Last week Manhattan District Attorney Alvin Bragg Jr. announced that Robert Taylor, a Bitcoin ATM operator of over 40 machines in New York, has been indicted for running his operation illegally and marketing it to criminals.
It was disclosed that between 2017 and 2018 the 35-year-old operated Bitcoin ATMs across New York at 46 locations consisting of mostly laundromats. During the two years Taylor converted nearly $6 million dollars into Bitcoin while charging a fee of 10-20% on his kiosks. Bragg made this statement at the announcement “Robert Taylor allegedly went to great lengths to keep his bitcoin kiosk business as secret as possible to attract a clientele that would pay top dollar for anonymity.”
During this time, nearly $600,000 was collected from the fees and 33% of those went directly into Taylor’s bank account. However, Taylor did report these earnings on his 2017 and 2018 tax forms.
Taylor’s charges include criminal tax fraud, multiple counts of operating an unlicensed money service business, and offering a false instrument for filing.
Taylor is one of hundreds of Bitcoin ATM operators across the United States, however this instance does shed some light on the importance of compliance and licensing when it comes to operating a Bitcoin ATM business or other MSBs.
When setting up your Bitcoin ATM business, it’s important you take the necessary steps to stay compliant and make sure your operation is legal not only federally, but also in whatever state you are operating in. The steps on staying compliant include —
- Registering your Bitcoin ATM business with FinCEN and renewing your registration every two years.
- Creating an Anti-Money Laundering (AML) program that helps detect, respond, and eliminate inherent and residual money laundering terrorist financing and fraud related risks.
- Assigning or hiring a designated compliance officer to ensure your operation is staying compliant with current regulations and evolving risks.
- Implementing comprehensive Know Your Customer (KYC) policies in an effort to know who is using your machine to stop predicate offenses to money laundering and terrorist financing.
- Routine Independent Reviews/Audits should be carried out once a year by an outside source to evaluate, report, and ensure that your operation is compliant with all applicable regulations.
If you’re interested in learning more about Bitcoin ATM compliance and the regulations surrounding the industry you can reach out to BTM Compliance with any questions or if you’re looking for consultation.
*This blog article cannot and does not contain legal advice. The information is provided for general informational purposes only which are factually based on research and personal experience. This is not a substitute for professional advice from your own legal counsel. Accordingly, before taking any actions based upon such information, we encourage you to consult with your legal counsel. We do not provide any kind of legal advice. The use or reliance of any information contained in this blog is solely at your own risk.