Topic: Miami arresting people for use of Bitcoin - page 2. (Read 5839 times)

"that part is written in the document only to prove that he KNEW what the undercover agent was dealing with"

my contention is that it only proves that the listener identified a question, it doesn't prove anything meaningful, in fact it more likely proves a disinterest because his response was generic and curt essentially a "give me your money and leave me alone" answer.  

yah Ponzi totally hilarious

Ah, sorry, you're perfectly right, the OP's title is completely misleading, like 99.99% of the ones used in the media..

I guess you haven't read what I wrote a few post before, about the article being misunderstood regarding the story of the stolen cards: he's probably prosecuted not because he said "I'll think about it" re the proposed illicit activity.. that part is written in the document only to prove that he KNEW what the undercover agent was dealing with and which was the purpose of the bitcoins he wanted to buy.

They are probably charging him with ML for promoting the carrying on of specified unlawful activity by conducting (or attempting to conduct) a financial transaction involving property represented to be the proceeds of specified unlawful activity, or property used to conduct or facilitate specified unlawful activity, where the term “represented” means any representation made by a law enforcement officer or by another person at the direction of, or with the approval of, a Federal official authorized to investigate or prosecute violations of this section.

They actually released a statement, that this was targeted at "registered businesses", and "those operating as a business, with large sums of clients and monies". Not individual John-Doe's who sell a few coins for a profit. That is just asset sales, and treated as such. (Transactions over $10,000 or volumes over $10,000 by any one person, are the target of the laws. Not single transactions under $10,000.)

Two transactions does not make him a "money transmitter".

"I will think about it", does not imply "Yes, I think I will", it implies, "I am unsure if I will participate, and have decided not to answer you at the moment".

If he was willing, that would never have been said. It would only have been said if he didn't want to do it, or had reservations about participation in facilitating the aforementioned apparent confession of illegal activities.

Getting arrested only implies that they "think" you may be guilty of a crime. The judge is the one who determines if any crime has been committed. To cover all ground, for possible convictions, the arresting officers will charge you with many things, and hope some are actual things which might be upheld in court. Rarely does anyone ever get found guilty of all charges, in most cases. They could have thrown j-walking in there, just to be dicks.

They acted rash, obviously an attempt to "ride BTC coat-tails", to try and make an example out of someone. That, or they actually had reservations that this person was conducting illegal activities, or just assumed so, because of the mention of BTC. (In light of news like silk-road, and due to lack of understanding what BTC actually is. We call those "white-knights", who are often misinformed, and get made to be the fools and branded forever as witch-hunters of the modern day.)

P2P on that car deal, no problem; if dealer is involved simply must report.


this is the guide:
http://www.fincen.gov/statutes_regs/guidance/html/FIN-2013-G001.html


this is from the horse's mouth:

REMARKS OF JENNIFER SHASKY CALVERY
DIRECTOR
FINANCIAL CRIMES ENFORCEMENT NETWORK
 
THE VIRTUAL ECONOMY: POTENTIAL, PERPLEXITIES AND PROMISES
UNITED STATES INSTITUTE OF PEACE
 
WASHINGTON, DC
JUNE 13, 2013
 
Good afternoon. It is a pleasure to be joining you at this event to discuss the potential,
perplexities, and promises of the virtual economy. I would like to thank our co-hosts, Thomson
Reuters, as well as the International Centre for Missing & Exploited Children, for inviting me to
join you today. I would also like to thank the U.S. Institute of Peace for providing us with such a
beautiful venue for our discussions.
 
First, a few headlines from the past several weeks, which not only sum up the very theme
of today’s discussions, but also illustrate how different our perspectives can be:
 
“Is the Government Trying to Kill Digital Currency?”
 
“Feds shut down payment network Liberty Reserve. Is Bitcoin next?”
 
“FinCEN’s New Regulations Are Choking Bitcoin Entrepreneurs.”
 
