What's the regulation roadmap look like for ATMs in 2024?

Due to the ATM industry's relationship to the financial industry, it is subject to a good deal of regulations. However, there can be a great amount of confusion about these regulations.

To bring some clarity, Jack Ford, attorney/owner of JMFord Law Office and Kevin Watts, COO of Switch Commerce LLC discussed current compliance issues such as TR-31, cashless ATMs and legislation at a session at the ATMIA conference held from Feb. 14 to 16 in Las Vegas.

TR-31

Many independent sales organizations and independent ATM operators have been concerned about TR-31 compliance guidelines, especially with a deadline of Jan. 1, 2025 set to comply with this encryption for PINs.

However, Watts said that this currently only applies to processors, acquirers and issuers, not IADS or ISOs.

"Everything you have heard about TR-31 only applies to processors, acquirers and issuers. You are not going to be turned off," Watts said. "But it would be wise to upgrade your PIN pads and software to a version that supports TR-31 for that extra level of PIN security. IT will become PCI PIN required somewhere down the road that processors, acquirers and issuers must only accept the new encryption."

Watts also pointed out that if someone was able to hack your PIN system, and you were not using the TR-31 encryption, you could be held liable.

Cashless ATMs

The topic of cashless ATMs has made waves throughout the years, due to their usage at cannabis dispensaries. They essentially act as a POS device that positions itself as an ATM withdrawal to networks. However, these ATMs are an "oxymoron," according to Watts.

"An ATM must print a receipt, display ISO name and contact information, display approved sponsor bank signage and must disburse cash," Watts said. "Visa, Mastercard and FIS have denounced the usage of their card brand for cannabis and cashless ATMs."

Because currently card networks do not allow their networks to purchase cannabis, ATMs that dispense cash are the only viable option.

However, many dispensaries are still using these devices and the industry as a whole have had to chase them down.

"It's a big black eye for our industry," Watts said. "It's a whack a mole. We are shutting down a 150+ a month."

Current regulations

When discussing regulations on the pipeline, Ford said that there have been a deluge of bills coming out on the state side that impact ATMs, with the vast majority of them related to cryptocurrency.

"279 bills have been proposed in multiple states and 70% are crypto related. Because Feds are doing nothing about this issue," Ford said.

On the federal side with bills such as the Payment Choice Act and Safe Access to Cash Act, Ford said there has not been significant progress and the sponsors are seeking bipartisan support.

The big issue Ford discussed is the Corporate Transparency Act, which directly impacts owners of ATM businesses, whether it be a corporation or limited liability company. This act aims to correct an issue that the U.S. has not complied with the International Organization Financial Action Task Force on Money Laundering, in particular to how it is difficult to identify owners of corporations and LLCs. This in turn makes it easier for bad actors to engage in money laundering or terrorist financing.

With this act, anyone that has 25% control over a corporation or LLC or significant control over it must file a Beneficial Ownership Information through the Financial Crimes Enforcement Network if you started the company prior to Jan. 1, 2024. If you found it after, you need to file the report within 90 days, and if you found a business after Jan. 1, 2025, you will need to file it within 30 days.

"They are really serious about this," Ford said. He also emphasized that it needs to be updated regularly if the owner dies or ownership transfers to someone else. "FinCEN wants to know who is behind these entities and who controls them for money laundering purposes."