FinCEN Cracks Down on Cryptocurrency Kiosks Amid Rising Financial Crimes
On August 4, 2025, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued a critical notice addressing the escalating misuse of convertible virtual currency (CVC) kiosks, commonly known as cryptocurrency ATMs, which have become a growing conduit for financial crimes including fraud, money laundering, and elder scams.
CVC kiosks are electronic terminals that facilitate the exchange of fiat currency, such as cash or card payments, for cryptocurrencies like Bitcoin and Ethereum. Found frequently in retail locations such as convenience stores, these kiosks offer a convenient entry point into digital assets for many consumers. Users typically verify their identities by providing information ranging from phone numbers to government-issued IDs, and transactions involve scanning or entering personal crypto wallet addresses to transfer virtual currencies instantly or near-real-time through connected exchanges or operator inventories.
Despite their convenience, FinCEN’s notice highlights substantial vulnerabilities. The inherent anonymity and limited oversight compared to traditional banking channels make these kiosks attractive for illicit use. Criminals leverage the system especially by directing scam victims, often older adults, to send payments via these kiosks under false pretenses. Financial institutions are urged to flag suspicious activities, including accounts with minimal transactional activity or the reuse of identical contact details across multiple accounts, which may indicate fraudulent patterns.
Surge in Fraud and Regulatory Risks
Fraud complaints involving CVC kiosks surged by 99% between 2023 and 2024, with reported victim losses nearing $246 million. Elder fraud represents a significant share of these cases, with over two-thirds of losses impacting seniors targeted by scammers impersonating trusted entities like tech support or government officials.
Moreover, the Drug Enforcement Administration (DEA) has identified drug cartels exploiting CVC kiosks to launder illegal proceeds. These kiosks’ widespread presence in high-traffic areas makes them an effective instrument for criminal organizations to disguise illicit funds.
FinCEN’s Compliance and Enforcement Guidance
The notice reiterates that CVC kiosks are classified as money services businesses (MSBs) and, as such, must comply with the Bank Secrecy Act (BSA). This entails registering with FinCEN, implementing robust anti-money laundering (AML) programs, conducting customer due diligence, and filing suspicious activity reports (SARs) when warranted.
However, FinCEN found many kiosk operators lacking adherence to these obligations, including failures in registration and AML measures, increasing their susceptibility to exploitation.
Financial institutions holding accounts for CVC kiosk businesses are instructed to perform enhanced due diligence, monitor transactions closely, and remain vigilant for red flags such as:
- Multiple accounts linked to the same contact information
- Customer accounts showing little to no activity before sudden large transactions
- Unusual patterns inconsistent with expected kiosk operations
Implications for Financial Institutions
FinCEN’s notice urges banks and credit unions to strengthen risk management frameworks related to crypto kiosks. This includes training staff to identify sophisticated fraud schemes, updating transaction monitoring systems, and ensuring timely SAR submissions to help safeguard the digital asset ecosystem. Institutions are also cautioned about potential operational and reputational risks stemming from associations with noncompliant kiosk operators.
Even financial institutions that opt not to service CVC kiosk operators benefit from understanding the risks, as these technologies increasingly intersect with broader financial markets and consumer protection concerns.
Looking Ahead
FinCEN’s proactive regulatory stance underscores the federal government’s commitment to curbing illicit activity in the rapidly evolving digital asset landscape. By shining a spotlight on cryptocurrency kiosks, the agency aims to close loopholes exploited by criminals and protect vulnerable consumers while supporting legitimate businesses in the cryptocurrency space.
As CVC kiosk usage continues to climb, operators, financial institutions, and regulators must collaborate actively to promote transparency, enforce compliance, and deter financial crime.