FinCEN has issued a new notice warning financial institutions, including money services businesses (MSBs), to be vigilant about suspicious activity involving convertible virtual currency (CVC) kiosks. These kiosks, which function like ATMs for digital assets, are being increasingly exploited for scams and other illicit activities, putting operators and financial partners at risk.
CVC Kiosk Concerns for MSBs
As an MSB, staying ahead of regulatory expectations is critical. CVC kiosks are now on FinCEN’s radar because of their use in fraud, cybercrime, and even drug trafficking issues that align directly with the agency’s AML/CFT national priorities. Non-compliant kiosk operators can expose themselves and their financial partners to serious enforcement actions.
According to the FinCEN notice, in 2024 alone, the FBI received over 10,956 complaints related to CVC kiosks, resulting in total losses of $246.7 million, a 99% increase from 2023.
Many of these scams targeted vulnerable populations, including older adults, and relied on the speed and irreversibility of kiosk transactions.
For MSBs, this creates two key concerns:
- Exposure to illicit activity through non-compliant operators.
- Heightened regulatory scrutiny on AML/CFT programs and SAR reporting.
Red Flags to Watch
FinCEN outlined several red flags that financial institutions should monitor for, including:
- Transactions that are structured just below reporting thresholds.
- Multiple customers depositing funds to the same CVC wallet.
- High-value transactions from customers with no prior history.
These indicators should feed directly into your transaction monitoring program and trigger enhanced due diligence where appropriate.
MSB Compliance Obligations
FinCEN emphasized that financial institutions, including MSBs, must meet all Bank Secrecy Act (BSA) obligations when dealing with CVC kiosk-related activity. This includes filing Suspicious Activity Reports (SARs). When filing, use the key term “FIN-2025-CVCKIOSK” in SAR field two and in the narrative when reporting suspicious activity tied to kiosks.
Other relevant BSA reporting requirements include:
- Currency Transaction Reports (CTRs)
- Form 8300
- Report of Foreign Bank and Financial Accounts (FBAR)
- Report of International Transportation of Currency or Monetary Instruments (CMIR)
- Registration of Money Services Business (RMSB)
- Designation of Exempt Person (DOEP)
Information Sharing is Critical
FinCEN also encouraged financial institutions to leverage Section 314(b) of the USA PATRIOT Act, which provides a safe harbor for information sharing related to suspected money laundering and terrorist financing. For MSBs, this means working collaboratively with banks, kiosk operators, and other financial partners to reduce risk exposure.
The Bottom Line for MSBs
CVC kiosks are now firmly in FinCEN’s compliance spotlight. MSBs that:
- partner with kiosk operators,
- process related transactions, or
- serve communities where kiosks are prevalent,
should revisit their AML/CFT program, risk assessment, and SAR protocols to ensure compliance with the new guidance.
Remaining proactive not only protects your business from regulatory action but also strengthens your banking relationships and with customers.
If you need support with your AML/CFT program or SAR reporting process, our experts can help MSBs navigate FinCEN’s evolving requirements with customized compliance solutions.
Tags: Bank Secrecy Act, BSA, Crypto, Cryptocurrency, FinCEN, Money Services Business, MSB, SAR, Suspicious Activity Report
