Missouri recently modernized its money laundering statute to define cryptocurrency and to include cryptocurrency within its definition of “monetary instruments.” This is a significant step for Missouri as it eliminates what was once a safe harbor, by clarifying any underlying confusion and permitting state prosecutors to pursue previously elusive criminal activity.
Missouri amended its money laundering statute to include a definition of “monetary instruments” as follows: “Currency and coin of the United States or of any other country, cryptocurrency, travelers’ checks, personal checks, bank checks, bank wires, or money order; or Investment securities or negotiable instruments, in bearer form or otherwise in such form that title thereto passes upon delivery.” Cryptocurrency is specifically defined as “a digital currency in which transactions are verified and records are maintained by a decentralized system using cryptography.”
Prior to this change, Missouri’s money laundering statute did not reference cryptocurrency at all and merely contained a general definition of “currency” as: “currency and coin of the United States” — and “currency transaction” as: “a transaction involving the physical transfer of currency from one person to another. A transaction which is a transfer of funds by means of bank check, bank draft, wire transfer or other written order, and which does not include the physical transfer of currency is not a currency transaction.” Notably, the definition of a “currency transaction,” as required to trigger the previous version of the statute, would appear to specifically disallow prosecution of cryptocurrency-related conduct. Now, however, the bar against prosecuting nonphysical transfers of currency has been removed from the statute altogether.
Money laundering is the act of concealing, or trying to conceal, the origin of money obtained from illegal activities. The act itself has traditionally involved the use of a series of transactions to shift illegally obtained fiat currency, such as the U.S. dollar, between multiple financial institutions and throughout different assets, in an effort to obscure the origin of the illicit funds. Once the origin of those funds has been substantially obscured, the launderer then withdraws them from a legitimate account. This process, however, has traditionally been time consuming and required a great deal of effort to illude various security and identity protocols.
With the advent of cryptocurrencies and blockchain technologies, resourceful money launderers now have a new means to move these funds through innumerable wallets — sometimes in a matter of seconds and without proof of identity — before eventually converting their ill-gotten gains from cryptocurrencies into fiat currency.
Missouri’s inclusion of cryptocurrency into its money laundering statute means that companies face a greater deal of exposure and may no longer be able to rely on definitional distinctions in order to avoid culpability and prosecution. Furthermore, Missouri’s legislative change is reflective of a nationwide trend on both the state and federal level toward accounting for the effect of technological advancements on both legal and criminal activity.
Members of the Troutman Pepper team are committed to staying apprised of state legislative changes and are keeping an eye out as more states take strides toward modernizing their laws in an effort to account for technological developments.