This guide focuses on U.S. laws, but be aware that other countries also have laws in these two areas.Steer Clear of Tainted Funds: Watch for Red FlagsIt states the obvious, of course, to say steer clear of tainted funds. But whether you are starting a new cryptocurrency exchange business or selling tokens to raise money for your new project, it takes intentional focus and care to ensure that the funds moving into and through your business are not the product of illegal activity. With several recent notorious examples of theft, fraud and money laundering fresh in the minds of government regulators and investigators, it is even more imperative that entrepreneurs establish and use the right anti-money laundering procedures up front.Whether your business model or planned token sale requires that you have a formal anti-money laundering program in place or not, you are always required to avoid conducting transactions involving criminal proceeds. Among others things, federal anti-money laundering laws prohibit the following types of financial transactions:Concealment or Promotion Money Laundering, 18 U.S.C. § 1956(a)(1): This statute prohibits a transaction in the proceeds of crime in which a person knows that the property involved comes from some form of unlawful activity, even if that person does not know the precise nature of the underlying criminal activity. To be in violation of this law, there must be an intent on the part of the person conducting the transaction — most often proven through circumstantial evidence — to conceal the true nature, location, source, ownership or control of the funds, or to reinvest in or “promote” future criminal activity.
International Money Laundering, 18 U.S.C. § 1956(a)(2): This law applies even to “clean” funds that are not currently the proceeds of criminal activity but are sent internationally to “promote” certain categories of criminal activity.
Money Spending Statute, 18 U.S.C. § 1957: Applicable to transactions in criminal proceeds over $10,000, this law simply prohibits transactions where the participant (including currency exchangers, money transmitters, and brokers or dealers in securities or commodities) knows the funds are from some unlawful source.
Money Laundering Conspiracy, 18 U.S.C. § 1956(h): Two or more individuals who intend to conduct a transaction in criminal proceeds may be liable for any foreseeable offenses committed by their co-conspirators in furtherance of the scheme.
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