Legal Implications of Cryptocurrency in Money Laundering

Written By: Moermond & Mulligan, LLC

Last Updated: 04-23-2024

Posted on Saturday, April 20th, 2024 at 9:00 am    

Legal Implications of Cryptocurrency in Money Laundering

One benefit of using cryptocurrencies like BitCoin that advocates often tout is the anonymous nature of virtual transactions. However, the anonymous nature of these digital currencies has led to concerns among Ohio law enforcement about how cryptocurrency can be used in money laundering. If you use cryptocurrency, it’s essential to understand the laws that apply in these situations so you don’t find yourself facing money laundering charges. In some cases, people could face money laundering charges related to cryptocurrency transactions even if they were not directly involved with criminal activity.

While cases involving cryptocurrency and money laundering are still a new area of the law, law enforcement agencies take these matters extremely seriously. If you face money laundering charges in Ohio related to cryptocurrency, the Cincinnati criminal defense lawyers at Moermond & Mulligan, LLC can help. We have significant experience with these cases and can help you find the best way forward in your situation. This blog explains the essential details of money laundering cases involving cryptocurrencies.

The Basics: What Is Money Laundering?

Money laundering happens when someone tries to make money earned from illegal activities look like it was earned legally. They do this by moving it through different transactions and accounts. This process makes it hard to trace the original, illegal source of the money. The goal is to use the money freely without getting caught by the authorities.

One reason cryptocurrency sometimes comes up in money laundering cases is that cryptocurrency transactions are practically anonymous. They don’t go through the traditional banking system and use complex digital tools to hide the identity of the original buyer and seller. Therefore, criminals can exploit cryptocurrency systems to hide income streams related to their illegal activity.

Relevant Ohio Laws in Cryptocurrency Money Laundering Cases

Ohio has two laws that may apply to cases involving the alleged use of cryptocurrency for money laundering. First is the general law against money laundering. This law defines money laundering as conducting or attempting to conduct a transaction while knowing that the property involved comes from the proceeds of criminal activity. This offense is a third-degree felony.

Ohio also has a specific law for money laundering in support of terrorism. While the broad definition of the offense is the same as standard money laundering, the law focuses on transactions related to the proceeds of or in support of terrorist acts. This offense can be a second-degree felony, depending on the circumstances.

Federal Laws Related to Cryptocurrency and Money Laundering

Because cryptocurrency transactions often occur across state or even international boundaries, that makes them the concern of federal law enforcement agencies like the FBI. There are a couple of federal laws that may apply to cases involving the use of cryptocurrency for money laundering purposes. The first is the Anti-Money Laundering Act of 2020. This recent law aims to make the banking system more modern by encouraging innovation and better engagement within the industry. A significant focus of the Act is to enhance transparency in financial transactions. For example, it requires more detailed reporting of who owns corporations and LLCs, which helps law enforcement track the flow of money more effectively.

This Act is especially relevant to cryptocurrency because criminals can use these digital currencies to obscure the origins of money, much like traditional money laundering. The Act helps ensure that financial institutions and others are more vigilant and have better tools to track and report suspicious activities involving cryptocurrencies.

The other key federal law in cryptocurrency money laundering cases is the Bank Secrecy Act (BSA). Originally enacted in 1970, the BSA requires financial institutions in the U.S. to assist government agencies in detecting and preventing money laundering. For example, banks must keep records of cash purchases of negotiable instruments, file reports of cash transactions exceeding $10,000, and report suspicious activity that might signify money laundering, tax evasion, or other criminal activities.

Many of the provisions of the BSA also apply to cryptocurrency transactions. Moreover, because the Anti-Money Laundering Act and BSA are federal laws, they typically carry much harsher penalties than state laws. There are also more complex procedures in federal cases, and knowing these procedures is essential for building an effective defense.

Who Could Face Charges Related to Cryptocurrency Money Laundering?

Individuals involved in using cryptocurrency for money laundering can face legal charges, but they are not the only ones at risk. For instance, those who provide services designed to obscure the source of the funds are also liable. The Financial Crimes Enforcement Network (FinCEN) highlights that operators of certain digital tools, known as “mixers” or “tumblers,” could face charges too.

Mixers or tumblers are services that blend different streams of potentially identifiable cryptocurrency funds. This process makes it difficult to trace the source of the funds. By using these services, individuals can anonymize their crypto transactions, which can be used to launder money from illegal activities. As a result, the operators of these services, even if they are not directly involved in the crimes generating the funds, can be held responsible for aiding in the laundering process under federal law.

This means that anyone, from those executing the transactions to those receiving the funds and the facilitators who anonymize the transactions, could potentially face legal consequences under current money laundering laws. Law enforcement agencies and regulatory bodies are increasingly focusing on these facilitators as part of their efforts to clamp down on financial crimes involving cryptocurrencies.

Why You Need an Experienced Attorney for Cryptocurrency Money Laundering Cases

Legal Implications of Cryptocurrency in Money LaunderingCryptocurrency transactions are highly technical, and the laws surrounding them are still evolving. If you face money laundering charges related to crypto transactions, an experienced attorney can help you navigate the legal system effectively and protect your rights. They can also challenge evidence based on the intricate nature of blockchain and digital transactions. Without the right legal guidance, you may not be able to effectively defend yourself in court, risking severe penalties.

Contact Our Ohio Money Laundering Defense Attorneys Today

Money laundering charges related to cryptocurrency transactions can lead to harsh penalties. If you face these charges, it’s crucial to work with an experienced firm like Moermond & Mulligan, LLC to protect your rights and avoid the worst possible outcomes. Call (513) 421-9790 now or complete our contact form for a free consultation.