Drug Trafficking Group in Spain Used Crypto ATMs for Money Laundering

Crypto Bitcoin ATM

With cryptocurrency came a lot of innovative developments. One of such innovations is the creation of ATM-like machines specifically for dispensing virtual currencies.

These machines function like the conventional automated teller machines (ATMs). You can put in a specific amount to get the equivalent worth in crypto coins or convert the cryptocurrencies in your wallet to fiat currency and withdraw the hard cold cash. This development was highly welcomed in the crypto community, only that it happens to fall short of some basic financial rules.

During a police investigation in Spain, Spanish police discovered that there is a loophole in these so-called Bitcoin ATMs that is readily exploited by money launderers. The Spanish police stumbled upon this discovery during the investigation of an ongoing money laundering case where a group of money launderers used two Bitcoin ATMs to finance their scheme.

Report has it that the laundering group, which consists of eight Spaniard and Latin-Americans, allegedly used nine crypto exchanges to make transfers worth over $10 million for drug trafficking, supposedly in Colombia and other countries.

The group reportedly wielded two Bitcoin ATMs and installed them in Madrid in disguise that they operate a center for trading cryptocurrencies and sending remittances.

Unbeknownst to the trading platforms, the ATMs were in fact a means to fund their illegal activities. Members of the group allegedly registered under fake identities and deposited cash in the machine, as the deposited cash can then be converted to Bitcoin and transferred to drug traffickers in other countries. This made it easy for their illicit activities to go unscathed.

Investigating how the group was able to execute this scheme without raising brows, the investigating police learned that Bitcoin ATMs do not fall under EU’s money laundering rules, making it a very lucrative hideout for money launderers.

This isn’t much of a surprise as these machines are pretty new in the market. Just like crypto in general, financial regulators are yet to get a hang of these new innovations. Hopefully, existing regulatory framework will catch up on these new innovations.

Speaking of which, the New European Union legislation proposed to be implemented come 2020 has decided to include crypto exchanges and custodians of online wallets in the new anti-money laundering laws. This means that crypto exchanges and online wallet holders will now be compelled to vet their clients just like other financial markets such as banks and jewelry dealers.

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