Australian bank Westpac bans payments on Binance to combat fraud

What’s new? Westpac, one of Australia’s largest banks, has banned customers from transferring money to the Binance crypto exchange as part of a set of measures aimed at protecting the public from fraud. The bank’s representatives classified Binance as a high-risk exchange that trades illegally obtained funds. They stressed that they recognize the legitimacy of digital exchanges as such, but blocked access to those that are often used for scams. Also since May 18, local customers will not be able to use the service PayID, developed with the participation of the Reserve Bank of Australia, to transfer to Binance, due to the corresponding decision of Cuscal, a banking transactions provider.

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Exchange response. The team of Binance Australia stated that they are working hard to find an alternative provider to continue to offer users deposits and withdrawals in Australian dollars (AUD). It is noted that customers can still buy and sell cryptocurrencies using credit or debit cards, and the peer-to-peer (P2P) platform Binance will continue to operate as usual.

The exchange’s representatives assured that customer funds are safe thanks to the Secure Asset Fund for Users (SAFU), which provides protection for customer funds in case of unforeseen situations.

Fellow Binancians,We regret to inform you that with immediate effect we are unable to facilitate PayID AUD deposits for Binance users due to a decision made by our third party payment service provider. We understand from our third party payment service provider that Bank…— Binance Australia (@Binance_AUS) May 18, 2023

Details on the Westpac initiative. Scott Collary, Head of Customer Services & Technology at Westpac, said that phased testing of new customer protection mechanisms for certain cryptocurrencies to reduce fraud losses will be rolled out in the coming weeks. He noted that it is foreign cryptocurrencies that are being used more often by attackers. Sometimes Westpac customers only find out about the fraud after the money leaves the country, making it extremely difficult to get it back.

According to Westpac’s latest figures, investment scams account for roughly half of all fraud losses, with a third of those payments going directly to cryptocurrency exchanges.

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Westpac was previously one of 17 banks to sign on to a new anti-fraud platform that has already cut illegal payments between banks in half during initial trials by freezing transfers at an early stage of detection. The Australian Banking Association’s Fraud Reporting Exchange (FRX) platform allows fraudulent payments to be reported in real time, increasing the likelihood that funds can be frozen and returned to customers. FRX is owned and operated by the Australian Financial Crimes Exchange (AFCX), a non-profit entity created and funded by Australian banks.

Last month, the Australian Securities and Investments Commission (ASIC) revoked the license to provide financial services to Binance Australia Derivatives. The decision came into force on April 14, customers were asked to close positions on derivatives until April 21.