- Australians lost more than $3 billion to financial scams in 2022
- A lot of those funds were laundered through cryptocurrency platforms
- Measures like credit cards with security codes that change daily are needed
- Scammers clone reputable investment companies to solicitate funds
Crypto platforms process almost half of all funds from scams and fraud cases in Australia, data from the Australian Financial Crimes Exchange (AFCE) suggests. The NPO has found that 47% of scam funds were sent to crypto exchange accounts in the last month based on data from its member organizations, including several leading Australian banks, the publication Australian Financial Review reported.
The members – Commonwealth Bank, ANZ, National Australia Bank and Westpac – have all taken measures to limit transfers to so-called “high-risk” platforms.
$3B+ lost to scams in Australia last year
According to estimates of the AFCE, Australians lost more than $3 billion to financial scams in 2022. Crypto industry insiders say it’s telecommunication firms and social media that give scammers the easiest access to consumers, however, and not exchanges.
According to AFCX managing director David Pegley, the stolen funds are eventually channeled to organized crime organizations and facilitate drug dealing, dealing weapons, and other crimes.
A Bankless Times report at the end of last year found that more than half of all cybercrime cases directly resulted from fraud, online shopping, or online banking.
Funds “impossible to recover”
Anna Bligh, chief of the Australian Banking Association, said that a lot of those funds were laundered through cryptocurrency platforms, making them “virtually impossible to recover.” She added that more needed to be done to make sure criminals stopped using crypto to process stolen funds.
Major exchanges under fire too
Leading banks stopped transfers to major exchanges such as Binance, which is facing scrutiny in a number of countries, including the US. According to the US Securities and Exchange Commission, the exchange “willfully evaded” laws and sold unregistered securities among other transgressions. Its Australian derivatives license was cancelled by the Securities and Investments Commission in April.
Blockchain Australia calls for collaboration
Blockchain Australia called for a collaborative approach by banks and exchanges to stop fraudulent activity rather than excessive restrictions. The industry organization is carrying out a survey on the toll of de-banking crypto exchanges on jobs and the industry in general. They commented:
The protection of consumers is paramount, both in protection from scams and not burdening consumers with undue restrictions in who they choose to do business with, which must be evidence-based to ensure they bring genuine benefits without undue costs.
They recommend measures such as digital credit cards with security codes that change every day, additional verifications for first-time transfers, and additional detection mechanisms.
Financial crimes show no sign of slowing down
Financial crimes show no sign of slowing down despite investigations by banks and law enforcement agencies, some of which have been brought to fruition. Scammers clone reputable investment companies and solicitate funds from victims, whose details they obtain using fake investment comparison websites.
In one common type of scam, victims were encouraged to deposit money into an account a legitimate institution operated. The institution processed payments on behalf of a crypto exchange.
Identity checks are circumvented
According to the legal advisers of victims, the financial system has a series of “blind spots” that have allowed criminals to siphon funds off into crypto exchanges and make away with them. The responsibility to perform identity checks was circumvented. Apparently, verification bodies only run checks on business customers, not retail users.
Scammers cheat exchanges
In some cases, victims were asked for additional documents for the purpose of identity verification, such as screenshots of utility bills or images of their passport. The documents were used to open accounts at crypto exchanges in the victims’ names. In other cases, criminals would tell the victims not to trust crypto exchanges when the latter tried to verify their details.
