In a recent report on Monday, the U.S. Government Accountability Office (GAO) says that virtual currency is increasingly being used in an unauthorized manner to facilitate human and drug trafficking.
According to the reports, a government agency that provides auditing and investigative reports to Congress emphasized that the gazebos, also called crypto ATMs, were in a way responsible for the rise of this crime, as the machines are less regulated than the crypto exchanges and that the transactions are the most difficult to trace. The investigating authority of the Congress stated,
“Virtual currency’s anonymizing features can attract criminals’ use to avoid detection when paying for illicit activities such as human and drug trafficking,”
The GAO brief suggests that policymakers, regulators, and law enforcement authorities have identified virtual currency, human trafficking, and drug trafficking as the topmost priority areas of concern. It also warns that the federal agencies may lack complete data when determining or reporting the illegal use of cryptocurrency.
In light of recent events, it has been noted that the number of suspicious activity reports filed with the Financial Crimes Enforcement Network (FinCEN) that involve virtual currency and drug trafficking has increased five times (252 to 1,432) to what it was back in 2017.
GAO suggests collaboration of IRS and FinCEN
The agency has made nine recommendations to selected agencies to improve their data collection practices.
The agency believes that the Internal Revenue Service (IRS) and the Financial Crimes Enforcement Network (FinCEN) should work together in regulating the crypto ATMs.
To get a better judgment of the issue, GAO has asked FinCEN and all other law enforcement agencies to review registration requirements for the crypto ATMs used to exchange these digital assets for liquidated assets in different locations like convenience stores. The agency has also asked them to take appropriate actions and to contain more detailed data regarding individual crypto ATM locations (registrations, renewals, etc). This helps in identifying high-risk kiosk operators to monitor for compliance, while also enhancing information per law enforcement that makes it easier to identify potentially illicit transactions.
