FinCEN Sounds Warning on Virtual Currency Kiosk Scams

The Treasury Department is warning financial institutions to watch for scams involving convertible virtual currency (CVC) kiosks.

While these kiosks can offer consumers an easier way to access CVC, they are also exploited by scammers and other criminals, the department’s Financial Crimes Enforcement Network (FinCEN) said in a notice issued Monday (Aug. 4).

“Criminals are relentless in their efforts to steal money from victims, and they’ve learned to exploit innovative technologies like CVC kiosks,” FinCEN Director Andrea Gacki said in a news release.

“The United States is committed to safeguarding the digital asset ecosystem for legitimate businesses and consumers, and financial institutions are a critical partner in that effort. This notice supports Treasury’s continuing mission to counter fraud and other illicit activities.”

These activities include fraud, cybercrime and drug trafficking activity, the release added. FinCEN said it has also seen a rise in scams involving the kiosks, including tech and customer support scams and bank imposter scams.

The risk of illicit activity is exacerbated if CVC kiosk operators do not meet their Bank Secrecy Act (BSA) obligations, the release added.

FinCEN’s warning comes as other regulators are cracking down on illicit activities involving digital asset infrastructure.

For example, the U.K.’s Financial Conduct Authority (FCA) announced last month it had seized four cryptocurrency ATMs, which are illegal in Great Britain.

Also in July, the government of New Zealand called for a ban on crypto ATMs, with Nicole McKee, the country’s associate justice minister, saying this move would make it “more difficult for criminals to convert cash to high-risk assets such as cryptocurrencies.”

Research by PYMNTS Intelligence and Featurespace shows that scammers are growing in sophistication, with 30% of Americans losing money in a scam in the last five years.

“Scammers are innovating and fine-tuning their tactics by drawing from the toolkits of legitimate businesses, personalizing their offerings, and customizing how they contact and convince victims to engage,” PYMNTS wrote last week.

“They exploit consumers’ unique circumstances and vulnerabilities, with victims cutting across demographics including age, education, and income. This growing sophistication necessitates a deeper understanding of scammer methodologies beyond just their prevalence.”

The research also explores the specific strategic adaptations by scammers, such as tailoring their tactics to target different generations. For example, 21% of scams that target Gen Z consumers are initiated through social media. By contrast, older generations like baby boomers are contacted more often through channels they trust, such as email (23% of scams) and phone calls (21% of scams).