Forfeiture for Money Transmitting Business
Forfeitures occur under both state and federal law. Under federal law, 18 U.S.C. § 1960 prohibits operating a “money transmitting business” without a license. The proceeds of such a business are subject to seizure and a civil asset forfeiture proceeding.
Most civil asset forfeiture proceedings against an “unlicensed money transmitting business” are typically deployed against non-bank financial institutions. Those institutions might include currency exchangers or wire emitters.
The federal government seeks to forfeit the property under 18 U.S.C. § 981(a)(1)(A) and (C), if the U.S. Currency or other property is:
- the proceeds of an unlicensed money transmitting business in violation of 18 U.S.C. § 1960 (b)(1)(A) and (B); or
- involved in a transaction with the proceeds of a specified unlawful activity in violation of 18 U.S.C. §§ 1956(c)(7)(A), 1956(a)(2)(A), and 1957.
Under Florida law, the seizing agency might allege that the money seized was used or attempted to be used as an instrumentality in the commission of, or in aiding or abetting in the commission of a specified felony.
The most common specified felony alleged in these cases is “money laundering” by transporting or attempting to transport a monetary instrument or funds with the intent to promote the carrying on of specified unlawful activity. §896.101 (3)(b)(l), Fla. Stat.
Attorney for Money Transmitting Business Forfeiture
Asset civil forfeiture attorneys represent individuals and businesses after a state or federal agency seizes U.S. Currency for forfeiture.
In many cases, the currency is seized directly from a bank account. Alternatively, the U.S. Currency might be seized from an individual at the airport, a train station, or on the roadway.
No matter how the money was seized for forfeiture, an attorney can help anyone accused of being a currency exchanger or wire emitter illegally operating a business that is not properly licensed as a money transmitting business.
Call 813-250-0500.
Civil Asset Forfeitures Involving 18 U.S.C. § 1960
In 1990, Congress enacted 18 U.S.C § 1960 “to combat the growing use of money transmitting businesses to transfer large amounts of monetary proceeds of unlawful enterprises.” United States v. Velastegui, 199 F.3d 590, 593 (2d Cir. 1999) (citing S. Rep. No. 101-460, at 14 (1990), reprinted in 1990 U.S.C.C.A.N. 6645, 6658–59).
The statute was later amended under the USA PATRIOT Act of 2001. Pub. L. No. 107-56, 115 Stat. 272 (2001). Subsection (a) of 18 U.S.C § 1960 makes it a crime to knowingly conduct, control, manage, supervise, direct, or own all or part of an unlicensed money transmitting business.
Title 18 U.S.C. § 1960(b) provides:
(1) the term “unlicensed money transmitting business” means a money transmitting business that affects interstate or foreign commerce in any manner or degree and—
(A) is operated without an appropriate money transmitting license in a State where such operation is punishable as a misdemeanor or a felony under State law, whether or not the defendant knew that the operation was required to be licensed or that the operation was so punishable;
(B) fails to comply with the money transmitting business registration requirements under section 5330 of title 31, United States Code, or regulations prescribed under such section; or
(C) otherwise involves the transportation or transmission of funds that are known to the defendant to have been derived from a criminal offense or are intended to be used to promote or support unlawful activity.
(2) the term “money transmitting” includes transferring funds on behalf of the public by any and all means including but not limited to transfers within this country or to locations abroad by wire, check, draft, facsimile, or courier; and
(3) the term “State” means any State of the United States, the District of Columbia, the Northern Mariana Islands, and any commonwealth, territory, or possession of the United States.
Allegations that the business failed to comply with the money transmitting business registration requirements under section 5330 of title 31, United States Code, involve proof that the money transmitting business failed to register with the Secretary of Treasury.
Section 5330 defines a money transmitting business as one that “provides . . . money transmitting or remitting services . . . or any other person who engages as a business in the transmission of funds” and “is required to file reports under 31 U.S.C. § 5313.” Id. 5330 § (a)(1), (d)(1)(A), (B).
31 U.S.C. § 5313 requires that reports be filed by “domestic financial institutions.” Therefore, to qualify as a money transmitting business under § 1960(b)(1)(B), the business must also be a “domestic financial institution.”