Or, on the other hand:
 
“A little regulation may boost Bitcoin’s Main Street cred.”
 
“New Money Laundering Guidelines Are a Positive Sign for Bitcoin.”
 
“Feds don’t plan to take down Bitcoin or other currencies.”
 
But, my personal favorite has to be, “FinCEN boss lays out Bitcoin rules.” If only it was
that easy.
 
One thing is clear – depending on what you read, FinCEN’s virtual currency guidance
has been the worst thing, or the best thing, to ever happen to virtual currency, and Bitcoin in
particular.
  
2
 
Taking a step back, for those of you who might not be as familiar with the work of
FinCEN, let me take a moment to give you a quick overview.
 
FinCEN is a bureau of the Treasury Department, and reports to the Office of Terrorism
and Financial Intelligence. With approximately 340 employees, we are relatively small
considering our broad responsibilities. Our mission is to safeguard the financial system from
illicit use and combat money laundering and promote national security through the collection,
analysis, and dissemination of financial intelligence and strategic use of financial authorities.
 
A key aspect of FinCEN’s mission is to administer and issue regulations pursuant to the
Bank Secrecy Act (BSA). The BSA requires a broad range of U.S. financial institutions --
including banks, money services businesses, casinos, insurance companies, securities and futures
brokers, and some trades or business, like car dealerships -- to assist U.S. government agencies
in the detection and prevention of money laundering. Financial institutions do this by instituting
effective anti-money laundering (AML) programs, and maintaining records and filing reports
with FinCEN. FinCEN, along with its law enforcement partners, uses the data contained in these
reports to detect and deter money laundering, terrorist financing, and other financial crime.
 
Now, back to those headlines I mentioned at the outset. It is in FinCEN’s regulatory area
that our interests first intersected.
 
This March, FinCEN issued interpretive guidance to bring clarity and regulatory certainty
for businesses and individuals engaged in money transmitting services and offering virtual
currencies.
 
Some in the press speculated that our guidance was an attempt to clamp down on virtual
currency providers. I will not deny that there are some troublesome providers out there. But, that
is balanced by a recognition of the innovation these virtual currencies provide, and the financial
inclusion that they might offer society. A whole host of emerging technologies in the financial
sector have proven their capacity to empower customers, encourage the development of
innovative financial products, and expand access to financial services. And we want these
advances to continue.
 
However, equally important is the need to ensure integrity and transparency. Because the
fact is, being a financial institution comes with certain responsibilities. And our recent guidance
is an important step to get us there.
 
FinCEN’s guidance explains that administrators or exchangers of virtual currencies have
registration requirements and a broad range of AML program, recordkeeping, and reporting
responsibilities. Those offering virtual currencies must comply with these regulatory
requirements, and if they do so, they have nothing to fear from Treasury.
 
The guidance explains how FinCEN’s “money transmitter” definition applies to certain
exchangers and system administrators of virtual currencies depending on the facts and
circumstances of that activity. Those who use virtual currencies exclusively for common
personal transactions like buying goods or services online are not affected by this guidance.
  
3
 
Those who are intermediaries in the transfer of virtual currencies from one person to
another person, or to another location, are money transmitters that must register with FinCEN as
MSBs, unless an exception applies. Some virtual currency exchangers have already registered
with FinCEN as MSBs, though they have not necessarily identified themselves as money
transmitters. The guidance clarifies definitions and expectations to ensure that businesses
engaged in similar activities are aware of their regulatory responsibilities and that all who need
to, register appropriately.
 
It is in the best interest of virtual currency providers to comply with these regulations for
a number of reasons. First is the idea of corporate responsibility. Legitimate financial
institutions, including virtual currency providers, do not go into business with the aim of
laundering money on behalf of criminals, such as those who would exploit children. Virtual
currencies are a financial service, and virtual currency administrators and exchangers are
financial institutions. Any financial institution and any financial service could be exploited for
money laundering purposes. What is important is for institutions to put controls in place to deal
with those money laundering threats, and to meet their AML reporting obligations.
 
