The Cryptocurrency Compliance Cooperative includes several blockchain intelligence firms, banks and anti-human trafficking associations.
With Bitcoin ATMs increasingly under scrutiny as a tool of money launders, drug traffickers and other criminal organizations, a group of automated teller machine operators have formed an anti-money laundering and industry advocacy alliance.
The Cryptocurrency Compliance Cooperative seeks to legitimize the cash-to-cryptocurrency industry by setting regulatory compliance standards, establishing best practices, and building relationships with law enforcement, regulators and banks.
There are currently 42,000 Bitcoin ATMs
— or BTMs — in the U.S. alone. As the industry booms
, the use of those machines
by organized criminal gangs and money laundering organizations (MLO) is a growing concern, according to the U.S. Drug Enforcement Administration (DEA) intelligence program’s 2020 National Drug Threat Assessment
“Despite federal anti-money laundering regulations, these regulations, unscrupulous owners of these machines utilize their functions to assist in obfuscating drug proceeds,” the NDTA found. “Increasingly, MLOs are using virtual currency automated teller machines to aid in the movement of illicit bulk currency.”
Bitcoin ATM’s are subject to the same anti-money laundering (AML) and know-your-customer (KYC) regulations requiring banks and other money transferring companies.
By using BATMs to turn cash into Bitcoin, criminals not only get access to the mixing services
and other ownership obfuscation tools available in the cryptocurrency industry, they get a first stage money launder by integrating illicit funds into the ATM owner’s revenue stream, the NDTA said.
It’s a problem some leading BTM operators readily acknowledge.
“The nefarious use cases plaguing this industry are well documented by several law enforcement agencies, and include fraud, elder abuse, and drug and human trafficking,” said Seth Sattler, director of compliance for BTM provider DigitalMint
, a CCC founder. “While a small number of Bitcoin ATM operators go above and beyond with KYC 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.”
Some BTM operators require no more KYC proof of identity documentation than a cell phone number, said Bo Oney, EVP of operations and head of compliance for BATM provider Coinsource
, a CCC co-founder. In New Jersey, state investigators found that almost 75% of BTM operators do this.
"Such lax provisions provide a safe haven for bad actors to abuse the machines for nefarious purposes,” he said. “The CCC is seeking to bolster regulatory requirements for the benefit of all BTM users and operators.”