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US authorities crack down on crypto ATMs reportedly involved in human and drug trafficking | Finbold


finbold.com 11 January 2022 10:54, UTC
Reading time: ~2 m

Due to their apparent connection with illicit human and drug trafficking, cryptocurrency ATMs, which were installed at an unprecedented pace in 2021, have begun to come under increasing scrutiny from US authorities.

Indeed, a report by the United States Government Accountability Office (GAO) stated registration rules for crypto ATMs should be tightened, with the kiosks being blamed for an upsurge in incidences of trafficking operations.

In the analysis issued on January 10, the group, which offers accounting and investigative services to the US Congress, found a correlation between the usage of cryptocurrency payments to aid illegal human and drug trafficking to crypto ATMs.

“As [crypto] market usage expands, FBI officials said they expect to see an increase in the use of virtual currency kiosks for illicit purposes, including for human and drug trafficking,” the report revealed.

Crypto ATMs are becoming popular for illegal transactions

As per, GAO, which investigated the use of cryptocurrency in worldwide trafficking activities, ATMs are becoming more popular for making illicit purchases. Since, they are less regulated than cryptocurrency trading platforms, which means that transactions performed via the kiosks are much more difficult to track down and identify.

In the agency’s view, the absence of information regarding the machines and the acts carried out through them is impeding the ability of law enforcement to identify and apprehend offenders. For example, while ATM kiosk owners must register with the Financial Crimes Enforcement Network (FinCEN), they are not required to disclose the location of their ATMs by law.

According to the GAO, this “restricts the capacity of federal agencies to identify kiosks in regions that have been identified as high risk for financial crime.” By imposing stronger regulations on crypto ATMs, authorities will get access to more information about their location and usage, which will aid in the identification of “potentially illicit transactions.”

The report asked the FinCEN and the Internal Revenue Service (IRS) to work together to evaluate the registration requirements for cryptocurrency kiosks and exchanges and the agencies are required to abide by the advice made, as per GAO.

In total, the GAO found that more than half of 40 large online “commercial sex markets” that “may be used to facilitate sex trafficking” allow cryptocurrency payments. Additionally, it was discovered that 36% of all US Immigration and Customs Enforcement investigations that involved digital assets were tied to drug trafficking, as well as 25% of all IRS crypto-related investigations and 85% of US Postal Service investigations.

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