FinCEN Heightens Scrutiny on Cryptocurrency Kiosks Amid Rising Financial Crime Risks

Washington, D.C., August 26, 2025 – The Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury, has issued an urgent notice addressing increasing concerns about the misuse of cryptocurrency kiosks, also known as convertible virtual currency (CVC) kiosks or crypto ATMs. These machines, which allow users to exchange physical cash or cards for cryptocurrencies like Bitcoin and Ethereum, are gaining popularity for their convenience but have simultaneously become conduits for fraud, money laundering, and other illicit financial activities.

What Are Cryptocurrency Kiosks and How Are They Used?

CVC kiosks are automated terminals found in public venues such as convenience stores and supermarkets that facilitate the exchange between fiat currency and digital assets. Users typically start a transaction by providing identification—ranging from phone numbers to government-issued IDs depending on operator compliance—before specifying a crypto wallet address to receive purchased funds. Payments are made in cash or by card, with the machine either connecting live with external exchanges or dispensing from pre-loaded inventories managed by kiosk operators. This ease of use has opened digital assets to new consumers, including those less comfortable with traditional financial services.

Emerging Risks — Fraud, Money Laundering, and Elder Abuse

While the accessibility of crypto kiosks benefits legitimate consumers, their relative anonymity and lower oversight compared to banks have been exploited by criminals. FinCEN reported that fraud complaints involving crypto kiosks surged by 99% between 2023 and 2024, with losses totaling approximately $246 million. Alarmingly, over two-thirds of these victim losses involved older adults, who are frequently targeted in scams where fraudsters impersonate government agencies or technical support to coerce victims into sending payments through CVC kiosks.

Beyond fraud, drug trafficking organizations have also leveraged these kiosks to launder illicit proceeds, concentrating activity in states with dense kiosk networks. The Drug Enforcement Administration (DEA) confirmed that kiosks located in high-traffic retail zones provide a convenient mechanism for criminals to integrate illicit funds into the financial system.

Regulatory and Compliance Shortcomings Among Kiosk Operators

FinCEN’s August 4 notice (FIN-2025-NTC1) highlights widespread noncompliance among CVC kiosk operators with the Bank Secrecy Act (BSA). Many operators have failed to register as money services businesses, neglected to implement anti-money laundering (AML) and counter-terrorist financing (CFT) programs, and inadequately conduct customer due diligence. This regulatory gap increases vulnerability to abuses and poses risks to associated financial institutions providing services to these businesses.

FinCEN’s Call to Action for Financial Institutions

FinCEN urges banks and other financial institutions to enhance vigilance when dealing with CVC kiosk operators and related transactions. Key directives include:

• Monitoring for red flags such as accounts with little activity or multiple accounts sharing identical contact details.
• Requiring thorough identity verification for kiosk transactions to mitigate fraud.
• Blocking suspicious accounts and filing suspicious activity reports (SARs) promptly when illicit behavior is suspected.
• Training staff to recognize emerging cybercrime risks linked to digital asset kiosks.
• Strengthening transaction monitoring to detect attempts at money laundering or scam payments.

Andrea Gacki, Director of FinCEN, underscored in the notice, “The United States is committed to safeguarding the digital asset ecosystem for legitimate businesses and consumers, and financial institutions are a critical partner in that effort.” This highlights the shared responsibility in curbing the misuse of financial technologies that, while innovative, are vulnerable to exploitation when oversight is insufficient.

Looking Forward

As cryptocurrency adoption continues its rapid expansion, the FinCEN notice marks a significant step towards tightening oversight of emerging technologies that blur lines between traditional financial services and decentralized digital assets. The cryptocurrency kiosk sector, poised at the intersection of convenience and risk, demands enhanced regulatory attention and proactive compliance efforts. Financial institutions are thereby positioned not only as facilitators of innovation but as essential gatekeepers against financial crime in the digital age.

For further information, financial institutions are encouraged to review FinCEN Notice FIN-2025-NTC1 and update their risk management frameworks accordingly.