Cyberlaundering: Anonymous Digital Cash and Money Laundering :: essays research papers

Cyberlaundering: Anonymous Digital Cash and Money Laundering Copyright 1996 R. Mark Bortner The author hereby grants the right to copy this article in its entirety or any portion thereof by any means possible and to distribute such copies freely and without charge. The author simply requests that when a portion of this article or its entirety is included within another work, that such copied material be clearly and correctly cited to. Presented as final paper requirement for Law & the Internet (LAW 745). A seminar at the University of Miami School of Law. Introduction This article will explore the latest technique in money laundering: Cyberlaundering by means of anonymous digital cash. Part I is a brief race through laundering history. Part II discusses how anonymous Ecash may facilitate money laundering on the Intenet. Part III examines the relationship between current money laundering law and cyberlaundering. Part IV addresses the underlying policy debate surrounding anonymous digital currency. Essentially, the balance between individual financial privacy rights and legitimate law enforcement interests. In conclusion, Part V raises a few unanswered societal questions and attempts to predict the future. Disclaimer: Although the author discusses this subject in a casual, rather than rigidly formal tone, money laundering is a serious issue which should not be taken lightly. As this article will show, fear of money laundering only serves to increase banking regulations which, in turn, affect everyone's ability to conduct convenient, efficient and relatively private financial transactions. Part I Humble Beginnings In the beginning, laundering money was a physical effort. The art of concealing the existence, the illegal source, or illegal application of income, and then disguising that income to make it appear legitimate 1 required that the launderer have the means to physically transport the hard cash.2 The trick was, and still is, to avoid attracting unwanted attention, thus alerting the Internal Revenue Service (IRS) and other government agencies 3 involved in searching out ill-gotten gains.4 In what could be described as the "lo-tech" world of money laundering, the process of cleaning "dirty money" was limited by the creative ability to manipulate the physical world. Other than flying cash out of one country and depositing it in a foreign bank with less stringent banking laws,5 bribing a bank teller, or discretely purchasing real or personal property, the classic approach was for a "smurf"6 to deposit cash at a bank. Essentially, platoons of couriers assaulted the lobbies of banks throughout the United States with deposits under the $10,000 reporting limit as required under the Bank Secrecy Act.