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The new move by New Zealand is part of their AML reforms, which target money laundering. The reforms aim at removing money laundering networks from local business networks. New Zealand will further use the services of law enforcement to enact the new regulations. The focus is primarily on converting fiat cash to cryptocurrency, rather than simply focusing on cryptocurrencies.
Nicole McKee, Justice Minister, stated that the new regulations were designed to facilitate legitimate businesses operating in New Zealand while making it more difficult for criminals to do so. McKee noted that the new rules were intended to make the New Zealand business sector one of the easiest and most efficient markets in the world to conduct business. The legislative process is ongoing, with various regulations currently under review.
McKee stressed that legitimate businesses, including those in the crypto sector, were not the target of the review, but were in fact being singled out for more support from the government. The Financial Intelligence Unit will be responsible for collecting data related to suspicious individuals, enabling the unit to perform more in-depth analysis and connect the dots between anonymous fiat cash transactions and the conversion to digital assets.
Lower-risk businesses, as classified by the Financial Intelligence Unit, will be granted special status to exempt them from additional regulations, such as address verification. The aim of this approach, according to the New Zealand government, is to enable legitimate businesses to operate with minimal government interference. The New Zealand government has a vision to make the country the easiest place in the world to conduct business.
 
Hopefully, this positive attitude towards business productivity extends to legitimate cryptocurrency businesses, such as cryptocurrency exchanges. Nicole McKee, Justice Minister, commented that compliance obligations were crippling the business sector, and in light of the government seeking new ways to optimize the business sector, could be a way to improve the economy post-pandemic. The new rules will also include stimulus packages to support distressed businesses.
Australia has introduced similar regulations for crypto ATMs, suggesting that the country is experiencing a similar wave of crime to that of New Zealand. AUSTRAC, the Australian financial regulatory body, has created new rules to curb the growing influence of crypto ATMs, including regulations that limit the amount an individual can transact and introduce mandatory registration requirements.
The focus of global agencies, including the US, has been on the use of crypto ATMs to target vulnerable groups, specifically older individuals who are lonely and susceptible to romance scams. The new approach of lawmakers is to market their regulations as promoting ‘legitimate’ businesses while making it hard for criminals to operate their crypto networks. This new approach is designed to get enterprises on board and prevent distress among legitimate businesses. In other words, regulatory bodies are recognizing the importance of utilizing public relations strategies to promote their new laws.
The lack of Know Your Customer (KYC) requirements made it somewhat inevitable that crypto ATMs would fall prey to criminal networks. The scheme was a disaster from the start, according to this perspective at least. However, the freedoms enjoyed by legitimate businesses may far outweigh the risks involved in removing KYC requirements. There has, however, been considerable distress experienced by crypto users who romance scams have targeted. The US has been at the forefront of combating romance scams, as many citizens have fallen victim to organized campaigns aimed at stealing their funds.
Australia has placed the crypto ATM sector on notice for what it sees as a growing problem for law enforcement. New Zealand laws are also designed to prevent the situation from worsening, something that financial analysts believe is inevitable if the situation is left unattended. Crypto ATMs often involve hefty fees for simple transactions, dissuading regular users from operating the machines, but attracting other groups, such as privacy-conscious individuals who need to send money anonymously, including criminals who require anonymity. A large fee of 5% to 10% would not even make the crypto ATM attractive for remittance payments. A simple back-of-the-envelope analysis would reveal that a $1,000 remittance payment at 10% would charge a fee of $100. That would make the crypto ATM impractical for sending regular transactions.
Source: https://zycrypto.com/new-zealand-bans-crypto-atms-to-combat-money-laundering-while-promising-to-support-legit-crypto-businesses/