Cryptocurrency and Money Transmitting Business
In United States v. 50.44 Bitcoins the court determined that bitcoin met the definition of money for property forfeiture relating to a money transmitting business. United States v. 50.44 Bitcoins, No. CV ELH-15-3692, 2016 WL 3049166, at *1 & n.1 (D. Md. May 31, 2016).
In that case, the Court explained:
The Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”) has stated that an administrator or exchanger of a virtual currency like Bitcoin is required to register as a Money Service Business (“MSB”) with FinCEN. See Application of FinCEN’s Regulations to Persons Administering, Exchanging, or Using Virtual Currencies, FIN-2013-G001, Department of the Treasury, Financial Crimes Enforcement Network, March 18, 2013.
Accordingly, a money transmitting business that operates in Bitcoins must register with FinCEN. Failure to register is a violation of 18 U.S.C. § 1960. Property involved in transactions that violate § 1960 is subject to forfeiture. 18 U.S.C. § 981(a)(1)(A).
“Bitcoin is an electronic form of currency unbacked by any real asset and without specie, such as coin or precious metal.” Sec. & Exch. Comm’n v. Shavers, No. 4:13-CV-416, 2013 WL 4028182, at *1 (E.D. Tex. Aug. 6, 2013).
“Bitcoin can be easily purchased in exchange for ordinary currency, acts as a denominator of value, and is used to conduct financial transactions.” United States v. Faiella, 39 F. Supp. 3d 544, 545 (S.D.N.Y. 2014).
Definitions Related to Money Transmission Services
Various laws in the United States, including the Bank Secrecy Act (BSA), have classified exchanges and other participants in the digital assets marketplace as “money transmitters.”
Those participants must comply with the AML/ CFT obligations that apply to money services businesses (MSBs).
As a result, providers engage in a form of jurisdictional arbitrage that sometimes involves laundering illegal proceeds.
In some cases, these providers might still have obligations under the BSA if they qualify as “domestic financial institutions” by doing business “wholly or in substantial part” in the United States.
If the provider is not doing buiness “wholly or in substantial part” in the United States, then the courts in the United States has no jurisdiction.
As explained in FIN-2019-G001 issued on May 9, 2019, on the “Application of FinCEN’s Regulations to Certain Business Models Involving Convertible Virtual Currencies,” in 2011, FinCEN issued a final rule (“2011 MSB Final Rule”), a money services business is defined as, “a person wherever located doing business, whether or not on a regular basis or as an organized or licensed business concern, wholly or in substantial part within the United States,” operating directly, or through an agent, agency, branch, or office, who functions as, among other things, a “money transmitter.” 31 CFR § 1010.100(ff).
In contrast, the term “transmittor” is defined as “[t]he sender of the first transmittal order in a transmittal of funds.
The term transmittor includes an originator, except where the transmittor’s financial institution is a financial institution or foreign financial agency other than a bank or foreign bank.” 31 CFR § 1010.100(fff).
Explained another way, the transmittor initiates a transaction that the money transmitter actually executes.
Additionally, the phrase “money transmission services” is defined to include the acceptance of currency, funds, or other value that substitutes for currency from one person and the transmission of currency, funds, or other value that substitutes for currency to another location or person by any means. 31 CFR § 1010.100(ff)(5)(i)(A).
The phrase “other value that substitutes for currency” includes situations in which the transmission does not involve currency.
For example, 31 CFR § 1010.100(m) defines currency as “[t]he coin and paper money of the United States or of any other country that is designated as legal tender and that circulates and is customarily used and accepted as a medium of exchange in the country of issuance.
Currency includes U.S. silver certificates, U.S. notes, Federal Reserve notes, and official foreign bank notes that are customarily used and accepted as a medium of exchange in a foreign country.
Florida’s Unlicensed Money Transmitting Businesses Act
In civil asset forfeiture cases at the state level, the seizing agency might allege that the money seized was used or attempted to be used as an instrumentality in the commission of, or in aiding or abetting in the commission of a felony, to wit “Money Laundering.”
In those cases, the agency will claim that money laundering involves transporting or attempting to transport a monetary instrument or funds with the intent to promote the carrying on of specified unlawful activity. §896.101 (3)(b)(l), Fla. Stat. (2021).
