Bitcoin Forum

I have been reading the AML policy of BitInstant, which seems to be passing the buck on anti-money laundering on to the exchanges such as MtGox apologies to BitInstant, I redact this statement. This seems like a legal gray zone so I am hoping someone with a little US legal experience could say if this sort of practice is legal, or if it could cause problems down the road. I am considering using BitInstant for transfers but would like to minimize legal risk.

Thanks

Are you trying to conceal the source of money obtained by illicit means?   

If not, then what legal risk might you believe you are exposing yourself to?

This is simply not true.

We don't pass the buck to anyone.

Thanks

I have not and do not plan on using bitcoins for any illicit purpose whatsoever. I am fascinated by it both as a concept and as a phenomena and am trying to gain more understanding about it's real-world applications by reading anything I can find. I am drawn to it primarily because it is not just a new concept but a new way of thinking in itself (i.e. spawning other ideas such as namecoin). I also find real value in it's use, such as favorable exchange rates, as much as 10c below conversion price from USD -> Euro. Even though I still consider myself a novice, I see there is a whole world of unexplored ideas and applications for Bitcoin.

Once again, apologies to BitInstant, I have redacted my statement and will be more diligent when writing my posts in the future. I was hoping to get pointed towards some reading which would explain the relationship between Bitcoin and FinCEN, in relation to your business and in the US in general. It seems that Bitcoin has a sorted reputation and I would like to avoid being falsely identified as a money-launderer (or involved with whatever Schumer was talking about) for using bitcoins or exchanging through an institution which does not report as legally required.

In your Anti-Money Laundering statement (which I found at https://www.bitinstant.com/static/aml.pdf) you write that you "are not a money transmitter and do not interact directly with regulated financial institutions, instead using intermediary bodies to process fund transfers and acting as a third party to accelerate transactions." Does this mean you do not engage in the same kind of reporting as a bank would?

Thanks

Well, here are three steps that should help you avoid being in the 'wrong neighborhood'.

First, is to not be involved in anyway in the types of things Schumer was talking about. Another is to not be involved with those whom you suspect may be involved in anyway with those types of things.

Second, keep current and accurate records of the transactions you engage in. In most cases, assuming you are a US person you should already be doing this to some extent for tax purposes. Often the receipts are emailed to you like with Bees Brothers (http://www.beesbrothers.com).

Third, let those you interact with know that you do not engage in the types of things Schumer was talking about and keep accurate records so you can be compliant with taxes.

The small remaining risk of 'being falsely identified' is something you have little control over. This can largely be accomplished by severing the audit trail (https://en.wikipedia.org/wiki/Audit_trail) (to outsiders but not to your own records) when possible and often which is good privacy hygiene anyways to protect yourself from identity theft.

It would be similar to taking $400 out of the ATM, spending them at Best Buy on some computer parts, the cash being stolen and then found at a drug bust. This is just the nature of identity theft, suspicion, etc.

In that case, you would show you withdrew $400 from an ATM (a fact they assert), that you spent it at Best Buy (provide the receipt) and the story is collaborated with a police report filed by Best Buy for the cash theft, etc. Of course, there is a big difference with 'beyond a reasonable doubt' between $400 and $40,000 with conforming serial numbers from the same account via ATM withdrawals. So likewise if 1 or 2 BTC leads to you is a lot different from 1-2 thousand BTC.