Money Laundering in the New Age of Virtual Currency Introduction “Money laundering is the process by which one conceals the existence of illegal source, or illegal application of income, and then disguises income to make it appear legitimate”. By the 1970’s, criminal organizations and more specifically, the drug trade began to make profits that attracted the attention of Congress. In 1999, it was estimated that drug trafficking alone produced approximately $48 billion in profits per year to be laundered in U.S. Dollars. These profits could no longer go unnoticed by drug dealers spending it on daily activities such as food, clothes, and entertainment. From a pure logistics standpoint, $48 billion dollars isn’t going to fit under the mattress. Drug dealers were forced to try and blend these profits into legitimate business or pass it through financial institutions in the hope that the money’s origin would become obscured. Congress recognized this new problem that criminals encountered and began to enact money-laundering laws aimed at preventing the criminals from accessing these profits. Congress has created a regulatory system that works to identify the point at which criminals try and invest those profits or funnel them through the financial institution. As the black market becomes more profitable, anti-money laundering laws provide a unique alternative to many of the other laws aimed at preventing and punishing crime. Instead of only convicting the drug dealer who stood on the corner, anti-money laundering laws establish liability for anyone who has knowledge of the illicit origin and proceeds to transact with the drug dealer. They aim to take away any ability to use profits and thus any incentive to get involved in profitabl... ... middle of paper ... ...prove the Treasury Department and the IRS’s ability to identify the source, volume, and movement of currency and other monetary instruments transported in and out of the United States. The Moral of the Story The real goal behind Congress’s anti-money laundering scheme is that of complete transparency. Congress wants to be informed. Currency reporting makes this information a federal interest. Information is the glue that holds the whole structure together. Any attempt to use cash or its equivalent in excess of $10,000 will immediately raise the suspicion of any legitimate bank or business. The bank or business will report this persons name, tax identification number, and other pertinent information to the IRS and the Treasury department. Since Bitcoin offers anonymity for its users, it is no surprise that it has been at the central of money laundering controversy.
In the Frontline documentary “The Madoff Affair”, it is revealed and painfully evident that the ability to predict, prevent, and prosecute white collar crime is flawed and highly complicated even for the government. Frontline takes a look at the first global Ponzi scheme in history and helps create a better understanding of the illegal conduct that led to the rise and fall of Bernie Madoff and those associated with his empire (Frontline, 2017). When the leadership at the top of any organization is founded on lies, secrecy, and empowered by the leaders within the industry, the corruption is deep and difficult to prosecute. The largest stock market fraud in history reinforces the need for better government regulations, enforcement of the regulations, and oversight, especially in it’s own backyard (Yang, 2014).
One aspect of financial incentives lay in the concept of forfeiture. Law enforcement agencies were granted authority to keep the bulk of cash and assets seized when making arrests, which allowed the drug war’s perpetual existence. The drug market then needed to be profitable and successful so that police forces could make money (Alexander, 78-79). A person could be found innocent of a crime and their property could still be subjected to seizure, and “those who were targeted were typically poor or of moderate means, lacking the resources to hire an attorney or pay the considerable court costs” (79). Ultimately, this process was highly lucrative for police. Those with assets could buy their freedom, while those who lacked financial means were subject to arrest. Additionally, there was no real justification for many of the raids. For example, some officers took as little as 93 cents in raids, even though by no means could that amount be considered drug money (82). Property could also be considered “guilty”. For example, a woman who knew her husband sometimes smoked marijuana could have her car forfeited since she allowed him to use her car (83). Unfortunately, forfeiture cases are left unchallenged 90% of the time, since the primary targets of this practice cannot afford lawyers to fight the case. Additionally, federal funding to police departments provided incentives for police arrests in the drug war. Law enforcement agencies that made drug-law top priority were given large sums of money, leading to competitions between departments and higher arrest rates (Alexander, 74). And not only cash assets, but military equipment was doled out by the Pentagon to local police departments in hopes that it would increase arrest rates
