Money laundering and Bitcoin
Bitcoin and other crypto-currencies are never far from the news. This is most recently because the value of Bitcoin rose considerably in the latter part of 2017, the market then crashing. It is a currency that permits criminal activity for those involved in money laundering.
It is an odd ‘currency’, as it is not backed by any government, and certainly not by an underlying gold stock. It is, in fact, nothing more than a virtual object that has a value dictated solely by supply and demand – indeed that is one of the few characteristics that it shares with conventional currency.
Currency attractive for money laundering
So, why the attraction? Why would a person wish to convert £10,000 into one bitcoin, or a lesser amount for a share of one?
One of the main attractions of bitcoin is that it exists across borders, outside of traditional banking controls and with a secure cloak of anonymity. Those three magic ingredients make this type of currency attractive to those seeking to launder the proceeds of crime.
Nobody is interested in the identity of the trader. The proceeds can be cashed in almost anywhere in the world. There are even cash machines in some countries including England. Blockchain encryption has rendered law enforcement impotent in this brave new world of international finance.
This explains the rise in value. In just one year it rose to thirteen times its value at the end of 2016.
But, the larger the sums that need to be laundered, the more complex and risky it is to make those initial transactions. That is where the middle-man comes in. He or she will be a person either knowingly or unwittingly agreeing to purchase bitcoin, or, more commonly, transfer monies on behalf of a money launderer. They will take a fee for his or her trouble along the way.
Sometimes the amount could be as little as a few hundred pounds but extrapolated this sum becomes significant. Such individuals are known as ‘money mules’.
Government regulation to fight money laundering
The government is keen to regulate these new currencies, and in a recent statement to parliament the treasury minister said:
“The UK Government is currently negotiating amendments to the 4th Anti-Money Laundering Directive that will bring virtual currency exchange platforms and custodian wallet providers into Anti-Money Laundering and Counter-Terrorist Financing regulation, which will result in these firms’ activities being overseen by national competent authorities for these areas. The Government supports the intention behind these amendments. We expect these negotiations to conclude at EU level in late 2017/early 2018.”
Until these protections are in place, people will be able to assist in money laundering enterprises, with little that the authorities can do to stop it.
Up to fourteen years for money laundering offences
It perhaps sounds the stuff of fiction, but in the first nine months of 2017, there were over 8652 ‘money mule’ cases identified by Cifas, the fraud prevention service. This criminality represents just the tip of a money laundering iceberg.
The penalty if caught is potentially significant, with sentences of imprisonment as long as 14 years available to a court. If someone close to you seems to have come into money, you may want to start asking questions, before it is too late.
Contact us for specialist legal advice
When a person becomes unwittingly involved in money laundering it is important to step back from the position as seen with the benefit of hindsight and examine what truly went on. A careful forensic analysis of the circumstances will reveal any defences available to someone suspected of money laundering crimes. Making a silly mistake is not yet a crime.
If you need advice about money laundering or any other criminal law matter then please contact your nearest office. We will be able to provide you with free and independent legal advice in any police interview, and advise you on the availability of legal aid should your case come to court. Alternatively, you can get in touch by using the contact form below.