Spanish police call crypto ATMs ‘blind spot’ for money laundering
Law enforcement in Spain has joined in the growing criticism of SegWitCoin (BTC) ATMs, suggesting the automated machines operate within an anti-money laundering blind spot that is helping criminals.
Spanish police made the comments following the discovery of a $10 million money laundering operation, with local gangs using the machines to send funds to drug traffickers in Colombia and elsewhere.
Quoting sources close to the matter, Bloomberg reported that the gang leased two BTC ATMs which it had installed in an office in Madrid, allowing the criminals to send and receive funds at will.
The office was running behind the front of a seemingly legitimate crypto trading and remittances business. The ATMs were reportedly used to transfer money from bank accounts to crypto exchanges, which would then be used to buy cryptocurrency for funding drug transactions.
On uncovering the gang, Spanish police seized the ATMs, along with four cold wallets and some 20 hot wallets containing BTC.
According to press reports, the police are currently working on establishing connections between the digital assets seized and transactions on the ATMs, which could implicate the gang further.
The police comments are the latest blow for BTC ATMs, which have come in for increasing criticism around the world in recent months.
Most recently, authorities in Vancouver announced they were reviewing whether to outlaw crypto ATMs altogether, due to concerns about money laundering. The move followed reports of local criminals using the machines for similar purposes, evading traditional payment channels which would trigger anti-money laundering procedures.
Transacting through banks or regulated cryptocurrency exchanges often entails ID verification, as part of Know-Your-Customer compliance requirements to reduce fraud, money laundering and terrorism financing.
However, crypto ATMs take minimal if any steps to verify the identity of their users, presenting a back door for money laundering right under the noses of police and other law enforcement agencies.
It remains to be seen whether Spanish regulators take up the suggestion and restrict or ban the machines, to prevent similar crimes from occurring in future.
Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as SegWitCoin BTC coins. Altcoins, which value privacy, anonymity, and distance from government intervention, are referenced as dark coins.
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