Drug trafficking is a prohibited, global trade that involves the production, the distribution, and the sales of drugs. It is a topic that has become a very large issue all over the world. It also has had a very big effect on many different countries because they often depend on the business that the drug trafficking creates. Since it has become such a problem, there have been many different efforts to put a stop to drug trafficking by different enforcement agencies. A website about drug statistics, drugabuse.net, indicated that the Drug Enforcement Agency or DEA, as it is well known as, makes over thirty thousand arrests each year dealing with the illegal sales or distribution of drugs. It is also believed that Mexico’s economy would shrink by over sixty-three percent if they lost their drug trafficking industry. There are many different tribulations like this that drug trafficking has created. Many people see it as such a vital asset to some countries, so it has emerged as an extremely big business that brings in a boatload of money. Just like any other immense problem, drug trafficking has its causes and effects
The government has since used the RICO act for its intended purposes over the years. The original intent was to bring down members of criminal organizations such as the mafia. It allowed the prosecution to connect incidents to the bosses or leaders behind the original crimes. Throughout our research we went back to how the RICO act came to be and the definitions of some key terminology of the act. The government has been successful in many famous cases over the years by benefiting from the RICO act. The RICO act has also led to some failures and confusion both in civil cases and in prosecution cases. The Hell’s Angels is a great example of the jury not understanding the terminology of an organized crime enterprise. The jury was unable to determine whether or not the prosecution was finding the bikers guilty or the Hell’s Angels enterprise guilty leading to a hung jury. Since, the original act has passed its original purpose the government and civil cases have abused the RICO act beyond it’s intended purposes. What was once a tool in law to aid in the dismantling of criminal organizations has now become an intimidating force which could prevent growth in an industry for fear of the massive fines. Through our research on the subject of Racketeer Influenced and Corrupt Organization Act we have found the good, the bad, and the grey area. RICO has served its purpose, but like with any good intentioned act it can be mistreated over
Bitcoin is a form of digital currency that is similar to physical cash stored in a digital form. It is the first fully implemented cryptocurrency protocol utilizing an open source peer-to-peer payment system. As a transfer protocol, it fundamentally functions as a money transfer medium that sends bitcoins from user to user without the need of a third-party intermediary and the system is protected by peer-reviewed cryptographic algorithms. This cryptographic digital currency simultaneously provides users a method to exchange money for free or a nominal fee, which is mutually beneficial for retailers and consumers. The main concern is that it can be used for illegal activities such as the purchase of drugs, weapons and other illegal goods. Albeit true, the concern also exists with all other forms of regulated currency, such as cash and wire transfers. Anonymity is one of the greatest Bitcoin perks, however, nothing is as untraceable as cash. It is the solution to the leading economic and security issues that have left everyone vulnerable, particularly in the wake after the Target security breach in which hackers stole unencrypted credit card and debit card data for 40 million customers’ as well as their pins over the span of two weeks before it was detected. In addition, these hackers were also able to obtain the names, addresses, phone numbers, and email addresses of 70 million customers (Andreesen 6). If Bitcoin were to be used as the standard form of payment, the transaction data does not identify the purchaser’s identity and all information is encrypted. It is the most secure payment method and is a more secure future. Bitcoin is a technologically innovative soluti...
estimated 7 billion dollars earned in shadow market. This money is used for drugs, gangs, mafia,
Drug trafficking has been a massive concern between the borders of Mexico and the U.S. “since mid 1970s” (Wyler, 1). Drug trafficking is “knowingly being in possession, manufacturing, selling, purchasing, or delivering an illegal, controlled substance” (LaMance, 1). A dynamic relationship exists amongst Columbia, Mexico, and the U.S. the informal drug trafficking economy. This growing informal drug economy leads to many individuals creating a substantial living through this undercover market. These individual drug cartels monopolizing the trafficking market are a growing problem for the U.S economy and need to be located and controlled. If this trafficking continues, the U.S. informal economy will crush the growth of legal industries. The trafficking and abuse of drugs in the U.S. affects nearly all aspects of consumer life. Drug trafficking remains a growing issue and concern to the U.S. government. The U.S. border control must find a way to work with Mexico to overpower the individuals who contribute to the drug trafficking business. This market must be seized and these individuals must be stopped.
