In my time as a federal prosecutor, I've seen an alarming rise in unlicensed money transmission through cryptocurrency platforms. This practice often involves individuals or entities conducting money transmission activities without proper licensing and registration with the relevant state authorities, violating 18 USC 1960. The law is clear: any person who engages in the business of receiving money for transmission or transmitting money from one individual to another must comply with federal regulations under the Bank Secrecy Act (BSA) and other related statutes.
Prosecutors frequently leverage Section 1960 alongside wire fraud statutes like 18 USC 1343, which criminalizes schemes using interstate communications for fraudulent purposes. These charges often arise when individuals use digital currencies to move funds across state lines without adhering to the legal requirements set forth by federal regulators. The Digital Currency Initiative at the Department of Justice (DOJ), along with the Securities and Exchange Commission’s Cyber Unit and the FBI Virtual Currency Team, have been particularly active in pursuing such cases over recent years.
When defending clients accused of unlicensed money transmission involving cryptocurrencies, it's crucial to dissect how they were operating their businesses. Were there any indications that your client was attempting to avoid legal oversight or engaging in activities that could be perceived as fraudulent? Understanding the precise nature and intent behind transactions is pivotal, as the line between legitimate business practices and criminal activity can often be very thin.
Former Federal Prosecutor Insight
Prosecutors often scrutinize the business model and operational procedures of cryptocurrency exchanges and other digital currency platforms to identify signs of non-compliance with Section 1960. They look for patterns indicative of unlicensed money transmission, such as high volumes of transactions without corresponding reporting or registration documentation.