Russia bitcoin narcotics case raises questions for money laundering laws
Money laundering in Russia may include converting illicitly obtained bitcoin into fiat, after a drug dealer’s case led to a disagreement in the law from the nation’s Supreme Court.
As reported by the Russian Legal Information Agency (RAPSI), the Supreme Court of the Russian Federation’s decision to overturn a defendant’s acquittal marks the first case of money laundering via cryptocurrency.
The defendant was initially arrested after reportedly storing large quantities of drug precursors and producing mephedrone on a large scale. He sold drugs for bitcoin and converted his crypto into 8 million rubles ($91,000) in total, and sent the funds to his roommate’s daughter’s bank accounts.
In his initial court case, the defendant was found guilty of drug trafficking but was acquitted on charges of money laundering. The court decided that since the bitcoin never ‘entered circulation,’ the money laundering charge couldn’t stick.
Prosecutors appealed the decision but it was upheld in appeals court. However, the case eventually made its way to Russia’s Supreme Court. Here, judges disagreed with the ruling and said that the appeals court “expressed extremely contradictory judgments.”
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The Supreme Court stated that the charge of money laundering via bitcoin doesn’t mean the funds must enter “economic circulation.” Instead, they ruled that his conversion of bitcoin to rubles alone constituted a financial transaction with the goal of “legalizing” his criminally obtained funds.
Now, the case will receive an entirely new trial. According to the Supreme Court, the acquittal “cannot be recognized as legal and justified.”
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