FinCEN issues an official warning that criminal organizations, including international drug gangs, are increasingly using cryptocurrency ATMs to conduct money laundering and fraud activities.
The Financial Crimes Enforcement Network (FinCEN), an agency under the Treasury Department, has issued an official alert to financial institutions regarding the increasing exploitation of cryptocurrency ATMs in organized crime activities. According to FinCEN, these devices are being exploited by criminal groups as a key channel for laundering money from drug trafficking, executing scams targeting the elderly, and many other forms of financial fraud.
The notice requires financial institutions to enhance monitoring and timely report suspicious transactions related to convertible virtual currency kiosks (CVC kiosks). FinCEN Director Andrea Gacki emphasized: “Criminals are constantly seeking new ways to steal assets from victims, and they have learned to exploit new technologies such as convertible virtual currency kiosks.” She affirmed the crucial role of financial institutions in protecting the digital asset ecosystem from illegal activities.
This warning reflects the escalation in efforts by the U.S. government to close loopholes in the digital financial system, while also demonstrating the seriousness of the ongoing issue.
FinCEN's report points out the root cause of the issue: many cryptocurrency ATM operators do not fully comply with existing legal regulations. Specifically, these businesses often lack the necessary internal control policies to implement customer identification verification (KYC) processes or effectively coordinate with investigative requests from law enforcement agencies.
These compliance gaps have facilitated the exploitation by criminal organizations. FinCEN cites information from the U.S. Drug Enforcement Administration (DEA), confirming that drug gangs such as the Jalisco New Generation Cartel are increasing their use of cryptocurrency ATMs as an effective money laundering channel, leveraging the relative anonymity and difficulty in tracing transactions.
This issue has attracted the attention of U.S. lawmakers. In the Senate, Senator Dick Durbin introduced a bill aimed at imposing stricter compliance requirements on cryptocurrency ATM operators. The bill proposes to establish specific transaction limits and requires clear warnings about fraud risks for users, in order to enhance transparency and accountability in this area.