According to the Drug Enforcement Administration (DEA) of the United States Department of Justice, during 2020 drug traffickers relied on bitcoin ATMs to carry out illicit money transfers.
The findings of the agency were published this March 2 in a report, in which they indicate that last year these ATMs served criminals to make cross-border transfers, avoiding them having to physically transport money . This, because international shipments, particularly between the US and Mexico, were suspended for much of last year due to the coronavirus pandemic.
Due to the quarantines established in many countries, ” large amounts of money that had to be delivered to international drug dealers were stuck in the United States ”, indicates the DEA in the document.
Although does not offer statistics on the crimes committed With bitcoin ATMs , the agency adds that this circumstance led to the use of these machines more and more in money laundering operations, to facilitate the movement of money.
In the document, entitled “National Evaluation of Threat to Drugs 2020”, it ensures that the use of ATMs has increased as the use of bitcoin is adopted more widely.
Reports have revealed that the number of cases and n which contracts between drug cartels are closed in currency, mediating with cryptocurrencies instead of cash .
“This money is integrated later in the TBML cycle ”(trade-based money laundering).
Virtual currencies create new opportunities for trade to expand, as well as so that criminals can more easily launder the illicit product. Cryptocurrencies such as bitcoin have been increasing in popularity, both among the public and criminals, due, in part, to the ability of these types of virtual currencies to change hands quickly without limits on the amount transferred.
The process to launder money with ATMs
The report remembers that ATMs for the sale of cryptocurrencies are designed to accept fiat currencies, which they convert into virtual currencies.
In the United States there are about 13,879, according to data from the CoinATMRadar page. The vast majority are subject to anti-money laundering (AML) regulations . Even in some parts of the country, such as New York, a license is required for them to operate.
However, “despite the regulations, the owners of these machines they have no qualms about using their functions to help obfuscate drug money, “says the DEA. The process involves the deposit of large volumes of cash in these machines to convert their value to cryptocurrencies .
“This cash is then integrated in the income stream of the ATM owner, hiding the origin of the funds ”, the report continues.
In this way, the value of the drug, converted into digital currency, can be transferred easily to another user instantly, eliminating much of the risk associated with carrying large amounts of cash.
Laundering money with bitcoin ATMs is not as easy as it seems
The issue of the commission of illicit activities with bitcoin ATMs has been worrying the authorities of several countries for some time some years. They have come to classify them as a blind spot for regulations against money laundering, and even the media have echoed this idea.
CriptoNoticias explained in 2018 the reasons why is not a good idea to launder money with a bitcoin ATM . One of the problems for the criminal is that some tellers ask for identification and take a photograph of users, applying regulations to know the customer (KYC).
However, according to the DEA, drug traffickers have found a way to evade this control, using ATMs not included in the official lists and not available for use by the general public. “They are kept hidden for the exclusive use of money launderers.”
Even so, we must also consider that bitcoin transactions are pseudonymous and public. They can be consulted through a block explorer, which makes it possible to associate an address with a certain identity.
This is how, using the properties of the blockchain for tracking, the research firm Chainalysis was able to determine that only 0.34% of transactions made with cryptocurrencies in 2020 were associated with illegal activities .
In its most recent report , the firm found that money laundering with bitcoin and other cryptocurrencies is increasingly centralized in few addresses and entities .
“Mainly, the destination addresses of illicit funds belong to large bitcoin and cryptocurrency exchanges, through which criminals pass the money obtained to fiat or other cryptocurrencies, ”said Chainalysis. “But we also see gambling sites, platforms in high-risk jurisdictions, or services for mixing or obfuscating transactions with cryptocurrencies involved in the process.”