At the same time, being a good corporate citizen and complying with regulatory
responsibilities is good for a company’s bottom line. Every financial institution needs to be
concerned about its reputation and to go out of its way to show it is operating with transparency
and integrity within the bounds of the law. Customers are going to be drawn to a virtual
currency administrator or exchanger where they know their money is safe and where they know
the company has a reputation for integrity. And banks will want to service administrators or
exchangers that show great integrity, innovation, and transparency.
 
But those institutions that choose to act outside of their AML obligations and outside of
the law are going to be held accountable. FinCEN will act to stop abuses of the U.S. financial
system.
 
Just a few weeks ago FinCEN named Liberty Reserve as a financial institution of primary
money laundering concern under Section 311. Liberty Reserve operated as an online money
transmitter deliberately designed to avoid regulatory scrutiny and tailored its services to illicit
actors looking to launder their ill-gotten gains. According to the allegations contained in a
related criminal action brought by the U.S. Department of Justice, those illicit actors included
criminal organizations engaged in credit card fraud, identity theft, investment fraud, computer
hacking, narcotics trafficking, and most relevant for today’s purposes, child pornography.
 
 The 311 action taken by FinCEN was designed to protect the financial system from the
risk posed by Liberty Reserve – an online, virtual currency, money transfer system that was
conceived and operated specifically to allow – and encourage – illicit use because of the
anonymity it offers.
 
Let me go back to the guidance I discussed earlier. FinCEN has been out front in issuing
our guidance to make it clear that we see virtual currency administrators and exchangers as a
type of money services business. These businesses are as much a part of the financial framework
as any other type of financial institution. As such, they have the same obligations as other
financial institutions, and the same obligations as any other money services business out there.
  
4
 
But keep in mind: this action was taken against one financial institution and one type of
financial service. That’s what a criminal case is, and that’s what a regulatory action is – an
action against a particular violator. With this action we were not painting with a broad brush
against an entire industry. I do not think that is fair to any industry in any situation, let alone this
one.
 
I do want to address the issue of virtual currency administrators and exchangers
maintaining access to the banking system in light of the recent action against Liberty Reserve.
Again, keep in mind the combined actions by the Department of Justice and FinCEN took down
a $6 billion money laundering operation, the biggest in U.S. history.
 
We can understand the concerns that these actions may create a broad-brush, reaction
from banks. Banks need to assess their risk tolerance and the risks any particular client might
pose. That’s their obligation and that’s what we expect them to do.
 
And this goes back to my earlier points about corporate responsibility and why it is in the
best interest of virtual currency administrators and exchangers to comply with their regulatory
responsibilities. Banks are more likely to associate themselves with registered, compliant,
transparent businesses. And our guidance should help virtual currency administrators and
providers become compliant, well-established businesses that banks will regard as desirable and
profitable customers.
 
Every financial institution, whether a brick and mortar bank or a virtual currency
administrator or exchanger, should be concerned about its reputation. Integrity goes a long way.
I recently heard a banker say that there is a reason that financial institutions have to obtain
licenses. It is a great bestowal of trust that enables banks to be part of the U.S. financial system,
to be part of the global financial system. And that trust -- that privilege -- comes with
obligations. One of those obligations is a responsibility to put effective AML controls in place
so that the type of criminal actors that showed up in the Liberty Reserve case are not able to
operate with impunity in the U.S. financial system.
 
In closing, I just want to circle back to the themes of today’s event. Much of what I
discussed today focuses on how we are approaching the “perplexities” of virtual currencies, and
those are discussions we need to continue to have going forward. But the “potential” and
“promise” these advances offer our economy are equally important. The innovations we are
seeing within the financial services industry are a benefit to commerce on many levels. From
providing services to the unbanked, to the development of new financial products, the virtual
economy holds great promise. However, I would like to close with a challenge to our great
innovators: extend your focus to devising creative solutions for preventing the abuse of virtual
currencies by criminals, such as those who would exploit children. We all stand to benefit from
such innovation, and the related transparency and integrity to our financial system.
 
