Drug dealers riding cryptocurrency boom and using Bitcoin ATMs to launder cash warn police

Drug dealers are increasingly using Bitcoin cash machines to launder their money and take advantage of the cryptocurrency's soaring value, police in the UK have warned.

Criminals are managing to evade national controls by strolling into cafes and newsagents with wads of cash and feeding their profits into the unregulated ATM-style machines that then convert it into the virtual currency.

Detectives say gangs are using cryptocurrencies more and more because it has become harder to launder ill-gotten gains through traditional methods.

"It's a great opportunity for them to dispose of cash quickly. You can shift it across borders, send it anywhere in the world to buy commodities," Detective Inspector Tim Court, of Scotland Yard's fraud squad, told The Times.

Police have listed virtual currencies like Bitcoin as one of the biggest emerging threats in organised crime, with them offering gangs an anonymous and harder-to-trace method of money laundering.

Bitcoin's soaring value – it has risen 12-fold this year alone – has also meant crime bosses have been able to boost their profits in a short amount of time.

There are currently just over 70 cryptocurrency ATM machines in London alone, with police saying some drug dealers are now basing their trade around them and depositing up to £1,500 a day.

The machines are run by individual companies who connect them to the digital exchange and pay shopkeepers about £1,200 a month to keep them in their store.

Some of the machines allow transactions of up to £500 without identification.

Detective Chief Superintendent Michael Gallagher, who leads the Metropolitan Police's Organised Crime Command, said: "Drug dealers know how to use this.

"Officers from Trident [the Met Police's gang crime command] are finding that street dealers are loading up local ATMs and standing on street corners cashless, which decreases the risk for them. If you move large quantities of cash it lowers your vulnerability to other criminals."

Last month, the UK Treasury revealed plans to crack down on the use of Bitcoin in money laundering by forcing cryptocurrency traders to disclose identities and report suspicious activity.

The new rules are expected to come into force by the end of the year or early 2018, the Daily Telegraph reported.

A Treasury spokesman said on Sunday (3 December): "We intend to update regulation to bring virtual currency exchange platforms into Anti-Money Laundering and Counter-Terrorist Financing regulation."