Westpac bans crypto exchanges linked to scams, fraud

The banking major is attempting to stamp out cryptocurrency platforms being used by scammers to export funds.

Westpac has banned a raft of cryptocurrency platforms over links with frauds and scams, amid concerns the exchanges were being used by criminal groups.

The banking major has moved to impose bans across all its brands after wrapping up a trial of the customer protection technology, with Westpac data showing almost half of all scam losses were ending up in cryptocurrency exchanges.

The bans will be rolled out over the coming two to three weeks.

The bans make Westpac the first Australian bank to impose wide bans on a number of cryptocurrency platforms, which is believed to include Binance, over scam concerns.

Westpac financial crime and fraud prevention general manager Chris Whittingham said the bank was concerned about the increase in scams linked to cryptocurrency and wanted to protect customers.

“We’ve determined which (exchanges) are the riskiest,” he said.

Westpac said it will not notify exchanges it has blocked transactions to them, but there were grounds for the companies to appeal the freeze.

“We’re really looking at it from not wanting to tip off scammers,” Mr Whittingham said.

“If a crypto exchange comes to us we would have a look at that, we would make an assessment of what controls they put in place to mitigate the risks.”

But Mr Whittingham said Westpac’s appeal mechanisms “won’t be an easy approach”.

“We would need to be confident about the controls they had to protect customers,” he said.

“This is about protecting customers and reducing the amount of scams customers are getting at this stage.”

Westpac has banned a raft of cryptocurrency platforms over links with frauds and scams. Picture: Damian Shaw/NCA NewsWire

The move against the crypto currency platforms comes as regulators ratchet up their surveillance of the sector.

Crypto currency platform Binance saw its financial license revoked in April after the Australian Securities & Investments Commission took aim over the firm’s offering of derivatives.

This followed a number of run-ins between ASIC and Binance over the platform.

The US Commodity Futures Trading Commission took aim at Binance in March this year, alleging the firm and some of its senior executives conspired to create an “illegal” exchange and a “sham” compliance program.

Binance was also hit with blocks on PayID transactions into the exchange’s accounts this week, with customers told they could only make transactions via credit or debit cards.

Westpac customer services and technology group executive Scott Collary said the bank’s new security interventions could save millions.

“Digital exchanges have a legitimate role to play in the financial ecosystem. But since the rise of digital currency, we’ve noticed that scammers are increasingly using overseas exchanges,” Mr Collary said.

“Often our customers only discover they’ve been scammed after the money has left the country, making recovery extremely difficult.