On October 8, CSBS announced that 34 state financial regulators reached a $2.5 million settlement with a cryptocurrency money transmitter and kiosk operator over alleged BSA/AML violations. The company agreed to cease virtual currency kiosk operations in the participating states by January 1, 2027, or pay an additional $4 million penalty. The settlement resolved a multistate examination covering the period from March 31, 2023, through March 31, 2025. The resulting report of examination found that the company did not maintain an effective BSA/AML program that “sufficiently mitigated” the risks of its kiosk business. The report cited deficiencies in transaction monitoring, KYC policies, suspicious activity reporting policies, enhanced due diligence and recordkeeping. According to the order, these deficiencies, together with “insufficient responses” to violations and deficiencies alleged in past examinations, “perpetuated a high-risk environment” that left the kiosk business “vulnerable to exploitation by criminal actors.” The order also acknowledged that the company has made “material enhancements” to its program. The company neither admitted nor denied wrongdoing.

Under the settlement, which took effect October 7, the company may not restart kiosk operations in any participating state without that state’s written permission. The company must pay a $2.2 million administrative penalty and $300,000 in administrative costs. It must also retain an independent consultant to assess its BSA/AML program, with the consultant’s assessment report due within six months of engagement. Any resulting corrective action plan must be completed within 12 months unless regulators grant an extension. Separately, the regulators approved a pending advance change notice tied to the planned acquisition of the company’s parent. A “substantial consideration” for that approval was the company’s agreement that individuals who left management, director or similar roles between January 1, 2023, and 30 days after the effective date may not return to those roles or exercise a controlling influence over its compliance or accounting functions without approval from each participating state where it is licensed.