UK Authorities Conduct First Crackdown on Illegal Crypto ATMs, Watchdog Issues Warning

John Lopez, Tech Times 14 February 2023, 02:02 pm

In what is being called the UK's first crackdown on illegally operating crypto ATMs, police raided five places in Leeds, a district in West Yorkshire. These places were thought to have machines that let people buy or convert traditional banknotes into cryptocurrencies like bitcoin.

The Guardian reports that the Financial Conduct Authority (FCA) and West Yorkshire police force's digital intelligence and investigation unit conducted a joint investigation, collecting evidence from the sites in question.

UK's Crackdown on Crypto ATMs

Although the FCA does not regulate crypto assets, it requires all crypto enterprises to register and establish effective anti-money laundering and terrorism financing measures. However, since no crypto ATMs are registered with the FCA, any crypto ATM operating in the UK is doing so illegally.

The financial watchdog also warns consumers frequently that crypto assets are unregulated and high-risk, which means users are unlikely to have any protection if something goes wrong.

West Yorkshire police cyber team's Detective Seargent Lindsey Brants said the force issued a warning letter asking operators to cease using the ATMs or risk being probed under the UK's money laundering laws. The police then informed the FCA of its findings.

'We are pleased to be able to work in partnership with the FCA in what we believe is a national first here in West Yorkshire,' DS Brants said in a statement.

The FCA's latest move is likely to send a strong message to unregistered crypto firms that they must follow the rules or risk facing penalties.

"The FCA will review evidence gathered during these visits and consider further potential enforcement action," the regulator said in a statement.

Mark Steward, who is in charge of enforcement and market oversight at the FCA, has said that the regulator is working with "multiple law enforcement partners," such as other local police departments, to look into other sites that may be hosting illegal crypto ATMs.

The Risk of Using Crypto ATMs

Crypto ATMs are becoming increasingly popular worldwide, with the number of machines in operation rising from around 500 in 2016 to over 34,000 as of early 2022, according to data from Statista.

While many of these ATMs are legal and comply with relevant regulations, unregistered crypto businesses may pose a significant risk by enabling criminal activities such as money laundering and terrorist financing.

Due to the lack of regulation in the crypto market, policymakers around the world are debating how to regulate the industry best while ensuring that it is not utilized for illegal reasons.

The FCA's crackdown on unauthorized crypto ATMs in the United Kingdom is just one example of the efforts being made to solve this issue.

More Warnings from the UK FCA

The FCA tells us that it is crucial to ensure that any financial services firm you deal with is authorized. However, unauthorized firms operate fraudulently, and it can be challenging to spot them. Therefore, it is essential to know how to protect yourself. Check out FCA's Warning list here.

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