Virtual currencies, such as Bitcoin, allow individuals to transfer payments to one another by electronic means. Neither a bank nor central administrator oversees the transactions, which are often logged in a database without either users’ identities. Using specific programs, it’s possible for the payee and payer to block their IP addresses, making some transactions completely anonymous.
Illegal Funds Channeled Through Virtual Currency
Although the anonymity of virtual currency transactions can be useful for business owners or individuals to keep their financial records private, it can also be used as a method for criminals to hide illicit dealings. Individuals could deposit funds obtained from illegal activity, such as drug dealing or weapons trafficking, and channel them through various exchanges before withdrawing it as “clean” money. Such action could lead to criminal charges. For instances, a California man was recently indicted on one count of money laundering after he withdrew over $130,000 from Bitcoin currency that was obtained through drug sales.
Anti-Money Laundering Measures Needed for Transactions
Money laundering charges can stem not only from cryptocurrency that is obtained through illegal means. Transferring large amounts of digital money to various other users without first registering as a transmitter and having anti-money laundering measures in place could also result in criminal allegations. In 2018, a 21-year-old from California was charged with money laundering and illegally transmitting money for selling over $750,000 of virtual currency to others across the U.S.
Money Laundering Charges
Both state and federal laws forbid money laundering. In California, individuals are prohibited from funneling money obtained from criminal activity through legal sources to make it appear legitimate. This offense can be charged as a misdemeanor or felony. Penalties vary depending on the level of crime.
If prosecuted as a misdemeanor, a money laundering conviction results in:
- Up to 1 year in jail
- Up to $1,000 in fines
The penalties increase to the following for a felony conviction:
- Up to 4 years in prison
- Up to $250,000 in fines
Under federal law, it is illegal for a person to transfer, transport, transmit, or conduct any type of financial transaction with money they know to be illegal.
A violation of federal statutes includes the following penalties:
- Up to 20 years imprisonment
- Up to $500,000 in fines
Get Aggressive Legal Defense on Your Side with Lessem, Newstat & Tooson, LLP
Unfortunately, because a person transferring virtual currency can easily conceal their identity, and the processes for hiding illegally obtained funds are complicated, innocent people could unknowingly get caught up in a money-laundering scheme. If you are being investigated for this offense, our attorneys are ready to provide effective legal counsel to protect your rights. We have over 50 years of combined experience and have handled complex federal and white-collar crime cases. Our team has the knowledge, skills, and resources to develop a strategy to fight your charges and work toward a favorable outcome on your behalf.
Speak with us during a free case review by calling us at (800) 462-7160 or schedule your evaluation online.