The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has issued a stark warning to financial institutions, urging them to closely monitor suspicious activity tied to convertible virtual currency (CVC) kiosks, commonly known as cryptocurrency ATMs.
The advisory comes amid a sharp rise in fraud complaints and mounting evidence that the machines are being exploited by scammers, cybercriminals, and transnational drug cartels.
Fraud Losses Nearly Double in a Year
According to the Federal Bureau of Investigation’s (FBI) Internet Crime Complaint Center (IC3), fraudsters are increasingly directing victims to deposit funds through CVC kiosks under false pretenses — from fake investment schemes to romance scams. In 2024 alone, IC3 received 10,956 complaints involving crypto kiosks, with losses totaling $246.7 million.
That figure marks a 99 percent increase in complaints and a 31 percent increase in losses compared with 2023. The Federal Trade Commission (FTC) also reported a surge, describing fraud losses linked to crypto ATMs as having “skyrocketed” in recent years.
Criminal Cartels Exploiting Kiosks for Laundering
Beyond consumer scams, FinCEN’s analysis of Bank Secrecy Act (BSA) data reveals that crypto kiosks are increasingly being misused to launder drug proceeds. The Drug Enforcement Administration (DEA) has warned that transnational criminal organizations (TCOs), including Mexico’s powerful Cartel Jalisco Nueva Generación, are adopting cryptocurrencies for rapid cross-border transfers.
In regions with heavy drug activity and dense clusters of crypto ATMs, TCOs have reportedly turned to kiosks as an alternative to traditional bulk cash smuggling. The Treasury cautioned that this trend underscores the growing convergence between digital finance and organized crime.
FinCEN’s Red Flags and Regulatory Reminder
The Treasury notice outlines illicit finance typologies associated with CVC kiosks and provides red flag indicators to help banks and financial service providers spot suspicious activity. Among the risks flagged are unusual transaction patterns, customer reluctance to provide identification, and repeated transfers to high-risk jurisdictions.
The agency reminded institutions of their obligations under the BSA, stressing that proper monitoring and timely suspicious activity reports are essential to combat emerging financial crime risks.
National Security and Policy Implications
Illicit activity tied to CVC kiosks falls squarely under three of FinCEN’s Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) National Priorities: fraud, cybercrime, and drug trafficking. By highlighting the role of kiosks in these categories, the Treasury is signaling that enforcement and oversight will intensify.
While cryptocurrency advocates argue that kiosks democratize access to digital assets, regulators warn that the same convenience is being exploited by criminals — threatening consumer protection, financial integrity, and national security.
“Crypto ATMs may look like ordinary cash machines,” one Treasury official noted, “but for organized crime and scammers, they have become a tool of choice.”
As law enforcement ramps up investigations and financial institutions face mounting compliance expectations, the battle over CVC kiosk regulation is poised to become a critical front in the U.S. government’s wider campaign against illicit finance.
For more information, the full notice can be accessed below.
By FCCT Editorial Team
