Can Bitcoin exchange be considered as money laundering?

[JB0011]

In my country, Bitcoin is neither legal nor illegal. So I don't know what Bitcoin exchange in this country means. Suppose, you are in another country. You buy BTC there (let's say $1000 worth). Later, you come back to your country and sell BTC (on Localbitcoins) and get your local currency in your bank. You technically didn't bring the money into the country through a proper channel. Or suppose, you earn online (freelancing or whatever) and get paid in BTC. Then you sell that BTC on localbitcoins and get your local currency. You technically didn't bring the money into the country through a proper channel. Can these exchanges be viewed as money laundering by authorities in your country where Bitcoin is neither legal nor illegal? If your answer is that it is not money laundering, how can you prove to authorities that what you did is NOT money laundering?

[1714126014]

1714126014

[Youresioure]

Your example includes fiat so I'd consider the act in your example money laundering. In spite of that thought, I think bringing money as Bitcoin into the country and using it as Bitcoin from crypto currency adaptors isn't an act that I consider money laundering. Crypto to crypto exchanges could fall in the same safe category. I'd start to worry when the transaction'd appear in a fiat balance.

[odolvlobo]

Perhaps you could learn a little more about money laundering. Here is a definition:

The process of taking the proceeds of criminal activity and making them appear legal.

It doesn't specifically refer to moving money between countries.

[Meuh6879]

Exchange block access when you don't follow the KYC and AML regulation.





Exchanges are not money clean machine ... at all.

[Doamader]

The only problem here is usually when you exchange money from other country you must pay a tax and the company should declare those transactions, localbitcoins arent nothing else then a individual business where anyone may buy or sell bitcoins, i dont see it as laundering, you arent making anything to cover where the money camed, you are earning bitcoin, getting paid and exchange it to your bank.

[JB0011]

Your example includes fiat so I'd consider the act in your example money laundering. In spite of that thought, I think bringing money as Bitcoin into the country and using it as Bitcoin from crypto currency adaptors isn't an act that I consider money laundering. Crypto to crypto exchanges could fall in the same safe category. I'd start to worry when the transaction'd appear in a fiat balance.

I understand what you are saying, but I think it's not making much sense. What I mean is, what difference does it make if you are spending in local currency or spending in btc? Btc isn't accepted in your local grocery stores, fuel stations, movie cinemas etc. so you have to exchange it to your local currency. From what you said, I think either both should money laundering or neither.

The only problem here is usually when you exchange money from other country you must pay a tax and the company should declare those transactions, localbitcoins arent nothing else then a individual business where anyone may buy or sell bitcoins, i dont see it as laundering, you arent making anything to cover where the money camed, you are earning bitcoin, getting paid and exchange it to your bank.

Yes, you're making sense and that's what I was thinking myself. You work online, get paid in PayPal, you get the withdrawn to your bank account. Now blockchain doesn't offer a withdrawing to your bank service so you use a third party (from localbitcoins) to get it withdrawn to your bank. Sort of like barter system. Digital barter system.

[shinratensei_]

IMO, the exchanges can be considered a little mixing, because some exchanges service are offering the features sending or depositing the money with the various address. all of the elements in the crypto are susceptive to be tools for money laundering.

[Hazir]

I want to ask you something Op, have you ever heard about term called "tax optimization"? What is your stance on this phenomena?
As far as I know this is not forbidden to move your business to another country or so called tax haven, you have no problem with that?

As for exchanges, bitcoin, buying, selling - as you said - bitcoin is not exactly regulated so, this rule is all we got: Nullum crimem sine lege.

[zahra4577]

In my country, Bitcoin is neither legal nor illegal. So I don't know what Bitcoin exchange in this country means. Suppose, you are in another country. You buy BTC there (let's say $1000 worth). Later, you come back to your country and sell BTC (on Localbitcoins) and get your local currency in your bank. You technically didn't bring the money into the country through a proper channel. Or suppose, you earn online (freelancing or whatever) and get paid in BTC. Then you sell that BTC on localbitcoins and get your local currency. You technically didn't bring the money into the country through a proper channel. Can these exchanges be viewed as money laundering by authorities in your country where Bitcoin is neither legal nor illegal? If your answer is that it is not money laundering, how can you prove to authorities that what you did is NOT money laundering?

