In a concerning trend, TRM Labs found that illicit activity at crypto ATMs is significantly higher than in the broader crypto industry.
This has prompted law enforcement and regulators across the world to leverage blockchain intelligence to investigate fraud and financial crime involving these machines.
Increasing Illicit Activity at Crypto ATMs
According to the latest report by TRM Labs, these cash-to-crypto services, which allow users to exchange physical currency for digital assets, have processed at least $160 million in illicit volumes so far since 2019.
In 2023 alone, the proportion of illicit transactions at crypto ATMs reached 1.2% of their total volume, compared to just 0.63% for the entire crypto ecosystem.
The blockchain intelligence platform said that this disparity highlighted the unique vulnerabilities of crypto ATMs to fraud and money laundering. Unlike traditional cryptocurrency exchanges, these machines often lack stringent Know Your Customer (KYC) and Anti-Money Laundering (AML) protocols, making them attractive to criminals seeking to move funds anonymously.
The report also revealed that over $30 million of illicit volume in 2023 was linked to known scam addresses, emphasizing the role of crypto ATMs in facilitating fraudulent schemes.
The findings come as global regulators intensify their scrutiny of the cash-to-crypto sector. In Germany, authorities recently seized 13 unlicensed Bitcoin ATMs and confiscated nearly EUR 250,000 in cash, underscoring the ongoing efforts to curb illegal activities associated with these machines.
Similar crackdowns have been seen in other countries, including the UK and the United States, where regulatory bodies have shut down numerous illicit ATMs in recent years.
Australia’s Crypto ATM Boom
Amidst concerns that these machines could be exploited by bad actors for money laundering and other illicit activities, the adoption of crypto ATMs in Australia has skyrocketed. In the past two years, TRM Labs found a staggering 17x increase in the number of kiosks in the country.
This rapid growth has positioned Australia as the third-largest market for crypto ATMs globally, trailing only behind the United States and Canada. The surge reflects rising demand for convenient access to digital assets, particularly in a country where crypto adoption is steadily climbing.
However, this expansion also brings increased scrutiny from regulators concerned about the potential for these machines to be used in illicit activities. As the number of ATMs grows, Australian authorities are ramping up efforts to ensure that operators comply with AML protocols, aiming to strike a balance between fostering innovation and safeguarding the financial system.
