I don't have enough knowledge pertaining to the Bitcoin mechanism. Can Bitcoin help people commit money laundering?
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14Probably. Cars help people commit money laundering too, they make it easier for them to move around to meet their accomplices.– Meni RosenfeldCommented Dec 13, 2011 at 19:14
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Dear answerers, would you please revisit this question, i.e. do you think your answers are still up-to-date? We had a duplicate of this question cite the age of the answers here as a reason to ask the question anew.– Murch ♦Commented Jan 9, 2015 at 15:35
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8 Answers
Since the vast majority of money launderers seem to prefer cash, I'd say the answer is no. At least, not yet. The way money laundering works is that you hide illegitimate transactions in a sea of legitimate transactions. There are a vast sea of legitimate cash transactions which makes money laundering in cash work well. Until there are some high-volume Bitcoin businesses, there will be nothing to hide illegitimate transactions with.
Even if the idea is to buy Bitcoins with dirty cash, sell them at an exchange, and claim you bought them really cheap and held them for a long time -- where can you buy large numbers of Bitcoins anonymously for cash?
answered Dec 13, 2011 at 20:47
I'd just say Bitcoin is like cash, Bitcoin is online cash.
Yes, "the vast majority of money launderers seem to prefer cash", but since bitcoin is mostly like cash, I'd say Bitcoin could be useful for them as much as the dollar or any other cash money.
No, Bitcoin does not help anyone do anything, it is just a means of transferring value, which enables people to do anything they want with it. In this sense, it is just like any tangible means of exchange, be it money, gold, art or anything of the sort.
The problem with Bitcoins though is that you have to obtain it in the first place, and currently one either needs to mine it (by buying a lot of hardware), or buy it from someone, usually online, which is more traceable. Moreover, all transactions in the Bitcoin network are transparent (anyone can see them), so if you find out who owns the addresses, you can check how much Bitcoins they have moved between one another.
In the end, whereas the anonymity of Bitcoin might be alluring to someone wanting to launder money, there are new problems they have to keep in mind when attempting to do that.
answered Dec 13, 2011 at 19:04
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4"Bitcoin does not help anyone do anything" - I think I know what you're trying to say, but I don't think that's a good way of saying it. It's like saying "I don't think a hammer will help you bang in a nail", which doesn't really make sense. Commented Jan 4, 2012 at 18:59
I think Bitcoins could be used for money laundering however it would be hard to purchase for cash in large enough quantities to make it worthwhile. One person here commented that there are those who would sell Bitcoins up to $1000 US at a time. That's small stuff to those that need to launder money.
The U.S. Treasury's FinCEN describes money laundering as the process of making illegally-gained proceeds (i.e. "dirty money") appear legal (i.e. "clean").
Bitcoin is a pseudonymous digital currency but it can be used anonymously when certain precautions (using Tor, mixing, etc.) are taken.
Presumably, some or all of the money would get exchanged to fiat. That is the point at which identity is required. Most exchanges have AML policies that require identity verification for withdrawals when the limits as defined by law are reached.
So, as long as the funds are kept as bitcoins, and transacted in a certain way, successful laundering of those funds might be possible.
Cash (currency) would probably more convenient to a money launderer, though.
answered Jul 29, 2012 at 6:56
Yes you can use it for money laundering. There are many people who sell bitcoin anonymously for cash. Just look at the sites that list the local buyers and sellers of bitcoin... For example I'm offering to sell bitcoin to anyone in my area for cash for up to $1000. It's not so much, and that's all I have, but there are people with more bitcoin and they can do the same.
There's nothing about Bitcoin that makes it especially appealing for money laundering. In fact, given the nature of the block chain, I would think it would be a fairly unappealing prospect for money laundering, because every transaction is publicly posted. Of course, the real issue with money laundering is defining it. I don't even think the authorities have a clear idea of what the term actually means at the moment.
Money laundering, at least historically, has been somewhat of a science. If you want a really good idea on how it's done, just take a look at some of the schemes Google and Apple have come up with to get out of paying taxes. One point of note is that none of these schemes involve Bitcoin.
It surely has some potential to help money launderers to conceal their identity from Anti Money Laundering regulation. Because a new wallet address could be generated at any time, without the prolonged process of Knowing-Your-Client (KYC), you can hypothetically conceal the owner of each account/address. For example, you have hacked a bitcoin exchange and you created a transaction through the block chain to xxxx1 address, then after that you split all of the amount in xxxx1 into xxxx2, xxxx3, xxxx4, which you control.
But this does not leave you without breach. If you use your bitcoin address often enough in the internet, your identity could be disclosed to the public (and also the feds). In this case what Amir Taaki tried to add a layer of security to DarkWallet, to enforce a concealment of public addresses in bitcoin to make it harder for the feds to get to know the true identity behind a wallet address.