Sometimes these types of operations create a negative image for offices engaged with these types of operations. "The drugs were not real the sentence was", (Wisnieski, 2015). With these types of operations, money is the common ground among crime and criminals. When contraband is seized and money has been recovered by law enforcement or the bad guys lose a significant payoff due to the seizure of their contraband, safety becomes the focal point. Safety of the officers and victims become primary as malum in se offenses have retaliatory consequences.
BY DOUG HENWOOD What’s being touted in some circles as the future of money looks hardly more peaceful than its past. Bitcoin, a formerly obscure cybercurrency, is now all over the headlines with reports of bankruptcies, thefts and FBI lockdowns. If our fate is to buy and sell bitcoins, this instability is troubling. But despite the headlines, the triumph of Bitcoin and related cyber-currencies is a lot less likely than recent commentary suggests.
The forfeiture laws allow the government to seize property from people it believes to be involved in drug-related activity, and then to use that revenue to bolster the efforts of law enforcement. The concept is simple. If you use your car, plane or boat to transport drugs, you will lose your car, plane or boat. And if your cash was acquired through illegal drug sales, you will lose that cash and anything bought with it. Forfeitures, however, can fall into two categories--criminal or civil--and due to some high-profile abuses, civil asset forfeiture has become extremely controversial. Under criminal law, the government can seize property as punishment only after its owner has been convicted of a crime, and our justice system ensures that they are considered innocent until proven guilty. But under civil law, it is the property itself--not the owner--that is charged with involvement in a crime” (Dunn, 2014, para. 8-9).
Cryptocurrency, such as Bitcoin, has brought in a lot of media attention over the past few months and has been raising eyebrows within government agencies worldwide. Here’s why: Appropriately constructed, cryptocurrency could potentially upend our established global economic system. This newfound technology poses as a serious threat to our currency-issuing central banks and also to the global financial intermediaries. To truly understand the changes that cryptocurrency could potentially bring, you will need to have a general understanding of our current economic system.
4) In the occasion that banks require more cash, they basically print progressively or summon more digits in their electronic records. This system is viable abused and gamed by banks since paper money is fundamentally paper checks with a certification to have regard, with no genuine physical gold off camera to back those
Money laundering is the routing of illegal profits from bank to bank to disguise its existence. The illegal profits are usually made through activities such as drug trafficking, prostitution rings, illegal arms sales, and various other things. Unfortunately money laundering is a serious crime that is still prevalent in the United States and other countries. The Russian mafia, the Triad or Chinese mafia, and the Columbian drug cartel are just a few of the groups that partake in money laundering. No one knows exactly how much money is laundered yearly but it is estimated to be about $100 billion in the United States. The United States is not the only country affected by these numbers. The estimated amount of laundering is 2% - 5% of the world’s GDP, between $600 billion and $1.5 trillion dollars annually. Although there are hundreds of ways in which to launder money, some are more lucrative than others. For example, the Black Market Peso exchange, gold, and digital cash are some of the more common ways to launder money. Making it harder to crack down on money laundering is the fact that many countries do not have money-laundering laws in place like the United States does. These other countries make it possible for this illegal activity to carry on, and are only hurting themselves because money laundering creates a direct negative effect on their economy. If these nations want to fight money laundering they will need to implement laws against it. Banks could be one of the most useful tools in stopping the laundering of money.
The invention of money is perhaps one of the greatest achievements of human civilization. From the very beginning of society, people have used money to circumvent the difficulties of bartering and to foster trade and commerce. Since then, money has come a long way. No longer do we need to rely on silver coins, cocoa beans, or even anything of intrinsic value to conduct our business; today, we use paper currency, which is convenient and easy to carry around. But slowly, we are moving into the digital age of money, an age in which less of our money is actually tangible and more of it is just data on a computer server.