Syed Rahman assesses the Financial Conduct Authority’s successful prosecution of a crypto ATM operator.
The Financial Conduct Authority (FCA) has now secured its first conviction for illegal crypto ATM operation in the UK.
Olumide Osunkoya, 45, pleaded guilty to five offences at Westminster Magistrates’ Court, having been charged last month with running crypto ATMs without authorisation. He was also convicted for using false documents and possession of criminal property.
The FCA had alleged that Osunkoya operated a network of at least 11 crypto ATMs. These, the regulator argued, had processed more than £2.6 million in crypto transactions between 29 December 2021 and 8 September 2023. During that time, Osunkoya had acted as a director of a company named Gidiplus Ltd and then later as a sole practitioner.
It was alleged that Osunkoya carried out no customer due diligence or source of funds checks on those who used his crypto ATMs, which were placed in local convenience shops across the country. The court was told that his ATMs were being used by those who are likely to be carrying out money laundering or tax evasion, and that he was suspected of having made substantial profits from his operation.
The court also heard that Osunkoya had used an alias to try and evade FCA rules. He will be sentenced at Southwark Crown Court at a date to be confirmed.
Compliance
This case demonstrates that the FCA can take action and achieve convictions, thus reinforcing its stance that compliance is not optional in the crypto sector. Unauthorised crypto ATMs bypass know your customer (KYC) and anti-money laundering (AML) measures, posing a high risk for money laundering and other financial crimes.
in some respects, this could be considered as a case of going after low-hanging fruit, as physical ATMs leave tangible, trackable evidence, making them a more straightforward target than online, decentralised operations.
But the significance of targeting ATMs should not be underestimated. With cash-to-crypto transactions being difficult to trace, physical crypto ATMs are certainly prone to abuse for money laundering.
Operators can set up machines in areas with little oversight, often in smaller retail locations, and then move them quickly if they suspect an investigation. Additionally, unregulated operators can deploy tactics such as using aliases or shell companies, which complicate identification.
At present there are currently no legal crypto ATM operators out there. This is due largely to the high bar for compliance set by the UK’s AML and KYC regulations. Legal operators would need to maintain continuous monitoring, AML checks, and source-of-funds verifications. All these are costly and complex tasks.
