New Zealand enforces a prohibition on cryptocurrency automated teller machines throughout the country

In a bid to curb financial crime, New Zealand's Department of Internal Affairs announced a nationwide ban on cryptocurrency Automated Teller Machines (ATMs) in 2022. This move is part of the broader Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) regime reforms, led by Associate Justice Minister Nicole McKee.

Prior to the ban, more than 220 crypto ATMs operated in New Zealand, allowing cash-to-digital asset conversions with minimal identity verification. The ban includes a NZ$5,000 cap on international cash transfers, aimed at disrupting the flow of criminal funds offshore.

The ban has been met with dissatisfaction from New Zealand's largest crypto ATM provider, CoinFlip, who called it "a step backward for the digital economy." CoinFlip argues that focused, effective regulation could achieve government goals without hindering innovation.

In contrast, Australia's approach to crypto ATMs is one of regulation rather than a ban. Australia's Transaction Reports and Analysis Centre introduced new compliance rules for crypto ATM operators in June 2022, including a cash deposit and withdrawal cap of A$5,000. Businesses in the cryptocurrency sector in both countries are required to register and comply with Anti-Money Laundering and financial conduct regulations.

Other countries have taken similar steps. China enforced a sweeping ban on most cryptocurrency transactions, including ATM operations, in 2017. The United Kingdom's Financial Conduct Authority effectively banned crypto ATMs in 2022. Singapore's Monetary Authority also instated a moratorium on crypto ATMs in 2022 as part of a broader crackdown on unregulated digital assets.

Bitcoin, which is legal in New Zealand but not legal tender, is classified as property under New Zealand law, making it taxable. McKee stated that crypto ATMs are a sound form of money laundering, citing a case involving NZ$107 million ($64 million) allegedly laundered through such channels.

The AML/CFT reform package introduced by McKee also includes an enhanced data sharing power for the Financial Intelligence Unit and a streamlined compliance obligation for low-risk businesses. The reforms are designed to strengthen New Zealand's financial system and protect it from the risks posed by cryptocurrencies.

New Zealand enforces a prohibition on cryptocurrency automated teller machines throughout the country