The Internal Revenue Service Criminal Investigation (IRS-CI) team was recently recognized by the Financial Crimes Enforcement Network (FinCEN) at its third annual Law Enforcement Awards ceremony on May 9, 2017, for the IRS-CI's cyber security work investigating the sale of narcotics on the dark web. Certain targets were identified by the financial information involved in these illegal sales, despite their efforts to conceal the proceeds using Bitcoins and Bitcoin laundering.
Use of virtual currency has grown in recent years, due in part to service benefits such as faster turnaround and lower transaction fees, and in part due to the relative anonymity of the parties involved in such transactions. And yet, in this case, the IRS' investigation into virtual currency played a major role in the arrest and indictment of multiple individuals, who subsequently pled guilty to various drug and money laundering charges. According to FinCEN, "This is notable since this is the first case in this particular Midwest district where money laundering charges were approved based on Bitcoin transactions."
The IRS has taken an increased interest in Bitcoin technology lately. (See our latest post on the topic here.) If you have questions about reporting requirements or the taxation of virtual currency transactions, contact one of our attorneys today.
To read FinCEN's press release about the IRS-CI's award, click here.