Suspected illegally operated crypto ATMs in Leeds have been targeted by the FCA in order to interrupt unregistered financial operations. Several sites and operators around the city have been inspected, and the regulator will now review the evidence it has gathered and consider further potential enforcement action.
“Unregistered crypto ATMs operating in the UK are doing so illegally”, said Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA.
“Crypto businesses operating in the UK need to be registered with the FCA for anti-money-laundering purposes. However, crypto products themselves are currently unregulated and high-risk, and you should be prepared to lose all your money if you invest in them.”
FCA in joint operation with police
These visits were carried out using investigative powers under the Money Laundering Regulations 2017, in a joint operation with the West Yorkshire Police’s Digital Intelligence and Investigation Unit.
“Warning letters were issued requesting the operators cease and desist using the machines and that any breach of regulations would result in an investigation under money-laundering regulations. We then shared our findings with the Financial Conduct Authority”, said Det Sgt Lindsey Brants of the Force Cyber Team at West Yorkshire Police.
The action also follows the warning that was sent out in November 2022. Then, the regulator warned UK operators of crypto ATMs to either “shut their machines down or face enforcement action”, and said:
“Crypto ATMs offering cryptoasset exchange services in the UK must be registered with us and comply with UK Money Laundering Regulations (MLR). None of the cryptoasset firms registered with us have been approved to offer crypto ATM services, meaning that any of them operating in the UK are doing so illegally and consumers should not be using them.”
“Crypto businesses operating in the UK need to be registered with the FCA for anti-money laundering purposes.”
Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA
The FCA will continue to work with law enforcement, including local police forces, to disrupt and disable illegal crypto ATMs. Given the fact that they are effectively operating illegally consumers should avoid using these in the UK.
The number of the ATMs operating in the United Kingdom appears to be limited, with the vast majority of these machines concentrated in the United States according to Statista. Their proliferation in that market, as well as their spread to EU countries and elsewhere, suggests that they do remain attractive to users.
The machines permit users to buy bitcoin or other currencies in exchange for cash, carrying out only very limited background checks on the purchasor. This absence of identity or fund source verifications means that a network of these could potentially enable money laundering at scale. This and potential consumer harm are key concerns for regulators globally and it is unsurprising to see the FCA taking action.