 
###


additional reference:


Money Services Business - The term "money services business" includes any person doing business, whether or not on a regular basis or as an organized business concern, in one or more of the following capacities:

(1) Currency dealer or exchanger.
(2) Check casher.
(3) Issuer of traveler's checks, money orders or stored value.
(4) Seller or redeemer of traveler's checks, money orders or stored value.
(5) Money transmitter.
(6) U.S. Postal Service.

An activity threshold of greater than $1,000 per person per day in one or more transactions applies to the definitions of: currency dealer or exchanger; check casher; issuer of traveler's checks, money orders or stored value; and seller or redeemer of travelers' checks, money orders or stored value. The threshold applies separately to each activity -- if the threshold is not met for the specific activity, the person engaged in that activity is not an MSB on the basis of that activity.

No activity threshold applies to the definition of money transmitter. Thus, a person who engages as a business in the transfer of funds is an MSB as a money transmitter, regardless of the amount of money transmission activity.

Notwithstanding the previous discussion, the term "money services business" does not include:

A bank, as that term is defined in 31 CFR 1010.100(d) (formerly 31 CFR 103.11(c)), or
A person registered with, and regulated or examined by, the Securities and Exchange Commission or the Commodity Futures Trading Commission.
For the complete regulatory definition of "money services business", see 31 CFR 1010.100(ff) (formerly 31 CFR 103.11(uu)).

Note: Each money services business (MSB) is a financial institution. For the regulatory definition of "financial institution," see 31 CFR 1010.100(t) (formerly 31 CFR 103.11(n)).


This is the official site
http://www.fincen.gov/

As far as I know Bitcoin is not considered as money.
Then buying bitcoins with cash is like buying cars with cash.
Buying a car worth of 30 000 USD with cash is also a money laundering ?

I'm not talking about links, I'm talking about the title of this topic itself being a hysterical one rather than the title being the same as what is written on the article, that's what you normally do when you want to discuss a news article here

seems as though the stuff is still valuable after all

Are you asking the OP? If so, the link to the article is there, 1st post..

Can you actually post the title of the news article instead of making up your own crap? For once this one does have me concerned because it looks like the agents themselves were trying to buy Bitcoins with dirty money to entrap them, didn't work, so they made up another charge instead which makes this more legitimate than the other stuff I've seen.

It's funny govts. always say it is about money laundering, but it's really about taxes..

Indeed, at least from a European perspective..moreover, it doesn't look like they actually work in stopping crimes.

More on the topic:

9.5.5.2.1.3  (08-27-2007)
Title 18 USC §1956(a)(3), Sting Operations

Title 18 USC §1956(a)(3) is a sting provision that allows for undercover operations where the government, or a direct informant, represents funds as being derived from a SUA. This subsection was added to the statute expressly to permit prosecution where the defendant believes the proceeds were derived from a SUA because of a representation made by a law enforcement officer (LEO) or an informant working under the LEO's control. The elements include that a defendant conducts or attempts to conduct a financial transaction involving property represented by a LEO or another person at the LEO's direction, to be either proceeds of an SUA, or property used to conduct or facilitate an SUA.

And regarding the intent: 

9.5.5.2.1.5.3  (08-27-2007) Definition of Intent to Promote

Title 18 USC §1956(a)(1)(A)(i): intent to promote the carrying on of specified unlawful activity:

Circumstantial evidence is sufficient to show intent for this section. The government is not required to prove that a defendant intended to violate a specific statute, but did intend to promote or facilitate an activity that he/she knew to be illegal. A violation may occur even if the promoted SUA is never completed.

All of this is just plain crazy, I sincerely hope they get out of this with a fine, and not have to spend years in prison. The prison sentences in America is out of every proportion.

