Could The Spike In Bitcoin ATMs Be A Goldmine For Money Launderers?


If you are a crypto fanatic, there is no doubt that you have seen a bitcoin ATM. In fact, there are high chances that you have come up close and personal with one, or even used it to make a few transactions.

 Over the past few years, the number of bitcoin ATMs has grown exponentially. They have come as a blessing to crypto users since they can now make transactions with the utmost convenience. Look – whether you have the best NBA betting strategy on a cryptocurrency casino or do some tasks and get paid in bitcoin, you can always withdraw your earnings quickly in a bitcoin ATM.


But here is the problem…

As the number of bitcoin ATMs increase, crypto experts warn that they are now being used to circumvent anti-money laundering controls.

In its Spring report published early in June, Cipher Trace revealed that bitcoin ATMs are constantly used to send funds to trading platforms that are believed to facilitate money laundering and other criminal activities.

According to the report, the amount of funds sent to high-risk exchanges from bitcoin ATMs in the United States has seen a spike and has been doubling for the last three years. In 2017, the amount of funds going to high-risk exchanges was 2%, but now the figure has risen to 8%.

How bitcoin ATMs numbers have risen

The upsurge in the number of bitcoin ATMs coming to the market is mind-blowing. The Coin ATM Radar reports that there were only 5,000 BATMs in June 2019, but now the number stands at 8,300.

Between June and December of 2019, only 1,000 BATMs were installed. In the past six months, this number has doubled, and 2,000 ATMs have since gone online.

From a glance, BATMs are not different from cash-based machines. Nonetheless, they allow users to trade in bitcoin and other cryptocurrencies from an exchange using hard cash and bank cards.

BATMs users are not required to have digital wallets since the machines create them and give them printouts of private keys and wallet addresses.


Does the rise coincide with the increase in money laundering cases?

In August 2019, a trader in Los Angeles was found guilty of failing to register his bitcoin ATM business with the Financial Crimes Enforcement Network (FinCEN). He pleaded guilty for laundering a whopping $25 million for drug dealers and other criminals.

Police in Spain also reported that a criminal syndicate that was involved in international narcotics trade used bitcoin ATMs to pay their drug suppliers in Columbia.

Crypto analysts allude that the increase in money laundering activities can be attributed to the explosion in the number of bitcoin ATMs.

Laws regulating the use of BATMs are progressively being implemented. For example, in the United States, people who own a bitcoin ATM must sign up with FinCEN and are required to keep records of all transactions. They must also follow know-your-customer (KYC) protocols and report any suspicious activity to the relevant authorities.

Some providers have also imposed self-regulations. They ensure that their machines prompt the user to enter a verified purchase location and wallet address before the cryptocurrency is sent.

But even with stringent regulations, money launderers are still finding ways to circumvent them and continue to engage in their malevolent activities.

In 2019, a Financial Action Task Force (FATF) guidance dubbed ‘Travel Rule’ was passed. This means that more rigid KYC/AML requirements for cryptocurrency businesses are now implemented in all corners of the globe.

Experts agree that the use of BATMs in money laundering will improve if regulatory scrutiny is increased. Operators should also stay proactive in compliance and, at the same time, respect the privacy of their users.