As the U.S. tax agency moves to ensure cryptocurrency isn't used to circumvent tax obligations, it's looking at both users and operators of bitcoin ATMs.

Bloomberg Law reported on Nov. 15 that investigators at the Internal Revenue Service (IRS) are focusing on so-called BTMs and crypto kiosks and their potential to facilitate illicit activity such as tax evasion or money laundering.

John Fort, the IRS' criminal investigation chief, told Bloomberg the IRS is working with other law enforcement agencies on the effort.

"If you can walk in, put cash in and get bitcoin out, obviously we’re interested potentially in the person using the kiosk and what the source of the funds is, but also in the operators of the kiosks," Fort said.

While most providers of crypto telling machines put in place user verification measures and are run by legitimate companies, there have been some cases of BTMs being operated by criminals. This summer, law enforcement agencies led by Europol and Spain’s Civil Guard broke up a criminal organization using BTMs to launder profits and said it exposed a gap in European rules.

Fort said that, generally, U.S. operators provide know-your-customer and anti-money laundering verification of users as required in law. However, "we believe some have varying levels of adherence to those regulations," he said. As such, the IRS is focusing on the "compliance issues" with the operators.

The official also explained that the IRS has not filed any public cases to date but it does have open cases involving cryptocurrency.

The IRS may also start to look further afield in its investigations. Fort said the agency is not just looking at U.S.-based crypto exchanges, but also at those based abroad. “We have concern that as things tighten up here in the U.S., that we are pushing people to foreign exchanges,” Fort said. “We have to focus on that as well.”

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