Criminals Exploit Cryptocurrency Automated Teller Machines for Illegal Drug Transactions and Elderly Fraud: Reports from Financial Crimes Enforcement Network
In response to the escalating issue of cryptocurrency ATM fraud, particularly affecting older adults, financial institutions and lawmakers are taking decisive action. The U.S. Financial Crimes Enforcement Network (FinCEN) has issued urgent notices and advisories, outlining red flag indicators for crypto ATM fraud and reminding financial institutions of their obligations under the Bank Secrecy Act to report suspicious activity.
FinCEN is encouraging banks to view cryptocurrency ATMs as a growing risk. They have highlighted that some operators of these ATMs are not following customer verification rules, making it easier for criminals to use them without detection. In light of this, FinCEN has referred to Convertible Virtual Currency (CVC) ATMs as being used in these fraudulent activities.
Lawmakers, under growing pressure amid surging scam losses, are proposing concrete regulatory frameworks. Senator Dick Durbin has introduced a bill aimed at addressing cryptocurrency ATM fraud. If passed, this bill would require crypto ATMs to display clear fraud warnings, mandate registration with the Treasury, share precise machine locations, issue detailed receipts to allow transaction tracing, impose transaction limits on new users, and establish a mechanism to reimburse fraud victims.
Several U.S. states, including Colorado, are also enacting laws to curb abuse by scammers. These measures include requiring crypto ATM owners to provide fraud warnings to customers and setting daily transaction caps.
Financial institutions are considered critical partners in safeguarding this digital asset ecosystem, tasked with detecting, reporting, and helping to prevent laundering and fraud linked to crypto ATMs. When filing a Suspicious Activity Report, FinCEN asks that banks use the term "FIN-2025-CVCKIOSK" to flag the case.
In 2024, the FBI received nearly 11,000 complaints about fraud through crypto ATMs, with total losses recorded at over $246 million. Most scams involving crypto ATMs target older people, with scammers posing as tech support, government officers, or romantic interests to convince victims to withdraw money and send it to a controlled wallet.
The Cartel Jalisco Nueva Generación, a major drug cartel based in Mexico, is using crypto ATMs across the U.S. to move money without relying on traditional smuggling routes. Chicago has been identified as a hotspot for crypto ATMs, with over 1,100 such machines.
Together, these efforts represent a multi-pronged approach by regulators and financial entities to mitigate the rapid rise in crypto ATM fraud and better protect vulnerable users. The goal of FinCEN’s efforts is to protect the digital asset space while combating its misuse.
| Measure | Description | |----------------------------------|---------------------------------------------------------------------------------------------| | Operator registration | Mandatory registration and sharing of machine locations with the Treasury | | Transaction limits | Caps on daily transactions, especially for new users | | Customer warnings | Requirement to inform users about fraud risks and scams | | Detailed receipts and tracing | Receipts allowing transaction tracking to aid investigations | | Enhanced monitoring & reporting | Financial institutions must watch for red flags and promptly report suspicious activity | | Victim reimbursement mechanisms | Proposed provisions to compensate victims of fraud |
- Financial institutions and lawmakers are taking decisive action in addressing the escalating issue of cryptocurrency ATM fraud, particularly affecting older adults, by proposing concrete regulatory frameworks and encouraging operators to follow customer verification rules.
- Senator Dick Durbin has introduced a bill aimed at addressing cryptocurrency ATM fraud, which, if passed, would require crypto ATMs to display clear fraud warnings, mandate registration with the Treasury, share precise machine locations, issue detailed receipts for transaction tracing, impose transaction limits on new users, and establish a mechanism to reimburse fraud victims.
- Several U.S. states, such as Colorado, are also enacting laws to curb abuse by scammers, requiring crypto ATM owners to provide fraud warnings to customers and setting daily transaction caps.
- In light of the growing concern about cryptocurrency ATM fraud, particularly due to its involvement in crime and justice matters, FinCEN has referred to Convertible Virtual Currency (CVC) ATMs as being used in these fraudulent activities and is urging banks to view cryptocurrency ATMs as a growing risk.
