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Bitcoin ATM Operators to Combat Money Laundering

They’re locking down more secure ways to prevent this egregious act.

Blockwatch ATM
Photo by AS Photo Studio

Major players in the Bitcoin ATM business like DigitalMint and Coinsource have banded together to fight illegal activity. 

The aforementioned companies have together launched the Cryptocurrency Compliance Cooperative, or CCC. Its goal is to set compliance standards for the ATM industry for Bitcoin. 

Launched with the backing from big blockchain analytic firms like Chainalysis and Elliptic, the CCC now stands to encourage people to participate in cash-based crypto money service businesses, regulators, and non-state as well as law enforcement agencies.

But why the focus on Bitcoin ATMs specifically? Well, it’s simple. The association targets KYC (or Know Your Customer) and Anti-Money Laundering (AML) compliances as these specific ATMs usually don’t have KYC requirements, which makes them an easy target. On the matter, the head of compliance at Coinsource, Bo Oney had this to say:

“Unfortunately, many BTM operators feel that merely asking for a cell phone number is enough due to diligence to absolve them of their mandated KYC requirements,”

He continued, “Such lax provisions provide a safe haven for bad actors to abuse the machines for nefarious purposes. The CCC is seeking to bolster regulatory requirements for the benefit of all BTM users and operators. This will require input from the most knowledgeable in the industry, all with the goal of making the cash-to-crypto space as safe as possible for all consumers.”

Director of compliance for DigitalMint as well as a leading CCC contributor Seth Sattler, stated that illegal usage of these ATMs within the industry are in fact very well documented by multiple law enforcement agencies. This would include fraud, elder abuse, and human trafficking. 

Sattler was quick to note that “While a small number of Bitcoin ATM operators go above and beyond with KYC and AML protocols, others in the cash-to-crypto industry simply turn a blind eye and are complacent to these bad actors by simply applying the bare minimum customer protections, which in many cases allow for completely anonymous transactions.”

In addition to Bitcoin and traditional ATMs is a Kiosk. This gizmo allows people to buy or sell Bitcoin as well as other cryptocurrencies using either their debit card or cash. There are currently more than 42,000 BTMs in the United States if the data by the BTM tracking website is to be believed. 

The lack of security steps asked of a user when using Bitcoin ATMs is concerning to say the least. In February, The State of New Jersey Commission of Investigation uncovered the fact that 75% of these BTM operators would let users engage in transactions without any additional info other than their cellphone number. Of course, last year a CipherTrace executive made an apt prediction citing that BTMs would face tighter regulations worldwide to make things more secure, and true to said prediction, countries like Canada and Germany are already in the process of securing the necessary AML regulations. 


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