National Australia Bank Blocks Payments to High-Risk Crypto Platforms Amid Surge in Scam Cases

The National Australia Bank (NAB), one of Australia’s major banking institutions, has announced its decision to impose payment restrictions on several “high-risk” cryptocurrency platforms, a move aimed at safeguarding its customers from the rising threat of scams in the sector. The new measures form part of NAB’s comprehensive anti-scam strategy, which has reportedly helped halt millions in payments between March and July 2023.

Scam Concerns Spur Action

In an effort to protect customers from scam-related losses, NAB will enforce blocks on certain crypto platforms, widely suspected to be at high risk for fraudulent activities. While the bank did not reveal the specific exchanges to be affected, Chris Sheehan, NAB executive for group investigations and fraud, hinted that the new blocks could impact the Binance crypto exchange, among others.

Scams Connected to Cryptocurrency

The decision follows an alarming increase in scam cases linked to cryptocurrency. As per NAB, nearly half of all scam-related funds reported in Australia are tied to crypto. In a period of just 30 days, scams associated with cryptocurrency activities represented a significant 50% of all scams, according to a press release from the bank.

Last year, the number of Australians falling victim to such scams led to an alarming loss of over $221 million, making crypto scams one of the fastest-growing security threats in the country. The authority further noted that many of these scams are orchestrated by organized, transnational crime groups which often use crypto platforms to quickly and covertly move stolen funds overseas.

Bank-Wide Anti-Scam Measures

In addition to the blocks on high-risk crypto platforms, NAB has introduced several customer protection measures over the last six months. These include the introduction of payment prompts, blocking the use of links in suspicious text messages, and taking action on spoofing. These measures have reportedly resulted in a 12% reduction in payments, offering customers additional time to review transactions before confirmation.

Other Major Banks Follow Suit

NAB’s move mirrors similar steps taken by other major banks in Australia, including Westpac and Commonwealth Bank, which have also blocked payments to crypto exchanges in response to scam concerns. The rising trend among banks to clamp down on potential fraud highlights the increasing risk perception associated with the crypto industry.

Despite the blocks, NAB continues to embrace certain elements of cryptocurrency. Earlier this year, it announced the creation of a new stablecoin backed by the Australian dollar (dubbed AUDN), developed on Ethereum and Algorand. Although currently only available for intra-bank cross-border payments, it is anticipated to be offered to corporate clients by late 2023.

Impact on the Crypto Industry

These restrictions by major banks have been met with concern by pro-crypto advocacy groups such as Blockchain Australia, which worry that such measures may hinder the growth of the cryptocurrency industry in the country. Nonetheless, the prevailing sentiment among many Australians seems to lean towards security, with 40% stating they would be “extremely willing” for payments to be slower if it meant better protection from scammers.

Public Awareness and Education

Amid these developments, there’s an evident need for increased public awareness and education about the risks associated with cryptocurrency transactions. For now, as these preventative measures are put in place by NAB and other banks, they serve as a stark reminder to customers and the wider public to exercise caution when venturing into the world of cryptocurrencies. The move highlights that while the world is adapting to this new digital frontier, security and protection against scams remain of paramount importance.