The Financial Conduct Authority has conducted inspections at several locations in and around Leeds that are rumored to be hosting crypto cash machines that are being operated illegally.
The joint operation with West Yorkshire Police is being hailed as a national first.
Users use specialized terminals, which resemble regular cash machines, to deposit or withdraw cash to buy or sell digital assets like Bitcoin.
However, it claims that operating such machines in the UK is forbidden because they have not been registered with the FCA.
One comparable service, FCA registered, allows users to purchase cryptocurrency through an app or bank transfer and then withdraw the sale proceeds using standard ATMs.
The watchdog claims it is collaborating with a number of law enforcement agencies, including local police forces, to stop and take down illegal crypto cash machines in shopping centers, bars, restaurants, newsstands, and post offices.
A 2020 government report found that "money mules" were increasingly using the machines to launder illegally obtained money because they were more prone than online exchanges.
We quickly located the locations of several live crypto ATMs after conducting intelligence-gathering work throughout West Yorkshire, according to Det Sgt. Lindsey Brants of the West Yorkshire Police Force Cyber Team. ".
She claimed that after warning the machine operators in writing to stop using them and stating that any violations of laws prohibiting money laundering would be the subject of an investigation, the police reported their findings to the Financial Conduct Authority.
In March 2022, the FCA had issued a similar caution.
"We are happy to be able to work in partnership with the FCA in what we believe to be a national first here in West Yorkshire," Det Sgt. Brants continued.
A two-year prison sentence is the maximum penalty for unregistered cryptocurrency activity that violates money-laundering laws.
According to Mark Steward of the FCA, the agency will keep track of and shut down unregistered cryptocurrency businesses.
He cautioned investors to be ready to lose all of their money because cryptocurrency products were "unregulated and high risk."
