Wisconsin Takes Aim at Crypto ATM Scams with New Legislation
The US state of Wisconsin has introduced a new draft law aimed at curbing fraud associated with crypto payment machines. Senator Kelda Roys, along with six other Democrats, presented the Senate 386 draft law on Monday, which accompanies an earlier legislative template submitted in the lower house by democratic representative Ryan Spaude on July 31. The proposed legislation requires crypto money machine operators to obtain a money transfer license to operate in the state and collect user information, including name, date of birth, phone number, address, and email.
The submission of identical legislative templates in both chambers is a strategic move to increase the likelihood of a successful legislative process and accelerate the procedure, as both chambers can consider the proposals simultaneously. According to the invoices, crypto-ATM operators must collect a government-issued document from customers, such as a passport or driver’s license, and take a photo of the customer. Operators must also check the identity of their customers for each transaction, and users are limited to transactions worth $1,000 per day.
Warning Signs and Fee Limitations
The invoices require that warning signs be placed “in the customer’s field of vision” on the front of the machine, alerting users to the potential for fraud. Crypto money machines generally charge higher fees than online crypto exchanges, and the invoices propose limiting the fees that operators can charge to a flat fee of $5 or 3% of the transaction value, whichever is higher. Operators must also fully reimburse customers if an ATM is used to process a fraudulent transaction, such as one involving a scammer, or if the operator is contacted by law enforcement authorities and confirms that the transaction was fraudulent within 30 days.
Fincen Warns of Crypto ATM Fraud
On August 4, the US Financial Crimes Enforcement Network (FinCEN) issued a warning to financial institutions to report suspicious transactions on crypto ATMs. FinCEN director Andrea Gacki stated that “criminals are relentless in their efforts to steal money and have learned to use innovative technologies such as CVC [convertible virtual currency] kiosks.” FinCEN identified fraud, cybercrime, and drug trafficking as the top three illicit activities carried out via crypto money machines.
Global Crackdown on Crypto ATMs
Crypto money machines have come under scrutiny from regulatory authorities worldwide due to concerns about their use in illicit activities. On July 17, New Zealand banned all crypto ATMs across the country, citing their use in money laundering and terrorist financing. The UK has also taken action, with regulatory authorities confiscating seven crypto ATMs in July and arresting two individuals in southwest London on suspicion of money laundering and operating an illegal crypto exchange.
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