In the report released earlier this month, the analysis firm CipherTrace found that bitcoin ATMs were often used to send funds to "high-risk exchanges" - trading platforms that the company considers known to facilitate criminal activities and money laundering. money.
"The percentage of funds sent to high-risk exchanges by US BATMs [bitcoin ATMs] has seen exponential growth, doubling every year since 2017." reads in the report. While in 2017 around 2% of U.S. transactions went to high-risk exchanges, that number is now close to 8%.
"Bitcoin ATMs are probably the next major regulatory target"
A bitcoin ATM allows people to buy and sell bitcoins and other cryptocurrencies directly with an exchange, using bank cards or even cash. Basically, users don't have to have a digital wallet, the machines themselves create them, providing users with printouts of the wallet addresses and private keys.
CipherTrace also pointed out that the vast majority of U.S. bitcoin ATM transactions in 2019, around 88%, sent funds to offshore destinations. "Bitcoin ATMs are probably the next major regulatory target," predicts the report.
This coincides with an explosion in the number of new bitcoin ATMs arriving on the market. Globally, there are around 60% more cars than last year's, according to Coin ATM Radar. Another interesting fact is that the installation rate has doubled since the beginning of 2020.
There is still a lot to do
Bitcoin ATM operators insist that they are doing everything possible to follow the regulations. ATM services in the United States must register with the Financial Crimes Enforcement Network (FinCEN) as a monetary services business and should keep records of their transactions, follow the know-your-customer protocols (KYC) and report any suspicious activity to the authorities.
But there are some who evade the above rules. In August 2019, a 25-year-old bitcoin trader in Los Angeles pleaded guilty that he did not register his bitcoin ATM business with FinCEN and that he recycled up to $ 25 million in criminal funds, including drug dealers.
In addition, last year, Spanish police reported that a local criminal gang involved in the international drug trade had actually circumvented European AML checks by laundering cash through two bitcoin ATMs and using "clean" encryption to pay suppliers in Colombia.
Tom Robinson, co-founder and chief scientist of the analysis company Elliptic, said that the new FATF guide nicknamed "Travel Rule" approved last year indicates that the more stringent AML / KYC requirements are now being implemented in all crypto-enterprises in the world.
Despite this, Robinson still shows concerns about how much this rule is applicable to bitcoin ATMs. "The situation is certainly improving, but it will take some time to ensure that these measures are applied globally," he said.
