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FinCEN Issues Alert on Cryptocurrency ATMs’ Role in Scams
The Financial Crimes Enforcement Network (FinCEN), part of the U.S. Treasury, has raised alarms regarding the rising criminal activity associated with cryptocurrency ATMs, commonly termed Convertible Virtual Currency (CVC) kiosks. These kiosks, which facilitate exchanges between fiat currency and cryptocurrency, are increasingly being targeted for scams, money laundering, and drug trafficking.
The Scam Tactics
Scammers are employing various deceptive tactics to exploit unsuspecting victims. These perpetrators often masquerade as tech support representatives, government officials, or romantic interests. They pressure victims, particularly the elderly, to withdraw funds from their bank or retirement accounts, convert these funds into cryptocurrency via CVC kiosks, and subsequently transfer the crypto to wallets controlled by the scammers. The appealing anonymity, speed, and irreversible nature of cryptocurrency transactions enable these criminals to swiftly funnel away funds, making recovery exceedingly difficult.
The Alarming Statistics
According to the FBI’s Internet Crime Complaint Center, there were more than 10,900 reports of incidents involving CVC kiosks in 2024, resulting in total losses of approximately US$246.7 million (AU$381.2 million). This represents a staggering 99% increase in the number of complaints and a 31% rise in financial losses compared to the previous year. The Federal Trade Commission has reported that a disproportionate 66% of these losses were incurred by elderly individuals.
Criminal Networks’ Use of Cryptocurrency
FinCEN has identified that transnational crime organisations, including Cartel Jalisco Nueva Generación, are leveraging cryptocurrency to transfer illicit drug profits both across the nation and internationally. Areas such as Illinois, and specifically Chicago—with its substantial concentration of over 1,100 kiosks—are hotspots for traffickers who are opting for cryptocurrency to bypass traditional cash smuggling methods.
Regulatory Shortcomings
Despite being categorised as Money Services Businesses under the Bank Secrecy Act, many CVC kiosk operators fail to uphold the requisite anti-money laundering regulations. Non-compliance remains a significant issue, with some kiosks misrepresenting their compliance statuses to financial institutions, or even operating without proper licenses.
To counter this growing trend, FinCEN urges financial institutions to strengthen monitoring systems and file Suspicious Activity Reports when necessary, referencing the term ‘FIN-2025-CVCKIOSK’ for such incidents.
FinCEN Director Andrea Gacki emphasised the United States’ commitment to protect the integrity of the digital asset ecosystem for legitimate entities, stating, "This Notice supports Treasury’s continuing mission to counter fraud and other illicit activities. Financial institutions are crucial partners in that endeavour."
In summary, the rapid proliferation of CVC kiosks, while enabling greater access to cryptocurrency, also presents significant risks as criminals exploit regulatory loopholes and the anonymous nature of such transactions. It is imperative for both regulatory bodies and financial institutions to take proactive measures in curbing this trend to safeguard consumers and maintain the integrity of the financial system.