Since you bought them and not acquired bitcoin through illegal ways,it is not money laundering because you already have converted your local currency to USD to buy btc

[JB0011]

I want to ask you something Op, have you ever heard about term called "tax optimization"? What is your stance on this phenomena?
As far as I know this is not forbidden to move your business to another country or so called tax haven, you have no problem with that?

As for exchanges, bitcoin, buying, selling - as you said - bitcoin is not exactly regulated so, this rule is all we got: Nullum crimem sine lege.

I personally have no issues with that. As far as I know, that is perfectly legal.

And the rule you mentioned, that makes a lot of sense.

Since you bought them and not acquired bitcoin through illegal ways,it is not money laundering because you already have converted your local currency to USD to buy btc

What if you are freelancing and earning in BTC and then getting it exchanged to local currency?

[mindrust]

You can't turn any illegal money into legal money with exchanges so the answer is no.

You do the job before you get to exchanges. The TV show "Breaking Bad" explains money laundering very well, you should look into it. Great show.

[pawel7777]

In my country, Bitcoin is neither legal nor illegal. So I don't know what Bitcoin exchange in this country means. Suppose, you are in another country. You buy BTC there (let's say $1000 worth). Later, you come back to your country and sell BTC (on Localbitcoins) and get your local currency in your bank. You technically didn't bring the money into the country through a proper channel. Or suppose, you earn online (freelancing or whatever) and get paid in BTC. Then you sell that BTC on localbitcoins and get your local currency. You technically didn't bring the money into the country through a proper channel. Can these exchanges be viewed as money laundering by authorities in your country where Bitcoin is neither legal nor illegal? If your answer is that it is not money laundering, how can you prove to authorities that what you did is NOT money laundering?

What does "neither legal nor illegal" even mean? If it's not declared illegal, then it's legal. I assume you meant 'unregulated', with no clear guidance of whether it's treated as asset or currency etc.

In such case, the only thing you can do is to enquire directly with relevant authority (i.e. your local tax office), telling them what do you intend to do and asking to clarify on  whether it's allowed and if so, how is it taxed.

[Maesters1-]

as bicoin has not yet given any statement about bitcoin that either it is legal currency or illegal, therefore we cannot consider it as money laundering, i think it is a legal transaction,

[StoreBit]

i think yes if you are transferring the money illegally from one stat to another using bitcoin as the medium of transferring money then it is really illegal for and can e conisider as money laundering.

[Hoor]

i think know because bitcoin is not use consider illegal by any country so using bitcoin for money transaction is legal therefore bitocin exchange can also be consider as legal.

[satdas]

very honestly yes, i think it will really be consider as money laundering,  and the reason is that most of the countries have not yet consider bitcoin as legal currency and still there is no tax on bitocin so if one is using it money transaction then it will certainly be consider as illegal activity . and will certainly be consider as money laundering.

[ethereumhunter]

i think it can be possible but its depend on bitcoin exchange itself and i think there are no bitcoin exchange will do that because if they do that, they risk their business with their member and their business will not stay for long.

[The Sceptical Chymist]

I think you could do it, by buying altcoins and switching back and forth--it's been discussed here before.  However as mentioned, the KYC regulations should take care of such things. 

I'm wondering when the law is going to catch up with the sketch exchanges like Yobit, and what they could have done with Cryptsy and Gox and Bittrex.  We're definitely still in the wild west territory.  But being considered money laundering?  Nah, not at present.

