Financial watchdog in fresh warning of scam risks in crypto deals

FINANCIAL intelligence agency Austrac has issued a fresh warning against cryptocurrency and NFT scams, with criminals increasingly turning to the pseudo-anonymous technologies to launder money and commit crimes.

Austrac on Thursday published two new financial crime guides to help businesses avoid ransomware attack payments and prevent criminal abuse of digital currencies.

The agency’s national manager for intelligence partnerships Jon Brewer said in an interview that ransomware attacks are up 15 per cent in the past year, while NFTs – often in the form of cartoon tokens – are being abused to enable money laundering.

He said criminals in the past 12 months in particular had been targeting digital artworks and currencies to move the proceeds of crime.

“Digital currencies have rapidly grown in popularity over the last five years and criminals are trying to take advantage of these new technologies to commit crimes such as scams, ransomware, and money laundering,” Mr Brewer said. “As Australians rapidly take up this technology, governments and the financial industry must work together to respond to financial crime risks and protect Australian individuals and businesses. The development of these financial crime guides is the result of the close partnership between government and industry to identify and prevent money laundering risks associated with digital currencies.

“Australian businesses should use these guides to help them understand and look out for the signs of criminal activity and take steps to protect themselves and their customers.”

NFTs – or non-fungible tokens – also represent a new crime risk according to Austrac, given they can be created by anyone and their value is subjective.

So-called “rug pulls”, in which NFT developers promote a new project and then disappear, have fleeced investors of millions of dollars.

“Financial service providers need to be alert to the signs of criminal use of digital currencies, including their use in ransomware attacks,” Austrac chief executive Nicole Rose said in a statement.

Research from Chainalysis found that crypto asset-based crime globally hit a new alltime high in 2021, with illicit addresses receiving $US14bn ($18.8bn) over the year, nearly doubling from 2020.