Westpac has banned customers from transferring funds to the world’s largest cryptocurrency exchange Binance, in a move aimed at reducing losses from scams.

The Australian big four bank said on Thursday it was blocking a number of cryptocurrency exchanges as part of a trial, after its own data showed investment scams accounted for about half of all scam losses, and a third of all scam payments were transferred directly to cryptocurrency exchanges.

The bank did not name Binance but it is understood the exchange has been hit with the ban.

Westpac’s group executive of customer services and technology, Scott Collary, said the move could save millions lost to scams.

“Digital exchanges have a legitimate role to play in the financial ecosystem. But since the rise of digital currency, we’ve noticed that scammers are increasingly using overseas exchanges,” Collary said.

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“Often our customers only discover they’ve been scammed after the money has left the country, making recovery extremely difficult.”

The block on the exchanges will be rolled out as a phased trial in the coming weeks, Westpac said.

Binance announced on Thursday it was unable to accept PayID payments in Australian dollars “due to a decision made by our third party payment provider”.

“We are working hard to find an alternative provider to continue offering AUD deposits and withdrawals to our users,” the company said.

The move comes a month after the Australian Securities and Investments Commission (Asic) cancelled Binance’s Australian financial services licence to sell derivatives. The regulator found Binance had incorrectly classified hundreds of retail customers as wholesale investors.

Binance is the biggest cryptocurrency exchange in the world, with 128 million customers globally and processing $65bn in daily trades.

Guardian Australia has sought comment from Binance.

Binance and its chief executive, Changpeng Zhao, were sued, in March, by the US commodity markets regulator, which alleged wilful evasion of US law. The complaint alleges the company had grown its US business despite publicly stating its intent to block US customers from accessing the platform.

The allegations against Binance include that the company knew it was facilitating illegal activity via its platform, and knew of loopholes to get past Know Your Customer rules.

At the time a Binance spokesperson called the regulator’s actions “unexpected and disappointing” and said the company had “made significant investments over the past two years to ensure we do not have US users active on our platform”.

“Nevertheless, we intend to continue to collaborate with regulators in the US and around the world.”

The Australian Competition and Consumer Commission’s Scamwatch reported in April that investment scams made up the largest portion of scams reported to Scamwatch, ReportCyber, the Australian Financial Crimes Exchange, IDCare and Asic.

Total reports were over 500,000 with losses of over $3.1bn, while investment scams accounted for $1.5bn of this.

Bank transfers were the most reported payment method, with 13,098 reports accounting for $210.4m lost.

But the ACCC said 3,910 people reported cryptocurrency as the payment method, up 162.4% with $221.3m lost.