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Bitcoin ATMs: Drug Traffickers’ Covert Tool For Money Laundering

As claimed by the US Department of Justice’s Drug Enforcement Administration (DEA), drug traffickers increasingly relied on crypto ATMs to support money laundering transfers last year. 

DEA also perceived a flood in Bitcoin (BTC) withdrawal of many dark web vendors last year, who feared “loss of funds.” DEA asserted that Covid-imposed lockdowns in 2020 delayed drug shipments, prompting funds to remain in escrow for more extended periods, which could depreciate before dealers were able to cash out.

During the pandemic, border restrictions between the US and Mexico, in particular, restricted physical cash flow. With money stuck with US-based traffickers, resorting to crypto ATMs became one way for drug dealers to transfer funds.

It must be noted that even crypto ATMs are supposed to abide by AML laws similar to other financial services firms. DEA alleged that some crypto ATM owners assist in obfuscating drug proceeds and are “traffickers,” incorporating cryptocurrency into trade-based money laundering TBML activity.

Investigators also discovered that large volumes of cash are converted to crypto via these ATMs. The machine’s money is then “integrated into the revenue stream” of the ATM owner to apparently “hide the origin of the funds.” 

The mentioned crypto ATMs used to facilitate crimes are often lowkey and exclusively used by “money launderers and couriers.” In addition to being “unlisted,” these ATMs can even be unavailable for public use.

Image Source: | Bitcoin ATM in Mexico City – Comicastle Comic book store

Currently, there are approximately 13,775 Bitcoin ATMs in the United States. The report did not mention any specific number of ATMs that were involved in the alleged activity. However, the 2020 National Drug Threat Assessment, which was published on 2 March, stated: 

The value of the original drug proceeds, now in a virtual form, can easily be transferred to another user of the virtual currency instantaneously, removing much of the risk associated with transporting large amounts of bulk currency. 

In 2020, darknet markets that offer illegal drugs and commodities received a total of $1.7 billion worth of cryptocurrency. Residents based in the US alone sent $115 million to darknet markets and received $64 million.

Overall, the total value people in the US sent to or received from darknet markets is $179 million.

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