cryptocurrency money-laundering any-jurisdiction
Is it possible for an individual to commit money laundering like a bank?
<p>In the classic example of money laundering, Charlie the Criminal would take his dirty money to Bob the Banker and get it in some form that is spendable and transferable.  In this situation it would be expected that Charlie would know it is dirty money, but Bob the Banker does not need to be specifically aware the the money has criminal origin.  Because of this he implements, if he is for example a cryptocurrency exchange, Know Your Customer (KYC) checks and refuses to deal in certain products, Monero in the UK for example.</p>
<p>What if however Bob is not a financial institution but a member of the public (Bob the Builder perhaps)?  If he uses a decentralized exchange such as <a href="https://bisq.network/" rel="noreferrer">bisq</a> he would be performing much the same actions as Bob the Banker or Cryptocurrency exchange, including exchanging fiat currency for cryptocurrency and trading in Monero.  The design of the market makes it impossible to perform any such KYC checks, and at least when exchanging fiat currency makes it clear that there is an covert element in the process (you are informed by the interface not to reference the transfer as &quot;bisq&quot; or &quot;cryptocurrency transaction&quot;).</p>
<p>It is possible for an individual to commit the crime that a bank could be found guilty of by having insufficient money laundering prevention measures?</p>
<p>As far as jurisdiction as one never really knows where the other party is located any jurisdiction where this is illegal probably makes it illegal anywhere so the most restrictive rules are probably the most relevant.</p>

<p>Because money laundering is a form of <a href="https://en.wikipedia.org/wiki/Transnational_crime" rel="noreferrer">transnational crime</a> there is an extensive system of treaties which harmonise, to some extent, the laws of most developed countries. Relevantly to your question, the <a href="https://www.unodc.org/pdf/crime/a_res_55/res5525e.pdf" rel="noreferrer">United Nations Convention against Transnational Organized Crime</a> provides in article 7:</p>
<blockquote>
<p>Each State Party … Shall institute a comprehensive domestic regulatory and supervisory regime for banks and <strong>non-bank financial institutions and, where appropriate, other bodies particularly susceptible to money-laundering</strong>, within its competence, in order to deter and detect all forms of money-laundering, which regime shall emphasize requirements for <strong>customer identification, record-keeping and the reporting of suspicious transactions</strong> …</p>
</blockquote>
<p>Generally, local laws will define concepts like &quot;money transmitting business&quot; and require individuals engaged in these businesses to obtain a licence and comply with similar KYC and reporting obligations to a bank.</p>
<p>For example, in the <strong>United States</strong>, <a href="https://www.law.cornell.edu/uscode/text/18/1960" rel="noreferrer">18 U.S.C § 1960</a> makes it illegal to run an unlicensed money transmitting business. In <em>United States v. Rockcoons</em> (<a href="https://www.courtlistener.com/docket/6325721/united-states-v-rockcoons/" rel="noreferrer">3:17-cr-03690</a>), the defendant <a href="https://www.justice.gov/usao-sdca/pr/man-sentenced-fraud-and-operating-unlicensed-money-transmitting-business" rel="noreferrer">committed this offence through peer-to-peer bitcoin trading</a>:</p>
<blockquote>
<p>Rockcoons advertised his Bitcoin exchange services on the website LocalBitcoins.com. In 2015, HSI identified Rockcoons as the most prolific San Diego-based seller. In April 2016, the defendant’s LocalBitcoins.com profile showed that he continued to advertise as a trader and seller of Bitcoin in San Diego, with his profile reflecting that he had engaged in more than 500 transactions. As of October 2017, the defendant’s profile indicated that he conducted more than 1,000 bitcoin trades with more than 644 people.  Rockcoons received a commission of as much as 36 percent per transaction.</p>
</blockquote>
<p>On the other side of the Atlantic, the law in the <strong>United Kingdom</strong> is explained in <em>Vladimir Consulting Ltd v Financial Conduct Authority</em> <a href="https://www.bailii.org/uk/cases/UKUT/TCC/2022/168.pdf" rel="noreferrer">[2022] UKUT 168 (TCC)</a>. VCL had been trading on LocalBitcoins.com since 2017, but from 2020, was required to become licensed as a &quot;cryptoasset exchange provider&quot; under the <em><a href="https://www.legislation.gov.uk/uksi/2019/1511/contents/made" rel="noreferrer">Money Laundering and Terrorist Financing (Amendment) Regulations 2019</a></em>. VCL was refused a licence because it had consistently failed to comply with requirements of the money laundering regulations. VCL challenged this decision in the Upper Tribunal, which analysed the applicable rules and confirmed the Financial Conduct Authority's decision.</p>
