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How Cryptocurrency Is Used in Money Laundering

The technological age has revolutionized nearly every facet of life – including criminal activities. Since cryptocurrencies like Bitcoin have been introduced, they’ve become a popular tool to aid in money laundering efforts.

What Is Money Laundering?

Money laundering is an attempt by an individual to disguise the origin of money gained through illegal activity. Through the offense, a party takes dirty money and “launders” it, removing the stains of the crimes attached to it.

To be guilty of money laundering in California, an individual must:

  • Complete a transaction through a financial institution
  • Deal with more than $5,000 in a seven-day period or more than $25,000 in a 30-day period
  • Make the transactions with the intent to promote criminal activity

While many of the current laws are written in a way that focuses on traditional banking systems and money laundering practices, using cryptocurrency to “clean” dirty money is equally illegal and punishable.

Understanding Cryptocurrency

Cryptocurrency is a popular form of payment in online markets. Unlike cash currencies, cryptocurrencies are intangible assets. Users simply transfer them through the internet.

They are not completely anonymous, though they do complicate efforts to follow the transactions.

Cryptocurrency in Money Laundering

Cryptocurrencies like Bitcoin are favored because of two main services: mixing and exchange. Bitcoin mixing disassociates the cryptocurrency from its original source. This aids money launderers as they work to sully the source of their illicit funds.

In exchange, an individual converts cryptocurrency into tangible and spendable money. This completes their laundering process.

While cryptocurrencies offer some degree of anonymity, their trail is permanent. So, even if money laundering initially goes undetected, the crime can catch up with the individual or group years later.

The Penalties of Money Laundering

Money laundering is a wobbler offense under California law. As such, it may be charged as a misdemeanor or felony, depending on the facts of the case and the individual’s criminal history. It could be punished by:

  • Misdemeanor: up to a year in jail and court fines
  • Felony: up to three years in prison and a fine of up to $250,000 or twice the amount of money laundered, whichever is greater
  • Felony with previous money laundering convictions: up to three years in prison and a maximum fine of $500,000 or five times the amount of money laundered, whichever is greater

If the money laundered exceeded $50,000, an individual may receive an additional year on their prison sentence. If it exceeded, $2,500,000, an additional four years may be added.

If the crime is handled in federal court, a conviction can result in a prison sentence of up to 20 years.

If you’ve been accused of money laundering, our attorneys can help. Call us today to discuss your case: (949) 251-0330.