I think this is a very good idea for law enforcement. They should just go to lots of banks and test this out, then arrest those employees one by one, since they're aiding in criminal activity. In fact, they should be arrested under the terrorist act, as speeding clearly i domestic terrorism and a matter of national security.

I guess some of you has misunderstood why the story of the stolen cards is mentioned. He's prosecuted not because he said "I'll think about it" re the proposed illicit activity.. that part is written in the document only to prove that he KNEW what the undercover agent was dealing with and which was the purpose of the bitcoins he wanted to buy.

My interpretation is that the specific ML "nuance" used in this case (you know there are more than one, some of them don't even require the funds to be the proceeds of a crime) is the following

U.S. Code › Title 18 › Part I › Chapter 95 › § 1956
18 U.S. Code § 1956 - Laundering of monetary instruments

(3) Whoever, with the intent—
(A) to promote the carrying on of specified unlawful activity;
(B) to conceal or disguise the nature, location, source, ownership, or control of property believed to be the proceeds of specified unlawful activity; or
(C) to avoid a transaction reporting requirement under State or Federal law,
conducts or attempts to conduct a financial transaction involving property represented to be the proceeds of specified unlawful activity, or property used to conduct or facilitate specified unlawful activity, shall be fined under this title or imprisoned for not more than 20 years, or both. For purposes of this paragraph and paragraph (2), the term “represented” means any representation made by a law enforcement officer or by another person at the direction of, or with the approval of, a Federal official authorized to investigate or prosecute violations of this section.

Do an experiment.  Stop by your bank and withdraw some cash.  Tell the teller you will get some gas for your car with that money and then will speed on the freeway.  What should the bank do?  Not give you your money?

While what you says make sense, does the law really cover that?

If you go to a hardware store and you purchase a crowbar and you tell the clerk at the counter that you're going to use it to break into your ex's house, is the clerk part of a crime? Is the store part of a crime? Is the distributor part of a crime? Is the producer part of a crime? Is the source of the raw material that was used to produce the crowbar part of the crime?

Is the clerk part of a crime if the person tells it before he pays it? What if he tells it after he has paid and is on his way out of the store?

What if you send an e-mail to your bank, telling them you're going to withdraw cash and pay a plumber with it, is the bank then partners in crime?

What is the responsibility of a seller? When is the law broken?

Obviously, if selling bitcoins and the other party outright tell that he's going to commit a crime, he's either very stupid, or it's a law enforcement sting operation. Then the only wise thing should be to back off, but I guess a lot of dudes are greedy and don't care, esp. so if the comission is big.

I think however it is wrong that law enforcement is allowed to do entrapment. If law enforcement claims they will buy stolen cc's with bitcoins, and they never do this - then no crime ever took place. How can anybody be convicted of a crime that never took place? And how can somebody be convicted as partnes in crime to a crime that never took place?

I'm not sure if the americans really see how fucked up this system is?

I would like to see a bank being accused of being partners in crime the next time someone buys narcotics with usd dollars. After all, they have security cams at the ATM's right - and when a gangster drives up and cashes out an extraordinary large amount, then the bank must know that it's going to be used for illegal purposes, right, right?

The whole system is more and more turning into a farce. Exactly where should we draw a line as to whether you're complicit in crime or not? After all, there's a lot of everyday items that can be used to commit crime, and while not every buyer gives you a verbal clue, you sometimes can get clues from their body language and facial expression.

So if somebody that looks completely enraged goes into a gun store and asks for a rifle, should he get it? At what point should he not get it? Where's the responsibility of the store owner?

I guess it boils down much to using your gut feeling, and reacting when you think it's warranted. Ideally however a transaction between bitcoin and cash should be 100% neutral, and there should be no responsibility for the parties to know what the other party exactly is doing.

If one of them is doing some kind of crime that's against the law, then law enforcement should investigate that. Bitcoins are only one part of the puzzle, crime has always existed, and bitcoin is neutral. Today most crime is conducted with fiat money, we don't see much of a push for banning that, do we?

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