The Australian Transaction Reports and Analysis Centre (AUSTRAC) is taking enforcement action against a crypto ATM provider as it seeks to flex its regulatory muscle on the sector.

AUSTRAC has fined Cryptolink 56,340 Australian dollars ($37,000) after identifying "weaknesses" in the company's anti-money laundering and counter terrorism financing (AML/CTF) compliance, according to a statement on Thursday.

Australia's AML/CTF watchdog said it identified late reporting of large cash transactions, for which it has imposed an enforceable undertaking "designed to ensure useable intelligence does not slip through the cracks."

Cryptolink must now enlist third-party auditors to validate that it has reported all required transactions to AUSTRAC, assess whether it has implemented effective controls for large cash transactions and ensure its AML/CTF processes are fit for purpose.

The enforcement actions comes only weeks after Australia's government proposed granting new powers to AUSTRAC to help clamp down on illicit activity through crypto ATMs.

AUSTRAC's Crypto Taskforce said it has estimated that 85% of ATM transactions made by the 90 most prolific users were the proceeds of scams and other nefarious acts.

Crypto ATMs allow the buying of cryptocurrency by inserting cash or a bank card and having crypto delivered to a designated wallet. They are often used for criminal activity by scammers directing their victim to deposit funds to a specific wallet to pay for some goods and then disappearing, for example.

There are 2,024 such terminals in Australia, according to data provided by Coin ATM Radar. This is a slight dip from around 2,100 earlier this month when news of AUSTRAC's new powers were reported, suggesting they may already be having the desired effect.