Cryptocurrency ATMs — also called “virtual currency kiosks” or “Bitcoin ATMs” — are becoming a growing channel for fraud. In recent months, federal and state regulators have issued new advisories highlighting the risks, scam patterns, and compliance expectations tied to these machines.

For Certified Fraud Examiners (CFEs), understanding these developments is essential. Victims are being directed to use crypto ATMs at alarming rates, and financial institutions face increasing pressure to recognize red flags and intervene before losses occur.

Key Recent Alert's

• FinCEN Notice (FIN-2025-NTC1)
  In August, FinCEN issued a notice warning that many crypto ATM operators are failing to comply with AML/CFT rules. The notice highlights how scammers coach victims into withdrawing cash, scanning QR codes, and depositing funds into crypto ATMs — effectively laundering money into anonymous wallets.
• California DFPI Guidance
  The California Department of Financial Protection & Innovation issued consumer guidance on “Crypto ATM Scams.” The DFPI notes that state law caps ATM transactions at $1,000 per person per day and stresses that many scams involve urgency, impersonation, and the use of QR codes.
• NASAA Investor Advisory
  The North American Securities Administrators Association (NASAA) cautioned investors that Bitcoin ATMs often lack meaningful fraud protections, charge high fees, and provide no recourse for victims once funds are sent.
• State Enforcement & Awareness
  
• • The District of Columbia Attorney General sued Athena BTM, citing that 93% of deposits were linked to scams with a median victim loss of $8,000. Victims’ median age: 71.
  • North Carolina launched a statewide education campaign to warn residents about crypto ATM fraud.
  • States including Nebraska and others have passed new laws limiting transaction amounts, requiring operator licensing, and mandating refunds for fraud victims.
• International Developments
  Australia’s financial intelligence unit, AUSTRAC, found that many of the top crypto ATM users are actually scam victims, not criminals. One case involved a victim in their 70s who deposited over A$430,000 into kiosks.

Common Red Flags in Crypto ATM Fraud

• Unsolicited contact (phone calls, texts, or emails) directing victims to an ATM.
• Impersonation of government agencies, banks, or family members in crisis.
• Use of QR codes or wallet addresses provided by the scammer.
• Pressure or urgency (“your account will be frozen,” “you must pay bail immediately”).
• Step-by-step coaching by the scammer, including directions to specific ATM locations.
• Older victims disproportionately targeted, often with devastating financial impact.

What CFEs Can Do

For fraud examiners, these advisories underscore the importance of

• Training front-line staff to recognize victim behaviors, such as confusion at ATMs or unusual cash withdrawals followed by kiosk deposits.
• Enhancing transaction monitoring to detect patterns consistent with crypto ATM fraud (structured cash withdrawals, recurring transactions near kiosks, etc.).
• Partnering with law enforcement and regulators to share intelligence on ATM-based fraud typologies.
• Educating clients and communities — particularly seniors — about the risks of crypto ATM scams and the irreversibility of such transactions.

Closing Thoughts

As regulators tighten oversight and fraudsters adapt their tactics, CFEs are uniquely positioned to help organizations stay ahead. Crypto ATMs may look like a modern convenience, but for too many victims, they are the entry point into devastating financial loss.

By understanding the latest advisories, recognizing the red flags, and strengthening institutional defenses, fraud examiners can play a critical role in protecting both organizations and individuals from this fast-growing fraud channel.