Organized crime groups in Europe are increasingly using Bitcoin ATMs to disguise payments for cocaine shipments from Colombia, a Europol official told ACAMS moneylaundering.com.

The payment chain begins in Europe, where professional money-laundering syndicates direct networks of money mules to exchange criminally derived euros for bitcoins by feeding the cash into any of hundreds of specialized ATMs now operating in cafes, convenience stores and other shops across the continent.

The funds, now converted into bitcoins and kept in digital “wallets” controlled by the money-laundering syndicate in Europe, are then transferred to digital wallets held by a syndicate separately working for the Colombian supplier, according to Borja Pastor, an organized-crime analyst with Europol.

The cartel’s money-laundering syndicate then uses an online exchange firm to swap the bitcoins for Colombian pesos, usually within a day of having received the funds from Europe, Pastor told moneylaundering.com at an ACAMS conference in Cyprus this month.

The quick turnaround limits potential losses from sudden fluctuations in Bitcoin’s value, which plummeted 70 percent from December to January after trading near $20,000.

The Colombian syndicate then directs its own network of mules to deposit the billions of pesos into dozens of local bank accounts, with the cash divided into smaller amounts to avoid raising suspicion or triggering currency transaction reports, Pastor said.

Finally, the syndicate completes the payment chain by arranging for delivery of the pesos from the mule accounts to their customer, the cartel, via cash withdrawals or electronic transfers, minus an agreed commission.

“This is the booming, new, exotic way to launder drug money,” Pastor said. “[The method] may be used not only by drug cartels, but all types of organized crime groups.”

EU lawmakers recently agreed to extend anti-money laundering requirements to cryptocurrency exchanges and wallets, some of which have already adopted AML programs to secure access to bank accounts.

The obligations are expected to cover the estimated 400 Bitcoin ATMs now open for business in the European Union because the machines allow for the exchange of fiat currency for cryptocurrency, said Anthony Eskander, an AML lawyer with KPMG in London.

Customers can buy bitcoins with a debit card or cash, but while some machines require identity verification, such as a palm print or photo ID scan, many ATM operators allow clients to buy the cryptocurrency anonymously.

A variation in the scheme may see money mules in Colombia remit pesos through local money services businesses, according to Oscar Moratto, formerly a senior official with Colombia’s financial intelligence unit, the Unidad de Informacion y Analisis Financiero.

Syndicates can also turn to online peer-to-peer forums such as LocalBitcoins.com to arrange meetings with local buyers to whom they sell bitcoins for pesos, then deposit the pesos into mule accounts or route them through MSBs, Moratto, now an AML consultant in Bogota, told moneylandering.com.

The scheme does not appear to generate any unique red flags for banks, but often involves multiple wire transfers or daily cash deposits by individuals in different countries who do not have an apparent connection or previous transactional history with the account holders.

Pastor said investigators suspect traffickers may adapt the scheme to funnel payments to Moroccan hashish suppliers, but added that Europol currently “only has knowledge regarding Colombian cartels.”