Spanish Police — Bitcoin ATMs Promotes Money Laundering

Wilfred Michael 

Wilfred Michael

News reporter

11 July 2019,
16:22
Spanish Police — Bitcoin ATMs Promotes Money Laundering

Bitcoin ATMs are gradually proliferating into several jurisdictions of the world with 5400 of such machines mounted in 83 countries.

However, these seemingly simple machines that allow users to convert fiat into crypto and vice versa also provide an opportunity for money launderers according to Spanish authorities who are investigating one of such cases.

As per Bloomberg, the case in question involves eight Spaniards and Latin Americans who allegedly used Bitcoin ATMs to send at least $10 million worth of cryptocurrencies to drug traffickers in Columbia and other countries.

The men used the identity of nine different companies for the transfers and could pull off the trick because Bitcoin ATM operators are not subject to same strict AML rules that govern other financial services businesses in Spain and the rest of Europe.

Explaining further how the illegal transactions took place, two officials from a Spanish enforcement agency called Civil Guard revealed that the accused men hired two Bitcoin ATMs from unsuspecting trading platforms.

They installed them in an office in Madrid which they disguised as a remittance and crypto trading venue. To top up these machines with Bitcoin, they would send money through their bank accounts to the trading platforms they got the ATM from and purchased their desired units of Bitcoin.

Prospective ATM users would then have to deposit cash at these machines in exchange for a quick response code that allows them to redeem their Bitcoins and then send to drug traffickers anywhere in the world.

In specifying the exact loophole, the authorities acknowledged in the report that “the scheme provided justification for large amounts of cash to be deposited in bank accounts in Spain and abroad without raising red flags.”

They have confiscated two Bitcoin ATMs, four cold wallets, and 20 online wallets holding cryptocurrencies involved in the crime to try to prove the relationship between the machines and the seized funds.

In a similar development, we reported that Europol arrested six people behind a $27 million crypto theft.