Whack-a-Mole: Why Prosecuting Digital Currency Exchanges Won't Stop Online Laundering

36 Pages Posted: 20 Aug 2013 Last revised: 14 Aug 2017

Date Written: 2014


Law enforcement efforts to combat money laundering are increasingly misplaced. As money laundering and other underlying crimes shift into cyberspace, U.S. law enforcement focuses on prosecuting financial institutions’ regulatory violations to prevent crime, rather than going after criminals themselves. This article will describe current U.S. anti-money laundering laws, with particular criticism of how attenuated prosecution has become from crime. The article will then describe the use of Bitcoin as a money-laundering vehicle, and analyze the difficulties for law enforcement officials who attempt to choke off Bitcoin transactions in lieu of prosecuting underlying criminal activity. The article concludes with recommendations that law enforcement should look to digital currency exchangers not as criminals, but instead as partners in the effort to eradicate money laundering and — more importantly — the crimes underlying the laundering.

Keywords: money laundering, cyberspace, prosecuting, regulatory violations, anti-money, Bitcoin, digital currency exchange, Mt. Gox, e-gold, Liberty Reserve, Silk Road, Bank Secrecy Act, Patriot Act, Money Laundering Control Act, suspicious activity report, FinCEN, Satoshi Nakamoto, know your customer

JEL Classification: K00, K14, K19, K29, K39, K42, K49

Suggested Citation

Christopher, Catherine Martin, Whack-a-Mole: Why Prosecuting Digital Currency Exchanges Won't Stop Online Laundering (2014). 18 Lewis & Clark L. Rev. 1 (2014), Available at SSRN: https://ssrn.com/abstract=2312787

Catherine Martin Christopher (Contact Author)

Texas Tech University School of Law ( email )

1802 Hartford
Lubbock, TX 79409
United States

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