Cryptocurrency Money Laundering: Cause For Government Concern or Fear Mongering Hype?

cryptocurrency money laundering concernsIs cryptocurrency linked to terrorist activities? The only responsible answer to that question at this point: Nobody knows. The virtual currency ecosystem is still fairly new. It has yet to hit the decade milestone — and there’s simply not enough data or evidence.

However, politicians are focusing on the money laundering potentials presented by virtual currencies — and starting to mention said concerns during legislative hearings.

Representatives Allude To Cryptocurrencies In Hearings About Financial Crimes

An article on BTCManager.com touched on a late-2017 government hearing about “Modernizing AML Laws to Combat Money Laundering and Terrorist Financing.” Specifically, officials are considering changing the definition of “financial institution” in Section 5312(a) of Title 31, United States Code to include “an issuer, redeemer, or cashier of prepaid access devices, digital currency, or any digital exchanger or tumbler of digital currency.”

As BTCManager.com points out, participating representatives didn’t concentrate on cryptocurrencies during the hearing, but the topic arose two notable times.

Ranking Member of the Judiciary Committee, California Senator Dianne Feinstein mentioned that proposed amendments to the bill would criminalize “intentionally concealing ownership or control of a bank account.”

The comment was significant because in July 2017, a Coinbase Board member gave written testimony to the U.S. Congress’ financial and anti-terrorism working groups indicating a “perception that virtual currency is untraceable,” which presumably may encourage would-be criminals “to conceal and move illicit proceeds.”

Another hearing participant, Senator Klobuchar, inquired:

“Is this transition we’re seeing from cash to digital going to make it easier or harder for law enforcement to track these money laundering cases, and you think these drug cartels are gonna start going cash free, and what do you do about it?”

Money laundering expert, John A. Cassara, mentioned cryptocurrencies by name at the hearing. He cautioned:

“Senator, I’m just glad I had my career when I did because I don’t know what I’d do trying to follow the money when it comes to digital currencies, it’s extremely, extremely challenging…I think if you look at the metrics, the metrics suggest today [that] digital currencies are a small fraction of the threat that we face. That’s not to say it’s gonna be the case in 5-10 years from now. We’re right at a crossroads, and it’s going to be very, very interesting to see what goes forward.”

Is The Threat Real?

There’s been a lot of chatter about the validity of crypto-terrorism links. Some factions are sure that ne’er-do-wells are using digital currencies to endanger the world. On the opposite side, a lack of tangible evidence has crypto-terrorism skeptics demanding “docs, or it didn’t happen.”

Contact A Cryptocurrency Lawyer

Got cryptocurrency legal questions? We’re cryptocurrency lawyers with answers. If you need assistance with a digital currency tax reporting matter, Gordon Law can help.

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