Complex Compliances: Checklist for Crypto ATM Operators

Besides being a lucrative business opportunity, Bitcoin ATM is difficult to maintain for ATM holders. Since the beginning of the first Bitcoin ATM installation in the U.S. and Canada in 2014, the demand for such ATMs has grown.

Out of the two types of Bitcoin ATMs, one is used to only buy Bitcoins. While another one is complex and it is used for both buying and selling of the digital currency. Customers prefer Bitcoin ATM over Bitcoin exchange in the majority of the cases.

But how can an ATM operator set up his own Bitcoin ATM in the area of his choice? The first and foremost requirement to set up a Bitcoin ATM is compliance. Every area has different laws for such ATM installations and an ATM operator has to follow these compliances properly.

Most comprehensive laws include Anti-Money Laundering regulations, Know Your Customer, state and federal laws. However, these regulations and laws vary from state to state. It is easier to set up Bitcoin ATM in some states and difficult in others. Some states require money transmitter license while others not.

Rules And Regulations To Be Followed By ATM Operators

Bank Secretary Act

The Bitcoin ATM operators should follow the federal regulation guidelines explained in the Bank Security Act (BSA) to stay compliant under federal laws.

MSB Registration With FinCEN

Since Bitcoin ATM is considered as a Money Services Business, it must be registered under the Financial Crimes Enforcement Network (FinCEN). The registration process with FinCEN is a simple and online process. This registration confirms that every transaction at the ATM is secure and can be reported under suspicious activities. The state regulation includes registration under the state-level license.

Creating An AML Program

After registering under the FinCEN, operators must create an AML program. This program includes the creation and implementation of anti-money laundering compliance. Developing an AML program can be presented by the operator through a written document that explains how money laundering will be prevented in that ATM. AML program must include the following parts:

  1. A designated compliance officer.
  2. AML training of personnel.
  3. Customer Due Diligence.
  4. BSA compliant internal procedures and policies.
  5. Third-party review and audit of the AML program.

Test AML Program, Transaction And Customer Controls Before The ATM Goes Live

The most crucial step after conducting the legal processes is testing the ATM before going live. You should check whether the AML program is being followed completely. A few sample transactions can pinpoint if there’s a loophole in the customer details and transaction information. Overall, the ATM operator should ensure Bitcoin ATM should not invite any money laundering at present as well as in future.


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