Crypto ATMs – A New Frontier for Criminal Activity, Warns U.S. Treasury

The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has issued an urgent notice to financial institutions, highlighting the rising threat of illicit activity linked to Convertible Virtual Currency (CVC) kiosks, commonly known as cryptocurrency ATMs.

The warning underscores growing exploitation of these kiosks by scammers, cybercriminals, and drug trafficking organizations, as highlighted in FinCEN’s recent Notice (FIN-2025-NTC1).

Surge in Crypto Kiosk-Related Fraud

CVC kiosks are ATM-like devices that allow consumers to exchange cash for cryptocurrencies such as Bitcoin, Ethereum, and stablecoins, or vice versa.

While these kiosks offer ease of access for the public, their rapid expansion and sometimes lax compliance controls have made them attractive targets for illicit actors.

According to FBI Internet Crime Complaint Center (IC3) data, over 10,956 complaints involving CVC kiosks were reported in 2024, a staggering 99% increase in incidents and a 31% rise in reported losses compared to the previous year.

Total victim losses reached approximately $246.7 million, with the Federal Trade Commission (FTC) confirming a parallel spike in crypto ATM fraud.

FinCEN’s analysis, coupled with law enforcement reports, shows that transnational criminal organizations, such as the Cartel Jalisco Nueva Generación, increasingly use crypto ATMs to launder money and facilitate rapid international transfers.

In U.S. jurisdictions with high drug traffic and large numbers of CVC kiosks, such as Chicago, criminals and scammers have taken advantage of weak compliance programs to move illicit proceeds and evade law enforcement detection.

Key Scam Typologies and Regulatory Gaps

The Treasury’s notice details how criminals, particularly targeting elderly Americans, employ a range of scams, including tech support, bank imposter, romance, and government impersonation frauds, persuading victims to withdraw cash and send it via CVC kiosks.

Once funds are transferred, transactions are instantaneous, irreversible, and quickly routed through multiple wallets or exchanged for stablecoins, making recovery virtually impossible.

FinCEN points to cases where CVC kiosk operators failed to comply with essential Bank Secrecy Act (BSA) obligations, including registering as Money Services Businesses (MSBs), collecting customer identification, and reporting suspicious transactions through Suspicious Activity Reports (SARs).

In some states, up to one in three operators were found unregistered, enabling further abuse by scammers and criminal networks.

Red flag indicators for financial institutions include multiple small transactions below mandatory reporting thresholds, rapid movement of funds, transactions involving geographically disparate customers but the same crypto wallet address, and older customers with no previous crypto history making high-value deposits.

Financial Institutions Urged to Tighten Controls

FinCEN’s notice reminds all financial institutions, banks, credit unions, and CVC kiosk operators of their duty to comply with anti-money laundering (AML) and countering the financing of terrorism (CFT) laws.

The agency calls for stronger transaction monitoring, swift SAR filings with explicit references to “FIN-2025-CVCKIOSK,” and enhanced information-sharing across institutions under the USA PATRIOT Act Section 314(b).

With the number of crypto ATM skyrocketing from just over 4,000 in 2019 to more than 37,000 today, U.S. authorities are intensifying efforts to safeguard digital asset infrastructure and protect consumers from rapidly evolving cyber-enabled fraud.