Bitcoin ATMs a “Hole” in EU Anti-Money Laundering Rules

Published: 12 July 2019

bitcoin copy copyThere are over 5,000 Bitcoin ATMs in the world

By Maya Perry

Spanish police are raising questions about Bitcoin ATMs, which they say are currently not covered by the European Union’s anti-money laundering regulations, Bloomberg reports. 

The complaints come in the wake of an April take-down of an organized crime group suspected of operating a crypto money-laundering scheme on behalf of other organized crime groups, 

 The scheme that was intercepted involved two Bitcoin ATMs, which the members of the criminal groups were able to use anonymously to “launder” money from illegal drug exchanges.  

Officials from Spain’s Civil Guard said that prosecuting the case has proven difficult because of Bitcoin’s unclear legal status in Spain.

Moreover, while EU money-laundering legislation that will come into effect next year will require cryptocurrency exchanges to flag any suspicious monetary transactions, just as traditional banks are required to do, independently-run Bitcoin ATM owners would not be beholden to this regulation.  

As a result, sophisticated money laundering schemes may increasingly rely on independent Bitcoin ATMs, the Civil Guard sources told Bloomberg. 

The number of Bitcoin ATMs in the world surpassed 5,000 last month.

In Vancouver, where the first-ever Bitcoin ATM was set up in 2013, there has been a recent push to ban the machines altogether in light of the city's recently-revealed money laundering crisis

In early June, Vancouver police called Bitcoin ATMs “an ideal money-laundering vehicle” and a senior official, Sergeant Alvin Shum, wrote in a statement that “given the lack of a central authority, there is no controlling organization who can monitor or regulate the transfer of funds to ensure a legitimate transaction.”

The city’s mayor, Kennedy Stewart, has proposed an outright ban on the machines. 

Some have pointed out that pinning the money laundering crisis on cryptocurrency machines is misguided, however.

In government reports that were released earlier this year, it was revealed that an estimated US$7 billion was laundered through the Vancouver real estate market alone last year.