[HanSchultz]

stock market is used to launder money and there might be people who use crypto exchanges to launder money ,it is really difficult to monitor these activities ,the best thing you can do is to collect your customers details and verification for transactions

[Snorek]

Why do we care so much about bitcoin laundering money schemes when the worst money laundering operation in history was conducted by FIAT  Banks?
Banks and official institutions had washed more dirty money that bitcoin probably ever will.

Just one HUGE example: http://www.businessinsider.com/gods-bankers-financial-scandals-at-the-vatican-2015-2?IR=T

[markyminer]

very honestly yes, i think it will really be consider as money laundering,  and the reason is that most of the countries have not yet consider bitcoin as legal currency and still there is no tax on bitocin so if one is using it money transaction then it will certainly be consider as illegal activity . and will certainly be consider as money laundering.

i am also agree with you, it can really be consider as money laundering, if it is against the rules and law of your government, but as it is still not consider as legal currency therefore any transaction made thought it and specially transaction made out of country can be consider as money laundering.

[lollolloll]

 money laundering is very different from exchange IMO

[olubams]

I actually enjoy your analysis and its actually what is going on but no evidence. You see multi-nationals move money abroad because of strict exchange policies through Bitcoin and it goes. Looking at it from the definition of Money Laundering, yes it is but the issue is under what law can one be prosecuted? Thats a question. On the issue you raised I dont think its money laundering in your own case because its actually a payment for service you rendered and $1000 from my view has not reached a benchmark to be flagged as money laundering...

[Goms]

@OP
It's not money laundering when you get paid for "goods" you sold.
As per proof, show them your profile on localbitcoins because each profile requires a name, bank account and of course phone number. It should be sufficient to link the profile to you.

[Omegasun]

money laundering is very different from exchange IMO

But actually exchanged can be money laundering if they are not paying tax in the government, Even though traders pays transaction fee but the exchanged site avoid giving their tax. The traders is also committing money laundering charges because the money he earn from exchange is from illegal too, So OP has the point in his statement

[michkima]

Criminals can use this as a medium for laundering money. It's a mode they can exploit to launder their dirty money. Because of the nature of Bitcoins, it's a good and easy way to launder. But let's remember, there are plenty of ways to launder money. Heck, we can launder money through religion if you want to.

[buwaytress]

I think the consensus here seems to be that if crypto isn't considered illegal, then what you're suggesting can't be seen as money laundering. It shouldn't matter if it's fiat, crypto or other form of e currency - as long as you're not using for illegal purposes, and are not evading tax (as opposed to optimising or tax avoidance which are perfectly legal), then you have no cause for worry.

[audaciousbeing]

Its really going to be dicey in other to determine whether its money laundering depending on what is the benchmark to be regarded as money laundering in each country and also the applicable law on Money laundering over here money laundering will happen if you transfer as much as $10,000 equivalent with necessary disclosure so I think this would be interpreted in the case of Bitcoin of that same value in our own jurisdiction here.

[Slark]

I think the consensus here seems to be that if crypto isn't considered illegal, then what you're suggesting can't be seen as money laundering. It shouldn't matter if it's fiat, crypto or other form of e currency - as long as you're not using for illegal purposes, and are not evading tax (as opposed to optimising or tax avoidance which are perfectly legal), then you have no cause for worry.

Seriously - some totally LEGAL stuff you can do with your money seems more harmful that bitcoin ever will be! You already mentioned tax optimization it is tip of an iceberg!
Tax havens, shell companies, equity swaps, avoiding capital gains tax, evading the estate tax, shell trust funds, life-insurance borrowing etc. - all these things!
It is actually funny that people are asking about bitcoin like it was some kind of crime friendly asset.

[toptek]

right now coin base iis fighting the US GOV over handing over three years of record , a court order may force them to  , i not sure who doing it, it may trumps people starting up or the Demo for other reason i read some place but as far i know coinbase is keeping the law and following the laws for US customer . send out the right papers as they need to . so i don't think you can use coin base for illegal purposes for long if you try i do agree some of the stuff they use US cash in the US for is very question able but it been that way for years or as long i can remember or my whole life before bitcoins, I'm 60 now .

