Buy and send Bitcoin to foreign citizen after receiving USD wire transfer into bank account

[Tcsekhar]

Illinois

Few of my friends in Asia wants me to buy Bitcoin and transfer into their Bitcoin wallets. As they are not tech savy and dont have trusted tech people near them, they dont want to risk their money. Is it legal for me to receive USD wire transfers through my bank from them, purchase Bitcoin from Coinbase and ship them the hardware wallet with Bitcoins that I bought?

If it is legal, are there any tax implications? Are there any limits on how much can be transacted?

Thanks.

 

[Taxing Matters]

There is nothing illegal in the U.S. about what you propose to do unless the financial transaction is connected to some criminal activity (e.g. money laundering, financing terrorist activity, etc). There is no tax implication for you since you are not making any income from this nor are making any taxable gift. However, I would get it in writing from your friends exactly what it is that you are agreeing to do for them.

 

[Zigner]

... ...

 

[xylene]

There is nothing illegal in the U.S. about what you propose to do unless the financial transaction is connected to some criminal activity (e.g. money laundering, financing terrorist activity, etc).

And how exactly would OP establish that this government thwarting cypto-currency drug funny money wasn't being used in a criminal enterprise...

 

[Zigner]

It appears I've been moderated. It must be because I gave a search term that would lead to an article on the matter written by a law firm. Fair enough. Suffice to say, /u/Tcsekhar would probably have to register as a money service business and conform to the regulations of Fincen.

https://www.fincen.gov/money-services-business-definition

No, your post was fine - I reported it because I (very mistakenly) thought it was spam. I blame it on being bleary-eyed so early in the morning - my apologies. I've sent a note to admin telling them it was reported by mistake.

 

[Taxing Matters]

And how exactly would OP establish that this government thwarting cypto-currency drug funny money wasn't being used in a criminal enterprise...

It is not up to the OP to establish that there was nothing illegal going on. It is up to the government to prove that the OP was engaged in criminal activity. And since Bitcoin (and other cyptocurrencies) are held by a large number of people who invest/speculate in them with no criminal activity going on the government cannot simply rely on the fact that a transaction is done in Bitcoin to conjure up a criminal charge. We still live in a nation where the government has to have evidence that supports at least probable cause for initiating prosecution and evidence beyond a reasonable doubt to win conviction.

 

[xylene]

not to mention potential civil forfeiture or the liabilities of sending the baloney-money equivalent of thousands of dollars in the international mail....

 

[Taxing Matters]

not to mention potential civil forfeiture or the liabilities of sending the baloney-money equivalent of thousands of dollars in the international mail....

Again, simply sending Bitcoin itself is not a crime. Nevertheless, you seem somehow intent on making it seem as though it is a crime. Perhaps you have a great dislike for digital currencies, but there is nothing inherently illegal about them or doing business with them any more than there is in dealing in cash.

 

[Taxing Matters]

https://www.fincen.gov/enforcement-actions-failure-register-money-services-business

I think the OP has some duties in addition to registration for the money service. https://www.irs.gov/businesses/small-businesses-self-employed/money-services-business-msb-information-center

The details would matter as to whether this activity might rise to the level of a "money service business." The OP might want to consult an attorney on that if he is going to be doing this more than a few times.

 

[xylene]

Again, simply sending Bitcoin itself is not a crime. Nevertheless, you seem somehow intent on making it seem as though it is a crime. Perhaps you have a great dislike for digital currencies, but there is nothing inherently illegal about them or doing business with them any more than there is in dealing in cash.

I have no idea why you you believe the OP's allegedly doing a 'favor' for multiple international people involivng large amounts of currency, and mailing that digital currency internationally is not obviously fraught with civil and criminal risk.

If the OP was doing this with traveler's cheques...

or money orders...

or reloadable debit cards...

or gas cards...

or airline miles...

or casino vouchers...

Would the absurd and risky nature of this plan be more apparent to you?

 

[Taxing Matters]

Would the absurd and risky nature of this plan be more apparent to you?

No, it would not. The difference between us here is that you apparently are concluding that because the transactions as described do not make sense to that must compel the conclusion that the OP is engaged in something criminal. That is, however, an illogical leap to make. Thus, I will not make that same leap. There could well be nothing criminal behind this. We have not been given all the facts from which a good conclusion might be be drawn. We don't know how the OP knows the friends, what the real need is for these friends to conduct these transactions, etc. I have already said that if there is criminal activity associated with the transactions that could pose a problem for the OP. But if there is no criminal activity related to it, simply doing this transaction itself is not illegal. You have, however, implied that simply doing the transaction itself is criminal. It is not. And that is what the OP asked about.

 

[PayrollHRGuy]

I don't believe it has been mentioned but under 12 CFR 21.11 banks are required certain suspicious activity. This doesn't change the government's requirement to prove a crime has been committed but the OP should be aware that an investigation might happen.

 

[xylene]

No, it would not. The difference between us here is that you apparently are concluding that because the transactions as described do not make sense to that must compel the conclusion that the OP is engaged in something criminal. That is, however, an illogical leap to make. Thus, I will not make that same leap. There could well be nothing criminal behind this. We have not been given all the facts from which a good conclusion might be be drawn. We don't know how the OP knows the friends, what the real need is for these friends to conduct these transactions, etc. I have already said that if there is criminal activity associated with the transactions that could pose a problem for the OP. But if there is no criminal activity related to it, simply doing this transaction itself is not illegal. You have, however, implied that simply doing the transaction itself is criminal. It is not. And that is what the OP asked about.

I didn't imply anything. I stated a well formed and rational opinion.

This is suspicious, and fraught with criminal and civil risk, which is a lot to put up with for a 'favor'

A favor would be educating someone on how to execute this transaction on their own, ostensibly the reason these people can't make this transaction.

Receiving a series of large wire transfers from abroad and then immediately purchasing bitcoin with those funds is a suspicious transaction pattern that will be noticed by any compliant financial entity.

I could have been the OP's best man and that would still be true. It doesn't matter how well any of us know these people.

No amount of libertarian hogwash changes that. You are simply wrong in your assessment of risk in this situation as described by the OP.

 

[CTU]

I didn't imply anything. I stated a well formed and rational opinion.

This is suspicious, and fraught with criminal and civil risk, which is a lot to put up with for a 'favor'

A favor would be educating someone on how to execute this transaction on their own, ostensibly the reason these people can't make this transaction.

Receiving a series of large wire transfers from abroad and then immediately purchasing bitcoin with those funds is a suspicious transaction pattern that will be noticed by any compliant financial entity.

I could have been the OP's best man and that would still be true. It doesn't matter how well any of us know these people.

No amount of libertarian hogwash changes that. You are simply wrong in your assessment of risk in this situation as described by the OP.

He's not wrong.

I'm saddened that you can't see that.