FinCEN warns financial institutions of crypto ATM fraud linked to criminal organizations and elder scams

A U.S. Department of Treasury bureau is warning financial institutions to be on the lookout for bad actors using cryptocurrency ATMs to launder suspected drug profits, the targeting of older people, among other schemes. 

The Financial Crimes Enforcement Network, tasked with protecting the financial system from terrorist financing and money laundering, sent out a notice on Monday asking those financial institutions to report suspicious activity. 

“Criminals are relentless in their efforts to steal money from victims, and they’ve learned to exploit innovative technologies like CVC kiosks,” said FinCEN Director Andrea Gacki in a statement. “The United States is committed to safeguarding the digital asset ecosystem for legitimate businesses and consumers, and financial institutions are a critical partner in that effort."

FinCEN cited reports from the Drug Enforcement Administration that criminal organizations such as Cartel Jalisco Nueva Generación are more often using crypto ATMs. The bureau also warned that operators of the ATMs could be non-compliant and therefore not be verifying customer information. 

"These non-compliant CVC kiosk businesses also often lack reasonably designed policies, procedures, and internal controls to respond to requests from law enforcement," according to the notice. 

Lawmakers in Washington have looked to combat crypto ATM fraud. Sen. Dick Durbin, D-Ill., introduced a bill in February to set out requirements for crypto ATM operators, including transaction limits, and providing consumers with clear warnings about potential fraud. Regulatory agencies have also scrutinized crypto ATMs over the years over concerns that they are being used in scams.