How to Ensure AML Compliance on Bitcoin ATMs in the US?

Blog / How to Ensure AML Compliance on Bitcoin ATMs in the US?

The Bitcoin craze continues unabated. The interest in Bitcoins brings with it new inventions, for example, Bitcoin ATMs. Bitcoin ATMs allow people to buy Bitcoin and other cryptocurrencies.

In the United States, all Bitcoin ATM operators must register with the Financial Crimes Enforcement Network (FinCEN) and comply with the Anti-Money Laundering provisions of the Bank Secrecy Act (BSA).

How do Bitcoin ATMs work?

A Bitcoin ATM is not actually an automatic teller machine (ATM) that allows bank customers to physically withdraw, deposit, or transfer money from their bank account. Instead, it generates blockchain-based transactions that send cryptocurrencies to the user's digital wallet, typically using a QR code on a Bitcoin ATM. Instead, they are kiosks that connect to the Bitcoin network and allow customers to purchase crypto tokens with deposited cash. Bitcoin ATMs are rarely operated by large financial institutions and do not connect customers to a bank account.

Bitcoin buyers usually transfer the money they buy to the account corresponding to their Bitcoin wallet address with a QR code; if the buyer does not have a Bitcoin wallet, a new wallet can also be created at these ATMs. Many Bitcoin ATMs have an upper and lower limit for cash to deposit. Bitcoin ATM operators in the United States have to register with the FinCEN and comply with the Bank Secrecy Act (BSA) Anti-Money Laundering laws. Depending on the size of the transaction, as per regulations, ATM Bitcoin may request a mobile phone number to receive a text verification code. Or it may require you to scan government-issued IDs, such as a driver's license, before completing a transaction.

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Develop and Implement an AML Program

It is known that 60% of Bitcoin ATMs are located in the USA, and if you want to open a Bitcoin ATM in the US, first of all, the money services business (MSB) to the US Treasury's Financial Crimes Enforcement Network (FinCEN), the country's financial intelligence unit and the arbitrator of federal Anti Money Laundering must be registered. Institutions that register with FinCEN are now responsible for complying with FinCEN regulations; they must meet these responsibilities and meet regulatory expectations. In this context, an AML program should be developed and implemented for Bitcoin ATMs.

An effective AML program basically covers the measures taken to prevent money laundering activities of your Bitcoin ATM and to minimize the risks. Therefore, all AML Programs must be written and contain the following items:

  • Establish reasonably designed policies, procedures, and internal controls to ensure compliance with the BSA.
  • Designate a compliance officer responsible for daily compliance with the BSA and AML programs. The compliance officer must have the expertise to necessarily equalize the risk of a particular ATM, including where the ATM will be located, the types of customers who can shop at the ATM, the regions involved, and the size of individual or cumulative transactions passing through the ATM.
  • Provide ongoing, targeted training to appropriate personnel regarding their responsibilities under the AML program. Training should address money laundering techniques, red flags, ATM risks, or risks faced by various frontline, business, or compliance teams.
  • The AML program must pass an independent review and audit. This control cannot be done by the person managing the AML program but can be done by someone other than the company. Qualified third-party consultants may also perform these audits.

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KYC Compliance for Bitcoin ATMs

Briefly published standards and regulations guide the operation of virtual currencies by FinCEN. As part of the guide, virtual currencies will integrate Anti-Money Laundering (AML) and Know Your Customer (KYC) verification features into the interface. With this regulation, a decrease in fraudulent activities is expected in Bitcoin businesses. Bitcoin providers must meet Know Your Customer (KYC) requirements to know their customers truly. AML Red flag checks should be done to understand the risks while performing KYC procedures.

Bitcoin ATMs can choose Sanction Scanner AML Compliance solutions to create a strong AML Program, easily meet Know Your Customer procedures and identify their customers. Easily integrate Sanction Scanner solutions with your business API, protect yourself against financial crimes, and avoid regulatory penalties. Meet Sanction Scanner!

Detailed guidance to learn AML comppliance in the US

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