Monetary instruments used in violation of any crime listed as “specified unlawful activity” are subject to civil forfeiture action. §896.101 (8)(a), Fla. Stat. (2021).
“Specified unlawful activity” means any, “racketeering activity” as defined in Florida State Statutes §895.02 (50) (b) including any act which is indictable under the Illegal Money Transmitters (Title 18 U.S.C. 1960 §§et. Seq).
Under the Prohibition of Unlicensed Money Transmitting Businesses Act, Title 18 U.S.C. § 1960, provides, in part, as follows:
“whoever knowingly conducts all or part of an unlicensed money transmitting business without an appropriate money transmitting license in a State where such operation is punishable as a misdemeanor or a felony under state law, whether or not the defendant knew that the operation was required to be licensed or that the operation was so punishable, shall be fined in accordance with this title or imprisoned not more than 5 years or both.”
The seizing agent in these cases will often allege that a person concealed or possessed currency as a contraband article, in that it was used in a money laundering and money transmitting scheme, to wit:
the currency was transported and/or delivered in violation of state law and thus used and/or attempted to be used as an instrumentality in the commission of, or in aiding or abetting in the commission of, felony violations of Chapter 896, Money Laundering, Chapter 560 Money Service Business, and Title 18 U.S.C. § 1960, Illegal Money Transmitter and is thereby subject to forfeiture pursuant to the provisions of the Florida Contraband Forfeiture Act.
Types of Money Laundering Crimes in Florida
During the civil asset forfeiture case, the agency might also allege that the totality of the circumstances establish that such currency was used, or was attempted to be used as in instrumentality in the commission of, or in aiding or abetting in the commission of, a felony, to wit:
- Operating an Unlicensed Money Service Business, by engaging in money transmitting services involving currency or payment instruments exceeding $300 but less than $20,000 a 12-month period without a license required by Chapter 560, Florida Statutes, a third-degree felony. See Fla. Stat. §560.125(5)(b)(2021).
- Money Laundering by transporting or attempting to transport monetary instruments or funds knowing that the property involved in the financial transaction represents the proceeds of some form of unlawful activity, to wit narcotics sale/purchase or Unlicensed Money Service Business with the intent to promote the carrying on of the unlawful activity, or knowing that the transportation is designed in whole or part to conceal or disguise the nature, location, the source, the ownership, or the control of proceeds of the unlawful activity, or to avoid a transaction reporting requirement, a third degree felony. See Fla. Stat. § 896.101 (3)(b) (2018) & § 896.101 (5)(a) (2021).
- Money Laundering by conducting or attempting to conduct financial transactions exceeding $300 but less than $20,000 in a 12-month period knowing that the property involved in the financial transaction represents the proceeds of some form of unlawful activity, to wit Unlicensed Money Service Business, with the intent to promote the carrying on of the unlawful activity, or knowing that the transaction is designed in whole or part to conceal or disguise the nature, location, the source, the ownership, or the control of proceeds of the unlawful activity, or to avoid a transaction reporting requirement or money transmitters’ registration requirement under state law, a third degree felony. See Fla. Stat. §896.101 (5) (a) (2021);
- Money Laundering by conducting or attempting to conduct financial transactions exceeding $300 but less than $20,000 in a 12-month period knowing that the property involved in the financial transaction represents the proceeds of some form of unlawful activity, to wit narcotics sale or purchase, with the intent to promote the carrying on of the unlawful activity, or knowing that the transaction is designed in whole or part to conceal or disguise the nature, location, the source, the ownership, or the control of proceeds of the unlawful activity, or to avoid a transaction reporting requirement, a third degree felony. See Fla. Stat. §896.101(5)(a)(2021).
Read more about the prosecution at the state level of money laundering crimes in Florida.
Florida’s Corpus Delict Rule in Money Laundering Cases
During the forfeiture action, the seizing agency might allege that pursuant to Florida Statute 560.125 (8), in any prosecution brought pursuant to this section, the common law corpus delict rule does not apply.
In those cases, the agency will argue that the defendant’s confession or admission is admissible during the trial without the state having to prove the corpus delict if the court finds in a hearing conducted outside the presence of the jury that the defendant’s confession or admission is trustworthy.
This article was last updated on Thursday, February 23, 2023.
