Bitcoin ATMs on The Radar of Regulators Due To Rising Concerns of Money Laundering

While regulators have been working on plugging the loopholes with Bitcoin money laundering, experts predict that the next targets would be the Bitcoin Automated Teller Machines (BATMs).

Ciphertrace CTO John Jeffries said that crypto-cash machines will now attract higher regulatory focus in a move to curb cross-border illicit financial transactions.

As per the CipherTrace report published on Monday, June 2, nearly 74% transactions made from the U.S.-based Bitcoin ATMs were cross-border transactions last year in 2019. Additionally, it states that 88% of the funds send from Bitcoin ATMs to cryptocurrency exchanges were transferred overseas.

Since 2017, this figure has seen exponential growth at an annual doubling rate. In an interview with Law360, the CipherTrace CTO said that Bitcoin ATMs will become “a greater point of regulatory focus”. As crypto ATMs are likely to grow in number with larger crypto adoption, Jeffries emphasized “the need for more uniform regulatory enforcement and compliance”.

The CipherTrace report comes just two days Canadian regulators introduced new regulatory framework dubbed Money Service Businesses (MSBs) for companies dealing with cryptocurrencies.

This new crypto legislation will basically affect all those companies who swap cryptocurrencies for cash. Hence, the Bitcoin ATM operators are likely to be the most-impacted out of it. As per the new regulatory norms, Bitcoin ATM operators will need to report all transactions above $10,000 CAD.

In its latest report, CipherTrace mentioned that high-risk exchanges are “nefarious exchanges known for facilitating criminal activities and money laundering”. Although these exchanges are not inherently criminal in nature the illicit transfers through the platforms are major cause of concerns.

So far, there are around 8000 Bitcoin-facilitating machines worldwide. Moreover, it is found that a majority of them operate outside the national anti-money laundering (AML).

For tax and AML purposes, countries like Germany, Spain, and United States are all cracking down on Bitcoin ATM transactions. Using these crypto-teller machines, users can easily buy and sell digital currencies.

Earlier this year in March 2020, The German Financial Market Authority (BaFin) took action against the unlicensed ATMs operating in the country. Later, BaFin unveiled its new anti-money laundering regulation to fill the loopholes in the existing regulatory framework.