AUSTRAC initiates crypto ATM crackdown

Australia’s financial intelligence and crimes investigation agency AUSTRAC has launched a targeted crackdown on cryptocurrency ATMs (CATMs), with the crypto industry set to be in the agency’s crosshairs over the next year.

AUSTRAC will form a dedicated cryptocurrency taskforce targeting potential money laundering, fraud and other financial crime activities associated with CATMs.

The internal taskforce will focus on digital currency exchanges (DCEs) that provide CATM services, ensuring they meet both minimum standards under the AML/CTF Act and that their machines are not being used to ferry money associated with scams, fraud or other proceeds of crime.

CATMs, or crypto kiosks, which are growing in number across Australia, enable individuals to purchase a variety of cryptocurrencies, including Bitcoin or Dogecoin, in cash, credit/debit cards or via their digital wallets.

Criminals are known to make use of these machines to launder illicit funds, with money fed into CATMs (sometimes multiple times) in return for typically untraceable crypto assets.

AUSTRAC estimates that more than 1,200 CATMs currently operate in Australia – the third highest number worldwide after the US (which accounts for around 80% of CATMs, with 32,000 machines), and Canada (which hosts around 3,000 machines), according to data from Coin ATM Radar, which tracks the global distribution of CATMs.

While around 400 DECs are registered with AUSTRAC, only a small handful operate CATMs, the agency notes.

Crypto ATMs are currently banned in the UK (though a number reportedly still operate in the country illegally) and Singapore.

AUSTRAC chief executive Brendan Thomas warned that the agency will take action against operators who flout the rules.

“Cryptocurrency ATM providers need to ensure they are complying with their money laundering obligations and are reducing the risks of crime.

“If they’re ignoring those obligations they risk being subject to significant financial penalties and AUSTRAC won’t hesitate in taking action.

According to Thomas, the CATM crackdown is the “first step in AUSTRAC’s focus to reduce the criminal use of cryptocurrency in Australia”.

“We will be focusing on this industry over the course of next year,” he added.

According to TRM, a blockchain intelligence firm, CATMs have processed at least US$160 million ($248.3 million) in illicit funds globally since 2019.

Last year, illicit volumes in the cash-to-crypto industry stood at 1.2% of total volume, double the 0.63% for the overall crypto ecosystem.

Thomas underscored the risks that cryptocurrency and CATMs pose, offering criminals “attractive avenues… to launder money”, being “widely accessible and make near-instant and irreversible transfers”.

“We’re seeing too many Australians falling victim to scams carried out through cryptocurrency, and we’ve heard of some victims losing their life savings, which is just heartbreaking.

“As the use of cryptocurrency increases, so too will criminal exploitation, which is why this taskforce will work to eliminate non-compliant high-risk operations.”

AUSTRAC re-emphasised the obligations of all crypto exchanges under the Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Act 2006. The agency notes that, beyond their requirement to register with AUSTRAC, DECs must also:

• undertake transaction monitoring
• complete know your customer (KYC) information checks on customers
• report suspicious activity in suspicious matter reports (SMRs)
• submit threshold transaction reports (TTRs) for cash deposits and withdrawals of $10,000 or more.