Bitcoin- A Tool for Money Laundering

In the past few years – and particularly these last few months – bitcoin has received a great deal of positive attention and backing from investors. Those who have been following bitcoin may have realized that it has climbed to nearly $20,000 for one coin. While bitcoin may certainly serve as a digital asset and an alternative form of currency, in recent years, it has also become a tool for criminal activity. In particularly, bitcoin has become a way for individuals and organizations to perform money laundering.

While money laundering may seem like a petty crime, it has also become a resource to fund terror.

Bitcoin And The Risk Of Money Laundering

Bitcoin is a leader in digital currency and it provides individuals with an opportunity to bypass the constraints of traditional currency, it serves as an investment tool, and so much more. Unfortunately, there are individuals other there who have been using bitcoin and other cryptocurrencies as a tool for money laundering.

Money laundering is a crime where criminals disguise their activity and the proceeds of their activity by making them appear to have been derived from a legitimate source. There are many different forms of money laundering. But in general, a common example is mixing legally derived funds and illegal derived funds into an account over time and in small quantities so as to not arouse suspicion. Money laundering is a crime that has existed since the beginning of time. However, as technology evolves, so does the way in which schemes are conducted. Today, money laundering is not only being conducted with traditional funds – but lately, many have been using bitcoin to conduct the crime.

Money Laundering With Bitcoin

Perhaps one of the most common type if litigation to arise concerning bitcoin is money laundering. As of today, there are under 100 legal cases that have been decided by United States courts, many of which have dealt with money laundering issues. Bitcoin has become a prominent resource for money laundering because it is an anonymous currency – that is to say, it is very difficult to track ownership. Another reason that bitcoin is used as a prominent money-laundering resource is that they are unregulated by the government.

According to the Drug Enforcement Agency, the use of bitcoin to perform money-based laundering schemes has grown significantly in recent years. The agency’s website explains that bitcoin is a prominent tool because it “can be used to anonymously transfer value overseas.”

The Legal Definition Of “Currency”

A factor that is causing the proliferation of bitcoin as a money laundering tool is that the definition of what a “currency” is varies from jurisdiction to jurisdiction. For bitcoin to fall under the money laundering laws, the cryptocurrency would need to be defined as a “currency.” There is a great divide in courts as to whether the definition of bitcoin, which is a “digital representation value” is a currency.

The good news is that congress is currently working on legislation to ensure that at least under federal law, bitcoin will be defined as a currency, thereby preventing individuals from circumventing the law.

Woman Accused Of Using Bitcoin To Launder Money To ISIS

One of the most serious and disturbing examples of using bitcoin as a tool to launder money is a recent issue that has arisen. These last few days, a woman named Zoobia Shahnaz, from Long Island, N.Y. was indicted on charges of money laundering and terrorism.

Court documents filed by the Justice Department claims that Shahnaz obtained over a dozen credit cards to purchase $62,700 worth of bitcoins and other cryptocurrencies. Thereafter, Shahnaz converted the bitcoins and other cryptocurrencies to dollars and deposited the funds into a checking account. Like most money laundering practices, Shahnaz then slowly funneled the funds to ISIS in the Islamic State.

The Justice Department further claims that tracking the activity has been exceedingly difficult, particularly because the formal banking structures where the transfers take place provide users with a high level of anonymity. The direct charge that Shahnaz faces is bank fraud and as a result, she faces 30 years in prison. There also may be other charges related to her scheme that she may be found guilty of.

The prosecutor will certainly attempt to introduce evidence of Shahnaz’s search history, proof of her purchase of bitcoin, and proof of the transfers. Those who are interested in keeping abreast of the issue can track the case as it goes through the courts.

Further, legislation has been introduced in Congress that may act to increase penalties for such crimes – thereby hopefully deterring individuals from conducting such activity.

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