On 10 September 2024, UK Financial Conduct Authority (UK FCA) charged Mr. Olumide Osunkoya, a 45-year-old resident of London, for operating multiple unregistered crypto ATMs. Between 29 December 2021 and 8 September 2023, these machines allegedly processed approximately £2.6 million in transactions without the necessary registration from the UK FCA, marking the first criminal prosecution of its kind under the UK’s Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs).
Under UK law, any firm or individual involved in providing cryptoasset services must be registered with the UK FCA and ensure compliance with anti-money laundering (AML) and counter-terrorist financing (CTF) standards. Cryptoasset services includes operators of crypto ATMs, which allow users to buy or exchange money for cryptoassets. Despite the legal requirement, Mr. Osunkoya allegedly operated his machines unlawfully, violating Regulations 86 and Regulation 92 of the MLRs, and faces additional charges under the UK Forgery and Counterfeiting Act 1981 for creating false documents to facilitate his illegal operations, and the UK Proceeds of Crime Act 2002 for possession of criminal property arising from the operation of his crypto ATMs.
Firms offering cryptoasset services within the scope of the UK Money Laundering, Terrorist Financing, and Transfer of Funds Regulations 2017 (MLRs) must register with the UK FCA. Key requirements include implementing AML and CTF policies, conducting customer due diligence (CDD), maintaining records for at least five years, and having procedures for suspicious activity reporting (SAR). Firms must also provide regular staff training, develop a risk assessment framework, and ensure ongoing compliance through continuous monitoring. The UK FCA offers pre-application meetings to guide firms through the registration process and ensure adherence to regulatory standards.
The UK FCA’s investigation into illegal crypto ATMs was conducted in collaboration with law enforcement agencies across the UK. Working alongside organizations such as the South West Regional Organised Crime Unit, Kent Police, and Bedfordshire Police, the FCA disrupted 26 illegally operating crypto machines in 2023. These agencies were involved in operations to inspect and disrupt illegally operating crypto ATMs. In 2023, the FCA inspected 34 locations across the UK suspected of hosting crypto ATMs.
Mr. Osunkoya is scheduled to appear before Westminster Magistrates’ Court on 30 September 2024 where his case is scheduled for hearing. The UK FCA has consistently warned the public about the risks associated with cryptoassets, reminding consumers that crypto remains largely unregulated in the UK, and any investments in crypto should be made with the understanding that they could lose all their money. There are no legal crypto ATMs currently operating in the UK, and the UK FCA has reiterated its commitment to cracking down on unlawful operators. The lack of regulated options for crypto ATMs in the UK creates a void that may push consumers into the hands of unregulated operators, along with the risks of money laundering and other financial crimes.
Matthew Long, Director of Payments and Digital Assets for the UK FCA, in his statement reiterating the stance on crypto ATMs stated: ‘There are currently no crypto ATMs registered with the FCA – so if you’re using one of these machines you could be handing your money to criminals. ‘The FCA works with law enforcement partners like Kent Police to protect consumers and maintain the integrity of our financial markets. ‘We continue to remind people that crypto remains largely unregulated and high risk; if you buy it, you should be prepared to lose all your money.’
(Source: https://www.fca.org.uk/news/press-releases/fca-charges-first-individual-running-network-illegal-crypto-atms, https://www.kent.police.uk/news/kent/latest/policing-news/medway-trader-first-in-uk-to-be-charged-with-crypto-atm-offence/)
