Bitcoin ATMs Face Tighter Regulations Over Money Laundering


Experts predict that Bitcoin ATMs (BATMs) will face stricter regulations worldwide, with countries including Canada and Germany already moving to tighten up anti-money laundering requirements.

A June 2 report from CipherTrace estimates that 74% of transactions made from U.S.-based Bitcoin ATMs were sent out of the country during 2019. The report also found that 88% of funds sent from U.S. crypto ATMs to virtual currency exchanges were transferred overseas. The figure has seen exponential growth over recent years, doubling annually since 2017.

In an interview with Law360, CipherTrace CTO John Jeffries predicted that BATMs will become “a greater point of regulatory focus,” emphasizing “the need for more uniform regulatory enforcement and compliance” concerning crypto ATMs moving forward.

Canada tightens Bitcoin ATM regulations

CipherTrace’s report was published two days after new regulations treating Canadian firms dealing with virtual currencies as Money Service Businesses (MSBs) took effect.

Francis Pouliot of Bitcoin Foundation Canada and local crypto exchange BullBitcoin tweeted that the new legislation will predominantly affect those firms that swap crypto for cash, citing Bitcoin ATM operators as the most heavily impacted. Bitcoin ATM operators are now required to report all transactions worth $10,000 CAD or more.

The amended Proceeds of Crime (Money Laundering) and Terrorist Financing Act was passed during June 2019 amid calls from the mayor of Vancouver to institute a city-wide ban on Bitcoin ATMs over money laundering concerns.

According to CoinATMradar, there are currently 778 crypto ATMs operating in Canada — which is almost 10% of the 7,958 terminals worldwide.

Global regulators target crypto kiosks

In July 2019, Spanish police also pointed to crypto ATMs as blind-spot in European anti-money laundering (AML) regulations after identifying a single local gang that had laundered roughly $10 million for Columbian drug traffickers using BATMs.

November last year saw the United States Internal Revenue Service (IRS) launch an investigation into illicit uses of cryptocurrencies, highlighting potential tax issues resulting from the use of Bitcoin ATMs and kiosks.

The German Financial Market Authority (BaFin) took action against unlicensed Bitcoin ATMs in March of this year. The crackdown followed the introduction of new anti-money laundering regulations targeting holes in Germany’s previously existing cryptocurrency regulations.

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