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 a “money transmitting business” are typically deployed against non-bank financial institutions including currency exchangers or wire emitters. The federal government might seek 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.
In 1990, Congress enacted 18 U.S.C § 1960 in order “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). 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 31 U.S.C. § 5330 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, in order to qualify as a money transmitting business under § 1960(b)(1)(B), the business must also be a “domestic financial institution.” In many of these cases, the currency is seized directly from a bank account. Forfeiture attorney Sebastian Rucci can help if you are accused of being a currency exchanger or wire emitter illegally operating a business that is not properly licensed as a money-transmitting business.
Civil asset forfeiture is state-sanctioned robbery and is the great injustice of our time.
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, Case 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. The property involved in transactions that violate § 1960 is subject to forfeiture. 18 U.S.C. § 981(a)(1)(A). “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).
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” required to comply with the AML/CFT obligations that apply to money services businesses. As a result, providers engage in a form of jurisdictional arbitrage that sometimes involves laundering illegal proceeds.
In some cases, however, 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 business “wholly or in substantial part” in the United States, then the courts in the United States have 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 transmitter is defined as “[t]he sender of the first transmittal order in a transmittal of funds. The term transmitter includes an originator, except where the transmitter’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 transmitter 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, and Federal Reserve notes. The currency also includes official foreign bank notes that are customarily used and accepted as a medium of exchange in a foreign country.”
Attorney Sebastian Rucci Focuses His Law Practice on Seizures and Asset Forfeitures
Forfeiture Attorney Sebastian Rucci has 27 years of legal experience and focuses his practice on seizures and asset forfeitures. He also works with other attorneys co-counsel on civil asset forfeiture cases.
Forfeiture attorney Sebastian Rucci will challenge federal asset forfeiture cases throughout the United States. He can file a verified claim for the seized assets, an answer challenging the allegations in the verified forfeiture complaint, seek an adversarial preliminary hearing if one was denied, and challenge the seizure by filing a motion to suppress and dismiss on multiple procedural grounds demanding the immediate return of the seized assets.
Forfeiture attorney Sebastian Rucci can show that the seized assets are not the proceeds of criminal activity and that the agency did not have probable cause to seize the funds or other assets. Even if a showing of probable cause has been made, he can file to rebut the probable cause by demonstrating that the forfeiture statute was not violated, that the agency failed to trace the funds, or showing an affirmative defense that entitles the immediate return of the seized assets.
Forfeiture attorney Sebastian Rucci is available as co-counsel, working with other counsel, where he focuses on challenging the asset forfeiture and seizure aspect of the case throughout the United States. Forfeiture attorney Sebastian Rucci often takes civil asset forfeiture cases on a contingency fee basis, which means that you pay nothing until the money or other asset is returned. Let experienced forfeiture attorney Sebastian Rucci put his experience with federal seizures and forfeiture actions to work for you, call attorney Sebastian Rucci at 330-720-0398.
