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Bitcoin ATMs face stricter regulations over money laundering

According to experts, Bitcoin ATMs (BATMs) will face stern regulations globally, with countries such as Canada and Germany tightening up anti-money laundering regulations.

A recent report from CipherTrace states that about 74% of transactions made through U.S.-based Bitcoin ATMs were transferred from the country during 2019. The report also states that nearly 88% of funds sent through U.S. crypto ATMs to virtual currency exchanges were exchanged overseas. Exponential growth has been noticed in the figures over recent years, doubling every year since 2017.

CipherTrace CTO John Jeffries thinks that BATMs will become “a greater point of regulatory focus,”  focusing the need for more uniform regulatory enforcement and compliance” regarding crypto ATMs moving forward.

The report got published two days after new rulings took effect that was treating Canadian firms using virtual currencies as Money Service Businesses (MSBs).

According to Bitcoin Foundation Canada, the new legislation will purposedly affect firms that swap crypto for money, referring to Bitcoin ATM operators as the most heavily affected. It is now mandatory for all Bitcoin ATM operators to report all transactions worth $10,000 CAD or more.

The revised proceeds of the Money Laundering and Terrorist Financing Act were passed during Summer 2019 in spite of calls from the mayor of Vancouver to observe a city-wide ban on Bitcoin ATMs over money-laundering issues. According to a report, there are approximately 778 crypto ATMs working in Canada — which is about 10% of the 7,958 terminals across the world.

Last year, the United States Internal Revenue Service (IRS) started an inquiry into illegal uses of cryptocurrencies, underlining potential tax issues as a result of the use of Bitcoin ATMs and kiosks.

The German Financial Market Authority, BaFin took strict action against unlicensed Bitcoin ATMs in March 2020. The crackdown led to the introduction of new anti-money laundering regulations filling gapes in Germany’s existing cryptocurrency regulations.