Bitcoin ATMs Face Tighter Regulations Over Money Laundering

Published at: June 3, 2020

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.

Tags
Bitcoin
Regulation
Atm
Canada
Aml
Germany
Spain
Related Posts
Bitcoin ATM operators set up association to counter money laundering
Major Bitcoin (BTC) ATM operators in the United States are joining forces to fight illicit activity related to Bitcoin ATMs. Bitcoin ATM operators DigitalMint and Coinsource have launched the Cryptocurrency Compliance Cooperative (CCC), a new association that aims to establish compliance standards for the Bitcoin ATM industry. The new compliance effort has launched with support from major blockchain analytics firms, such as Chainalysis and Elliptic, among its 15 initial members. The CCC is now encouraging participation from cash-based crypto money services businesses, regulators, financial institutions, as well as non-state and law enforcement agencies. The association specifically targets Bitcoin ATMs to …
Bitcoin / Aug. 26, 2021
Owning a Bitcoin ATM is about to get a lot harder in Germany
In an effort to increase the country's legal overwatch, Germany now says Bitcoin (BTC) ATMs require regulatory approval before they are allowed to operate. ATMs that offer assets such as Litecoin and Bitcoin now requires a license from Germany's financial regulator, BaFin, a Sept. 8 statement from the entity said. "Proprietary trading is a financial service and financial commission business is a banking business, for which prior approval from BaFin is required." This does not appear so much as a new ruling as it does a clarification of current legal requirements. "Those who set up such crypto machines that do …
Bitcoin / Sept. 9, 2020
German Financial Regulator Takes Action Against First Bitcoin ATMs
The German financial watchdog is stopping the operations of a company KKT UG from Berlin that allows consumers to buy and sell cryptocurrencies at ATMs. Lack of necessary permission According to a March 4 statement, BaFin ordered Mr. Adam Gramowski, who runs KKT UG as managing editor, to cease cross-border proprietary trading. The order was issued on Feb. 26. On its website www.shitcoins.club, the company advertises 24 bitcoin machines für purchase and sale of cryptocurrencies in Germany. Moreover, its business apparently extends across the whole of Europe. According to his LinkedIn profile, Gramowski also works as CEO of Bitcoin Technologies …
Bitcoin / March 6, 2020
Canada’s New AML Rules Have Room for Improvement but a Good Start, Eh?
As the world’s supervisory agencies start to heed the crypto guidelines of the Financial Action Task Force, a new regulatory landscape is taking shape within the crypto industry. The latest country to annex the FATF directives is Canada, but how will the new rules impact crypto business in the country? In a report released March 10, the Financial Transactions and Reports Analysis Center of Canada, or FINTRAC, unveiled plans for an “enhanced AML regime.” Come June 1, 2020, FINTRAC will treat all crypto firms as money service business, or MSB. This will place added scrutiny on cryptocurrency transfers, customer identification …
Bitcoin / March 29, 2020
Bank of Spain issues registration guidelines for crypto services
The central bank of Spain is introducing new registration guidelines for local virtual currency service providers, or VASPs, including banking institutions. The Bank of Spain has issued instructions on VASP registration for Anti-Money Laundering, or AML, purposes, requiring institutions to submit their registration requests through an electronic registry, Cointelegraph en Español reported Oct. 25. Issuing the guidelines on Oct. 19, the Spanish central bank noted that the obligation to sign up in the registry applies to “all individuals and institutions providing virtual currency exchange services” like cryptocurrency trading and custody services. The regulator stressed that VASPs will have to register …
Adoption / Oct. 26, 2021