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Australia’s Bendigo Bank blocks high-risk payments to crypto exchanges

July 31, 2023 Coin Telegraph

Aussie

Chainalysis policy lead Chengyi Ong warned crypto users may eventually have no choice but to deal with offshore unregulated exchanges.

Australia’s Bendigo Bank has become the fourth major bank in the country to announce blocks for “high-risk crypto payments,” citing the need to protect customers from investment scams.

The bank said on July 31 that it implemented new rules on instant payments to crypto exchanges that add “some friction to certain genuine payments,” according to its head of fraud, Jason Gordon.

It cited combatting fraudulent payments and enhancing protections for its 2.3 million customers as reasons for the blocks.

*Screenshot of Bendigo Bank's warning about investment scams. Source: Bendigo Bank*

A Bendigo Bank spokesperson told Cointelegraph that certain instant crypto transactions that it identifies as higher risk will be blocked, but the bank is not disclosing further details at this time.

The spokesperson said it identifies high-risk transactions by employing “a combination of factors” but refused to comment on specifics. The bank said it was not disclosing what exchanges may be affected by its changes.

Bendigo Bank’s blocks follow similar actions in recent months from three of Australia’s Big Four banks — Commonwealth Bank, National Australia Bank (NAB) and Westpac.

In an interview conducted before the recent Bendigo Bank announcement, Chainalysis APAC Policy Head Chengyi Ong warned that such actions would force Australia’s crypto public to interact with offshore exchanges.

Speaking to Cointelegraph, Ong argued that such blocks won’t stop criminal actors from using other platforms, crypto or not, while uncertainty over banking access could also drive crypto exchanges and users outside the jurisdiction of authorities.

Instead of cutting off exchanges, Ong says banks — alongside regulators, telecommunication providers and social media platforms — need to cooperate at every point of the scam lifecycle.

“[We need to target] all the potential attack vectors and all the potential points of interaction between a victim and a scammer. We have to tackle every single one of those touchpoints.”

Dr. Aaron Lane, senior lecturer with the RMIT Blockchain Innovation Hub, told Cointelegraph that the best thing banks can do for consumer protection is to constructively work with exchanges, adding:

"Debanking as a risk tool should be reserved for individual cases of serious and unacceptable risk, not a general posture towards an entire industry or asset class."

Australia has been weighing crypto-specific laws for over three years, and Dr. Lane urged lawmakers to take crypto law reform “out of the too-hard basket.”

Ong’s and Dr. Lane’s comments follow an official statement from the Department of the Treasury in June that included similar warnings.

The Treasury said it understands its inaction on debanking will stifle financial services competition and innovation and could “drive businesses underground and to operate exclusively in cash.”

Collect this article as an NFT to preserve this moment in history and show your support for independent journalism in the crypto space.

Magazine: Unstablecoins: Depegging, bank runs and other risks loom

Additional reporting by Brayden Lindrea.

Binance Australia partner hints at rising ‘scams’ after debanking exchange

May 19, 2023 Coin Telegraph

AUD

Cuscal, the company that handles AUD on-and-off ramping for the exchange, declined to comment specifically on why it decided to pull support for Binance Australia.

The "third party payments provider" for Binance Australia, Cuscal hinted toward the impact of “scams and fraud" as it relates to "account fraud, ID takeover and crypto activity" after being questioned why it offboarded the firm on May 18.

The payments provider did not specifically address Binance or crypto exchanges in its statement to Cointelegraph and declined to elaborate on why it pulled support for Binance Australia specifically.

A spokesperson for the Sydney-based B2B financial services firm told Cointelegraph that it's "focused on supporting the industry in protecting Australians from financial crimes and scams."

"Following recent media attention in relation to the impact of scams and fraud in Australia with particular focus on account fraud, ID takeover and crypto activity, Cuscal reiterates its commitment and important role in identifying and implementing detection services for our clients across the Australian payments system," the accompanying statement from Cuscal wrote.

Binance is suspending AUD fiat services in Australia.

Got this email this morning.

Very disappointing as it was one of my favourite on/off ramps.

Chokepoint is real.. pic.twitter.com/ZYiWY3aO0C
— Miles Deutscher (@milesdeutscher) May 18, 2023

It added it "has, and will continue to, terminate any clients or their customers and/or merchants" which do not meet its onboarding and compliance requirements.

It declined to comment specifically on Binance Australia or why it instructed its partner payments firm Zepto to "offboard" the exchange saying it doesn't "have a comment on any other parties at this point."

