FinCEN Warns of Surge in Crypto ATM Fraud and Money Laundering by Cartels

U.S. regulators have escalated warnings about the misuse of cryptocurrency ATMs by criminal actors, particularly drug cartels and fraudsters. The Financial Crimes Enforcement Network (FinCEN) issued a series of advisories in late July and early August 2025, highlighting the growing exploitation of convertible virtual currency (CVC) kiosks for money laundering, fraud, and organized crime. The agency emphasized the need for heightened vigilance and stronger regulatory compliance across the industry [1].

According to recent reports, the FBI’s Internet Crime Complaint Center (IC3) received over 10,956 complaints in 2024 related to crypto ATMs, with losses exceeding $246.7 million—nearly double the number of complaints and a 31% increase in losses compared to the previous year [2]. These incidents often involve victims being tricked through social engineering tactics such as phishing, romance scams, or fake tech support calls into depositing funds through QR codes or kiosk interfaces, sometimes losing thousands of dollars instantly [3].

The threat extends beyond individual fraud. Transnational criminal organizations (TCOs) have increasingly used CVC kiosks to move illicit drug proceeds across borders. The Jalisco Nueva Generación cartel, for example, has been identified as a group leveraging these machines for money laundering, avoiding traditional cash smuggling methods in high-risk regions [4]. This trend has prompted regulators to call for more robust monitoring and reporting mechanisms to track suspicious patterns.

FinCEN has outlined a set of red flags to help financial institutions detect potential fraudulent activity, including deposits just below reporting thresholds, repeated use of multiple machines to bypass daily limits, and unusual transaction timing or location [1]. The agency urged institutions to improve transaction surveillance and promptly file suspicious activity reports.

Regulatory pressure on crypto ATM operators is intensifying, with calls for stricter compliance measures and operational adjustments. Some industry leaders, including U.S. Senator Dick Durbin, have proposed legislative actions such as transaction limits and mandatory consumer warnings [2]. Failure to comply could result in legal consequences and increased operating costs for businesses in the sector.

As the number of crypto ATMs continues to rise, so does the risk of exploitation. FinCEN’s alerts underscore a broader regulatory effort to combat financial crimes in the digital asset space, reinforcing the need for industry-wide cooperation to safeguard the integrity of the financial system [4].

Source: [1] FinCEN Warns Financial Institutions: Watch For Suspicious Activity At Crypto Kiosks (https://www.cutoday.info/site/Fresh-Today/FinCEN-Warns-Financial-Institutions-Watch-For-Suspicious-Activity-At-Crypto-Kiosks)

[2] FinCEN Issues List of Red Flags for Possible Crypto ATM Scams (https://bankingjournal.aba.com/2025/08/fincen-issues-list-of-red-flags-for-possible-crypto-atm-scams/)

[3] FinCEN Warns Financial Institutions About Rising Crypto ATM Crimes (https://coincentral.com/fincen-warns-financial-institutions-about-rising-crypto-atm-crimes/)

[4] FinCEN Warns of Crypto ATM Misuse by Criminals (https://www.fincen.gov/sites/default/files/shared/FinCEN-Notice-CVCKIOSK.pdf)