Lawmakers in the US state of Wisconsin have introduced a bill in the state’s Senate to accompany an earlier bill filed in the lower house that aims to curb fraud occurring through crypto ATMs.
Senator Kelda Roys, along with six other Democratic representatives, introduced Senate Bill 386 on Monday as companion legislation to Assembly Bill 384, which Democratic Representative Ryan Spaude introduced on July 31.
Under the identical proposed bills, crypto ATM or kiosk operators will need a money transmitting license to conduct operations in the state and must collect information about their users, including name, date of birth, number, address, and email.
Filing identical bills in both chambers is a tactic to increase the likelihood of a bill becoming law and speeds up the legislative process as both chambers can consider legislation simultaneously.
Wisconsin looks to warn crypto ATM users
Under the bills, crypto ATM operators will have to collect a government-issued document from their customers, like a passport or a driver’s license, and will need to take a photo of the customer.
Operators will have to verify their customer’s identity for every transaction, and users will be capped at $1,000 worth of transactions per day.
The bills mandate that labels warning of the potential of fraud must also be placed “within the customer’s field of vision” on the front of the machine.
Crypto ATMs typically charge much higher fees compared to online crypto exchanges, and the bills propose capping the fees operators can charge customers, to flat $5 fee or 3% of the transaction value, whichever is higher.
Operators will also have to fully reimburse customers if an ATM is used to process a fraudulent transaction, such as to a scammer, or if the operator is contacted by law enforcement agencies confirming that the transaction was fraudulent in nature within 30 days.
FinCEN warns on crypto ATM scams
On Aug. 4, the US Treasury’s Financial Crimes Enforcement Network (FinCEN) issued a notice to financial institutions asking them to report suspicious transactions conducted via crypto ATMs.
“Criminals are relentless in their efforts to steal money from victims, and they’ve learned to exploit innovative technologies like CVC [convertible virtual currency] kiosks,” FinCEN Director Andrea Gacki said.
FinCEN said it identified fraud, cybercrime, and drug trafficking as the three main illicit activities that are conducted through crypto ATMs.
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The agency also identified that elderly people are more vulnerable to scams where malicious actors pretend to be bank employees, tech support specialists, or customer service representatives.
Global crackdown on crypto ATMs
Crypto ATMs have been in the crosshairs of regulators across the world due to regulators’ concern about their use for crime.
On July 17, New Zealand banned crypto ATMs across the country, citing their use in money laundering and criminal financing.
The UK has also cracked down on crypto ATMs, with regulators seizing seven crypto ATMs and arresting two individuals in southwest London in July on suspicion of money laundering and illegally operating a crypto exchange.
Grosse Pointe Farms, a small town outside of Detroit, Michigan, preemptively passed a regulation on crypto ATMs despite the town not having one.
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