On May 18, Binance Australia said Australian dollar services were suspended "with immediate effect," citing a "decision made by our third party payment service provider."

We have confirmed with our local payment partner that our users can continue to withdraw AUD and we will update with any further changes on timing as we know more. Users are still able to buy and sell via debit and credit card. https://t.co/ReS6V7FbZu
— Binance Australia (@Binance_AUS) May 18, 2023

A Zepto spokesperson told Cointelegraph at the time that it "processes payments for Binance Australia" and "our partner, Cuscal, instructed us to offboard Binance."

Binance Australia has been on the hunt for an alternative payments partner since. Binance said Zepto and Cuscal are continuing to support users wishing to withdraw AUD.

Magazine: Unstablecoins: Depegging, bank runs and other risks loom

Australian crypto businesses tell Senate inquiry about being de-banked up to 91 times

September 9, 2021 Coin Telegraph

Andrew Bragg

Speaking on a panel as part of the senate inquiry into “Australia as a Technology and Financial Centre” three crypto firms outlined their de-banking experience in Australia.

Crypto-related companies and figures have provided evidence about being de-banked by Australian financial institutions to a Senate inquiry.

Crypto investment firm Aus Merchant, global remittance provider Nium and small peer-to-peer crypto brokerage platform Bitcoin Babe were speaking on a panel as part of the senate inquiry into “Australia as a Technology and Financial Centre” on Sept. 8.

All three are registered with financial intelligence regulator AUSTRAC and are subject to reporting requirements, however they all echoed similar sentiments of being de-banked without a concrete explanation as to why.

Michaela Juric, the founder of the peer-to-peer trading business dubbed after her nickname “Bitcoin Babe” stated that she has been banned by a total of 91 banks and financial institutions throughout her seven-year history in crypto:

“As of yesterday, I have been banned and de-banked from 91 banks and financial institutions. That's 91-lifetime bans. No reasons given, no case-by-case assessments or discussions engaged and no recourse available.”

At today's Senate hearings on crypto regulation, the session opens with @ausfintech providing testimony on #debanking: CEO says there is no area within fintech suffering more from this than the crypto sector, saying "Australia will be left behind"
— chloe white (@ChloeWhiteAus) September 7, 2021

Bitcoin Babe utilizes exchanges such as Local Bitcoins to conduct trades in Australia, and according to her profile on the website,she has conducted more than 40,000 trades since 2014 with a feedback score of 98%.

Despite holding a good reputation online, Juric told crypto-friendly Liberal Senator Andrew Bragg that some banks have even flagged her as a terrorist due to the nature of her business:

“I’ve had banks go as far as report me as being like a terrorist on some databases, and that’s what stopped me from being able to get some of these services.”

It’s troubling to hear about the personal impact of de-banking on people trying to set up a small business. The banks have said the driver of de-banking is the lack of a regulatory framework for digital assets. That’s what we must fix and we will hold the banks to that.
— Senator Andrew Bragg (@ajamesbragg) September 8, 2021

Singapore-headquartered Nium is licensed in 40 markets across the globe, however the firm stated that Australia is the only country where it has had issues with financial service providers.

Michael Minassian, Nium’s Asia-Pacific head of consumer business stated the firm feels that there are some “uncompetitive practices” that are being conducted with de-banking, as he questioned the “opaque” reasons that banks have offered when cutting services to the company:

“They're very vague as to why they are ceasing to provide banking services to you. I've had some bankers provide me with verbal reasons as the policy shifts within the bank etc, but essentially industries like remittance become too hard for the banks.”

“It's costly for them to try and establish frameworks that they can allow banking, so it's just easier for them to to to cease providing services,” he added.

Mitchell Travers —the co-founder of New South Wales-based crypto investment platform Aus Merchant — stated that with what little reasoning was provided behind debanking the platform, it was due to “risk avoidance” from banks.

“As far as I’m aware, It was a risk avoidance, risk-off attitude where the reasoning was that we were outside of the scope of services for these banks, and we weren't given an opportunity to provide enhanced due diligence procedures,” he said.

Senator Bragg responded by stating “okay, I see your registration with AUSTRAC is worthless to a bank, it sounds like.”

The Commonwealth Bank (CBA) provided a submission to the inquiry explaining its practices and stated that it operates “commensurate systems and controls to mitigate and manage” anti-money laundering and terror financing risk.

“In circumstances where a customer’s source of funds and source of wealth is unable to be determined, or their account activity is not in accordance with known business activities, the group takes appropriate steps to mitigate and manage its ML/TF risk,” The CBA said in its submission.

Debanking

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