certainly did not want its clients scammed and was committed to working with law enforcement and regulators.
“Whilst we acknowledge the importance of the National Risk Assessment, we wish to clarify that it has been prepared using data collected from January 1, 2018 to December 31, 2023: CoinFlip launched in New Zealand in the second half of 2023.
“Our transaction volume during the Risk Assessment period was nominal.”
“We have a comprehensive onboarding process in place: our ATMS are subject to the same anti-money laundering and know your customer regulations as traditional financial institutions, as well as other Virtual Asset Service Providers operating lawfully in New Zealand.
“Our ATMs offer consumers a seamless, convenient way to access the Web3 market through buying and selling virtual assets, without the need to link to their bank account.”
The spokesperson said: “We invest heavily in compliance and customer protections such as blockchain analytics to stop fraud and intercept attempted transactions to known high-risk wallets, display relevant consumer warnings on our ATMs, and provide 24/7 customer support. Tools like blockchain analytics go beyond what is even available for traditional finance transaction monitoring.”
