A major joint operation by the Financial Conduct Authority and the Metropolitan Police in July 2025 resulted in the seizure of seven crypto ATMs and the arrest of two individuals in southwest London, both suspected of money laundering and running an illegal cryptoasset exchange. During coordinated searches at four separate premises, authorities uncovered evidence of unregistered cryptoasset activity that violated the UK’s anti-money laundering regulations. The FCA, applying powers under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, led the enforcement action, reinforcing that operating a cryptoasset exchange or crypto ATM without registration is a criminal offense. Both suspects were questioned under caution and have been released pending further investigation, highlighting the ongoing determination of UK regulators and law enforcement to curb illicit crypto operations and enhance consumer protection.

Cryptoasset ATMs, which allow users to exchange cash for digital currencies or vice versa, have become a favored tool for money launderers seeking to exploit regulatory loopholes. Despite repeated warnings from the FCA, illegal crypto ATMs have continued to operate in the shadows, circumventing registration requirements and AML controls. This latest case is a vivid example of how regulators are combining real-world investigations with a sharper focus on technological crime.

Why Cryptoasset Exchanges and ATMs Attract Criminals

The rapid adoption of digital assets has brought legitimate innovation, but it has also opened new doors for financial criminals. Crypto exchanges and ATMs provide a fast and often anonymous bridge between fiat money and cryptocurrencies, enabling bad actors to move illicit funds across borders or disguise the origins of criminal proceeds.

In the UK, anyone providing cryptoasset exchange or ATM services as a business must register with the FCA under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs). Registration is not just a formality—it is the foundation for monitoring compliance, verifying beneficial ownership, and enforcing robust anti-money laundering (AML) procedures.

Unregistered operators bypass these controls, increasing the risk that their platforms may be used for activities like:

• Layering illicit funds by rapidly exchanging currencies
• Structuring deposits to avoid detection
• Facilitating anonymous, cross-border transfers for sanctioned or high-risk individuals

The FCA’s ongoing crackdown reflects a recognition that crypto is now integral to the modern money launderer’s toolkit. It also signals that authorities are prepared to escalate operations and penalties as new threats emerge.

UK Cryptoasset Regulation and Enforcement Framework

Since January 2021, the UK’s AML regime for cryptoasset businesses has been anchored in the MLRs. These rules require all relevant crypto businesses to:

• Register with the FCA and pass rigorous AML checks
• Conduct ongoing customer due diligence (CDD) and enhanced due diligence (EDD) for higher-risk clients
• Monitor and report suspicious transactions to law enforcement via Suspicious Activity Reports (SARs)
• Maintain transparent records of all business relationships and transactions

Operators who do not comply face both civil and criminal penalties, including fines, prohibition orders, and even imprisonment for the most egregious offenses. The FCA maintains a public list of registered cryptoasset firms as well as those suspected of non-compliance, serving as a warning to consumers and a deterrent to illegal operators.

In the July 2025 case, the suspects were interviewed under caution and released pending further investigation, a typical procedure when authorities suspect organized money laundering. The seizure of the crypto ATMs is expected to yield further evidence on how illicit cash flows are converted into digital assets, as well as the identities of customers using these machines.

The Evolution of Crypto Crime and Law Enforcement Response

The dynamic nature of crypto-related crime poses unique challenges for both regulators and law enforcement. Unlike traditional money laundering methods, digital assets can move at the speed of the internet, often through networks that intentionally obfuscate ownership and transaction trails. Criminals have been quick to exploit regulatory arbitrage, privacy coins, decentralized exchanges, and peer-to-peer (P2P) trading.

To combat these risks, UK authorities are:

• Expanding cross-agency cooperation between the FCA, Metropolitan Police, National Crime Agency (NCA), and HM Revenue & Customs (HMRC)
• Utilizing advanced analytics to detect unusual crypto flows and identify links to other criminal activities
• Increasing intelligence-sharing with overseas regulators to disrupt transnational networks
• Publishing guidance to raise public awareness about the risks of using unregistered crypto services

International efforts are also gathering pace, with the Financial Action Task Force (FATF) providing recommendations for virtual asset service providers (VASPs) and encouraging member countries to strengthen oversight and enforcement.

Despite these efforts, criminals continue to adapt. Crypto ATM networks are often part of larger schemes involving shell companies, straw men, or mule accounts, and the operators typically use sophisticated techniques to avoid detection. Law enforcement’s response must therefore evolve alongside these threats, blending technological tools with traditional investigative work.

Impact on Consumers and the Crypto Industry

For the UK’s growing base of crypto users, the enforcement actions serve as a stark reminder: using unregistered crypto ATMs or exchanges is not only risky, but may also unwittingly support criminal networks. Victims of financial crime often find it difficult to recover funds or trace illicit transfers once assets enter the digital ecosystem.

On the other side, legitimate crypto firms argue that clear and proportionate regulation is essential for the industry to flourish. They support robust AML controls but also call for regulatory clarity and fairness, especially as new business models and technologies emerge.

There is a delicate balance between preventing financial crime and not stifling responsible innovation. The UK’s approach so far has emphasized transparency, due diligence, and close cooperation between public and private sectors. However, the persistence of illegal operators demonstrates that enforcement must remain a top priority.

Ongoing Challenges and Future Developments

The July 2025 operation is just one chapter in a larger story. As law enforcement and regulators refine their tools and strategies, several challenges remain:

• Rapid proliferation of new crypto platforms and services, including DeFi and NFT marketplaces, which often fall outside traditional regulatory perimeters
• Use of privacy-enhancing technologies, like mixers and privacy coins, to conceal transaction origins
• Global nature of crypto, which requires seamless international cooperation and information exchange
• Continued public confusion about the difference between regulated and unregulated providers

Addressing these issues will require ongoing vigilance, more robust AML controls, and a willingness to update laws and guidance in step with technological change. The FCA has signaled its commitment to adapt its enforcement and supervisory approach, while also pushing for greater alignment with international AML standards.

Conclusion: Staying Ahead in the Fight Against Cryptoasset Money Laundering

The seizure of seven crypto ATMs in southwest London and the related arrests mark a significant moment in the UK’s battle against crypto-enabled financial crime. This case underscores the need for constant vigilance, stronger cooperation between agencies, and relentless adaptation to new money laundering threats.

As cryptocurrencies become more embedded in daily financial life, both consumers and businesses have a shared responsibility to ensure they are using legitimate, FCA-registered services. For authorities, the lesson is clear: sustained enforcement and regulatory innovation are essential to keep pace with a rapidly evolving risk landscape.

The fight against cryptoasset money laundering is far from over, but with each operation, the UK moves closer to building a safer, more transparent financial system for all.

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Related Links

• FCA: Cryptoasset registration requirements
• Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017
• FCA: List of registered cryptoasset firms
• National Crime Agency: Financial crime guidance
• FATF Guidance: Virtual Assets and VASPs

Other FinCrime Central Articles About Crypto-ATMs

• AUSTRAC Tightens Crypto ATM Oversight to Curb Financial Crime in Australia
• UK Crypto ATM Operator Jailed for 4 Years: The First Prosecution of Its Kind
• AUSTRAC Targets Crypto-ATM Money Laundering and Money Mules

Source: FCA

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