Money Laundering

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Money Laundering in the New Age of Virtual Currency Introduction “Money laundering is the process by which one conceals the existence of illegal source, or illegal application of income, and then disguises income to make it appear legitimate”. By the 1970’s, criminal organizations and more specifically, the drug trade began to make profits that attracted the attention of Congress. In 1999, it was estimated that drug trafficking alone produced approximately $48 billion in profits per year to be laundered in U.S. Dollars. These profits could no longer go unnoticed by drug dealers spending it on daily activities such as food, clothes, and entertainment. From a pure logistics standpoint, $48 billion dollars isn’t going to fit under the mattress. Drug dealers were forced to try and blend these profits into legitimate business or pass it through financial institutions in the hope that the money’s origin would become obscured. Congress recognized this new problem that criminals encountered and began to enact money-laundering laws aimed at preventing the criminals from accessing these profits. Congress has created a regulatory system that works to identify the point at which criminals try and invest those profits or funnel them through the financial institution. As the black market becomes more profitable, anti-money laundering laws provide a unique alternative to many of the other laws aimed at preventing and punishing crime. Instead of only convicting the drug dealer who stood on the corner, anti-money laundering laws establish liability for anyone who has knowledge of the illicit origin and proceeds to transact with the drug dealer. They aim to take away any ability to use profits and thus any incentive to get involved in profitabl... ... middle of paper ... ...prove the Treasury Department and the IRS’s ability to identify the source, volume, and movement of currency and other monetary instruments transported in and out of the United States. The Moral of the Story The real goal behind Congress’s anti-money laundering scheme is that of complete transparency. Congress wants to be informed. Currency reporting makes this information a federal interest. Information is the glue that holds the whole structure together. Any attempt to use cash or its equivalent in excess of $10,000 will immediately raise the suspicion of any legitimate bank or business. The bank or business will report this persons name, tax identification number, and other pertinent information to the IRS and the Treasury department. Since Bitcoin offers anonymity for its users, it is no surprise that it has been at the central of money laundering controversy.

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