Robin Fuson
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Can Using Bitcoin Lead To Money Laundering Charges?

Criminal Defense

Can the use of the virtual currency called “Bitcoin” lead to an accusation of criminal money laundering? Precisely what is the law in Florida regarding “alternative” or “virtual” forms of currency? Should the average person in Florida know about – or be concerned about – Bitcoin and money laundering? You might be surprised. You’ll find some answers below.

But first, you should understand that money laundering is considered a very serious crime in the state of Florida. If you are arrested and accused of money laundering in the greater Tampa Bay area, you must have the advice and services of an experienced Tampa criminal defense attorney. Money laundering is on the rise, and so are the prosecutions for money laundering in our state.

Earlier this year, the Florida Legislature sent Governor Rick Scott a bill that defines “virtual currency” and forbids its use in laundering criminal proceeds. Governor Scott signed that bill into law in June and it took effect in July. The new law adds the term “virtual currency” to the definition of “monetary instruments” under Florida’s Money Laundering Act.

WHY DID FLORIDA LAWMAKERS ADDRESS BITCOIN THIS YEAR?

The new law is a response to a Miami judge’s decision last year to dismiss money laundering charges against a suspect who allegedly sold $1,500 worth of bitcoins to purchase stolen credit-card numbers online. “Cyber criminals have taken advantage of our antiquated laws for too long,” State Representative Jose Felix Diaz of Miami, who sponsored the bill, told the Miami Herald.

“Bitcoin bypasses the traditional banking system, and our state’s laws simply had not caught up to the upsurge in criminality in the world of cybercurrency,” Representative Diaz explained. Lawmakers across the United States have been struggling for several years to determine how – or if – Bitcoin should be regulated.

WHAT EXACTLY IS BITCOIN?

Bitcoin is “digital currency.” Digital currencies allow internet users to make person-to-person transactions, to purchase services and goods, and to exchange money – even internationally – without the involvement of banks, governments, credit-card firms, or any other third parties. Bitcoins can be purchased from distributors like CoinBase, which operate much like PayPal.

Bitcoins can be used to purchase legitimate services and goods online and even at a number of brick-and-mortar stores and restaurants. But south Florida drug traffickers have also used bitcoins, especially through the “Silk Road,” an online black market that has been shut down twice by the FBI and international law enforcement authorities.

BUT IS IT MONEY?

Is Bitcoin actually money? One authority says no. Charles Evans is an economist and a virtual currency expert at Barry University in Miami Shores. Because Bitcoin is backed by no government and by no gold or silver, Evans contends that bitcoins are more comparable to poker chips than to cash.

Nevertheless, the economist speaks critically of the new law. “Florida legislators will be sending a very clear signal that financial innovation is not welcome here,” he said. He also suggested to the Miami Herald that “tickets to Disney World” might be the next target of regulation by Florida lawmakers.

Law enforcement officials in this state are taking Bitcoin – and its potential for abuse – a bit more seriously. According to Miami-Dade State Attorney Katherine Fernandez Rundle, “The high-tech criminals of the 21st Century use virtual currencies like bitcoin to accumulate and hide the profits of their illegal activities.”

Prosecutors and lawmakers began working on the new statute after a judge in Miami-Dade County dismissed charges against Michel Espinoza, who was accused of laundering $1,500 worth of bitcoins. Espinoza’s defense attorneys contended that because Bitcoin is not actually money under Florida law, the criminal charges should be dropped, and the judge agreed.

WHAT CONSTITUTES MONEY LAUNDERING IN FLORIDA?

Bitcoin regulation is a tangle of confusing laws from one state to the next. The IRS presumes that Bitcoin transactions are merely barter. Florida law defines money laundering as any action to hide funds acquired through crime including bank deposits, wire transfers, and now, bitcoin transfers. Transfers of real estate or vehicle titles also constitute money laundering if a title transfer is used to conceal the profits of criminal activity.

To convict a defendant of money laundering in Florida, the state must prove beyond a reasonable doubt that the defendant knew of the criminal activity or criminal source of the proceeds. The state must also prove beyond a reasonable doubt that the defendant knew that the financial transaction functioned to conceal the criminal nature of those proceeds.

WHAT ARE THE PENALTIES FOR MONEY LAUNDERING CONVICTIONS?

The text of the Florida law states: “Knowing that the property involved in a financial transaction represents the proceeds of some form of unlawful activity” and completing that transaction is money laundering, which may be charged as a first, second, or third-degree felony depending on the amount of the transactions:

– Money laundering is a third-degree felony for transactions over $300 but under $20,000 within a twelve-month period.
– It’s a second-degree felony for transactions over $20,000 but under $100,000 within a twelve-month period.
– It’s a first-degree felony for transactions over $100,000 within a twelve-month period.

Florida statutes establish a range of sentences for money laundering convictions. A third-degree felony is punishable upon conviction by up to five years in prison, while a conviction for a second-degree felony is punishable upon conviction by up to fifteen years in prison. A first-degree felony conviction can send someone to prison in this state for as much as thirty years.

A money laundering conviction can also be punished with a considerable fine – $250,000 or twice the total amount of the illegal financial transactions, whichever is greater. If the offender has a previous money laundering conviction, the potential fine goes up to $500,000 or five times the amount of the illegal transactions.

CAN A CRIMINAL DEFENSE LAWYER HELP?

Anyone who is being investigated for or charged with money laundering in Florida will need high-quality defense representation from an experienced Tampa criminal defense attorney. If you are taken into custody on a money-laundering charge, exercise your rights. Be polite, but insist on your right to remain silent and your right to have an attorney present for any questioning.

Money laundering is a felony. A conviction means prison. Don’t risk your future. If you’ve been tricked or cajoled into a financial transaction that you did not fully understand, if the accusation against you is entirely fabricated and you are entirely innocent, or even if you are in fact guilty as charged, you must have a Tampa criminal defense attorney working for justice on your behalf.

Robin Fuson
By Robin Fuson