Virtual currency ATMs are increasingly being used to launder illicit drug proceeds, a federal agency in the United States has warned.
The Drug Enforcement Administration (DEA), in its annual National Drug Threat Assessment report, warns that criminals are integrating virtual currencies into money laundering methods, and there has been a rise in the use of virtual currency ATMs by launders.
It said: “Increasingly, money laundering organisations are using virtual currency automated teller machines (ATMs) to aid in the movement of illicit bulk currency.
“These ATMs are specifically designed to accept fiat currency in exchange for virtual currency and are subject to federal AML regulations. Despite these regulations, unscrupulous owners of these machines utilize their functions to assist in obfuscating drug proceeds.
“Money couriers deposit large volumes of cash into these machines to convert the value to virtual currency; the cash in the machine is then integrated into the revenue stream of the owner of the ATM to hide the origin of the funds.”
The DEA said that once the drug proceeds are in virtual form they can be easily transferred to other virtual currency users, removing much of the risk associated with transporting currency,.
The report also said that launders were increasingly incorporating virtual currency into Trade-Based Money Laundering (TBML) activity. Bulk currency contracts are fulfilled through the use of virtual currency instead of case, the fiat currency “recycled into the TBML cycle.”
The Financial Crimes Enforcement Network considers virtual currency ATMs to be Money Services Businesses. This means they have to register and meet requirements under the Bank Secrecy Act, including maintaining an Anti-Money Laundering programme.
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