[audaciousbeing]

Its really going to be dicey in other to determine whether its money laundering depending on what is the benchmark to be regarded as money laundering in each country and also the applicable law on Money laundering over here money laundering will happen if you transfer as much as $10,000 equivalent with necessary disclosure so I think this would be interpreted in the case of Bitcoin of that same value in our own jurisdiction here.

In addition to the above, over here, when they mention Money Laundering, you are not talking about any small amount of money because thats what qualifies as that in our own clime of the society. And for someone to have that kind of money, it means that individual all things being equal is not a small boy which means he wont be exposed to Bitcoin yet based on what we have on ground and government is not even aware of Bitcoin so until then if I have that kind of money, I will move it without any disturbance through Bitcoin.

[zoose]

I don't think it would be considered money laundering if you merely used Bitcoin in your country. Now, if you have a drug dealing business and you take your fiat and turn it into Bitcoin to hide the money then you're laundering money.

[Victorycoin]

In my country, Bitcoin is neither legal nor illegal. So I don't know what Bitcoin exchange in this country means. Suppose, you are in another country. You buy BTC there (let's say $1000 worth). Later, you come back to your country and sell BTC (on Localbitcoins) and get your local currency in your bank. You technically didn't bring the money into the country through a proper channel. Or suppose, you earn online (freelancing or whatever) and get paid in BTC. Then you sell that BTC on localbitcoins and get your local currency. You technically didn't bring the money into the country through a proper channel. Can these exchanges be viewed as money laundering by authorities in your country where Bitcoin is neither legal nor illegal? If your answer is that it is not money laundering, how can you prove to authorities that what you did is NOT money laundering?

What to determine whether your exchange is money laundry or not, is the source of the $1000 used for buying the BTC, where did it come from or how was it earned? It could have come from anything - your sweat or crime, so if you got some proof like that of making it from freelancing, then you don't have any case. However, if you do not have proof of how the $1000 ended in your hand, that's where your case with the authorities starts.

By the way, since you employed localbitcoins for the exchange, you should have settled for cash, not bank and no dust would be raised!

[sonic212]

bitcoin exchange to my knowledge there are no laws of his country so I think there is no theft of money in the transaction is safe for users bitcoin

[Amph]

they are not used to do any illegal activity, unless you want to evade, but this is not a problem with the exchange but your, i can't see how they can be considered money laundering, maybe you need to check the definition of that first

if it was true every exchange would be closed already, you think their government will allow this? never

[lOvE mE forEvEr]

I don't think it would be considered money laundering if you merely used Bitcoin in your country. Now, if you have a drug dealing business and you take your fiat and turn it into Bitcoin to hide the money then you're laundering money.

I think the contrary, if people know bitcoin the opportunity to make money laundering very large. with bitcoin of course will not be detected as nature anonymous. I think state must be set it so that bitcoin not abused.

[legendbtc]

money laundering is very different from exchange IMO

For exchanging money you need to get permission from the government, if you won't get any certificate than you are violating country rules and regulations. Exchanges are being made only when you have proper reason which are regulated under control of governments. But bitcoin is not still un control of government so it is illegal.

[Sniper150]

according to what I've read, money laundering is punishable a crime where any person who transact money from crime to this out from clean way as anti-money laundering law of 2001 in republic act no. 10365 otherwise known as the amendment to anti-money laundering law that aside from money is also covered that the delivery of precious metal and precious stones with such laws.

maybe this is right because it is in the laws. i dont think so 
 

[1.btcwonder]

You should exchange money by permission of the government. Bitcoin or other cryptocurrencies are not considered money laundering because you have to pay taxes at the time of the transaction. It is considered money laundering only if you are annoying to evade paying taxes to the authorities.

[Arcteryx]

I will have to say it is only considered money laundering if the country who the accuser considers bitcoin as a currency whether a real one or just a digital currency. It has to be under those to be determined as a form to be prosecuted under that countries laws and regulations.