18 U.S.C. § 1960 – Prohibition of Unlicensed Money Transmitting Businesses

18 U.S.C. § 1960 is a federal criminal statute that prohibits operating an unlicensed money transmitting business.

Individuals who conduct financial transfers without proper state licensing or federal registration may face prosecution, even if no other crime is alleged.

This law is frequently used in cases involving:

Cryptocurrency exchanges
Bitcoin operators
Wire transfer businesses
Check-cashing operations
Informal money transfer systems
Payment processing companies

A conviction under 18 U.S.C. § 1960 can result in up to five years in federal prison and significant financial penalties.

If you are under investigation or have received a federal subpoena or target letter, immediate legal representation is critical.

Your best chance for a favorable outcome is with an experienced federal criminal defense attorney at the Hedding Law Firm. To schedule a consultation, call (866) 986-2092 or use the contact form here.

What Does 18 U.S.C. § 1960 Prohibit?

The statute makes it illegal to knowingly conduct, control, manage, supervise, direct, or own an unlicensed money transmitting business.

A business violates Section 1960 if it:

Fails to obtain a required state license;
Fails to register with the Financial Crimes Enforcement Network (FinCEN) under federal law; or
Transmits funds known to be derived from criminal activity.

Importantly, the statute does not require prosecutors to prove the defendant knew a license was required.

What Is a “Money Transmitting Business”?

Under federal law, a money transmitting business includes any person or entity that transfers currency, funds, or value that substitutes for currency between persons or locations.

This may include transfers by:

Wire
Check
Draft
Courier
Electronic transfer
Cryptocurrency platforms

The activity must affect interstate or foreign commerce to trigger federal jurisdiction.

Federal Registration Requirements (FinCEN)

Money transmitting businesses must register with the Secretary of the Treasury under 31 U.S.C. § 5330, part of the Bank Secrecy Act.

Registration requirements include:

Filing registration forms with FinCEN
Maintaining anti-money laundering (AML) programs
Reporting certain financial transactions
Maintaining compliance policies

Failure to register can result in criminal charges under 18 U.S.C. § 1960.

Cryptocurrency and Bitcoin Enforcement

Section 1960 is commonly used in cryptocurrency enforcement actions.

Federal prosecutors have applied the statute to:

Bitcoin exchange operators
Peer-to-peer crypto traders
Digital wallet services
Virtual currency transmission platforms

Even if a business does not deal in traditional currency, transmitting digital assets that substitute for money can fall within the statute's scope.

Charges may also be paired with:

18 U.S.C. § 1956 – Money laundering
18 U.S.C. § 1957 – Monetary transactions in criminal proceeds

What Must the Government Prove?

To secure a conviction under 18 U.S.C. § 1960, prosecutors must prove:

The defendant operated or controlled a money transmitting business;
The business affected interstate or foreign commerce;
The business was unlicensed under state law, unregistered federally, or knowingly transmitted criminal proceeds.

Unlike many federal crimes, proof of specific intent to violate the licensing requirement is not always necessary.

Penalties for Violating 18 U.S.C. § 1960

A conviction carries:

Up to 5 years in federal prison
Fines up to $250,000 (or more depending on circumstances)
Asset forfeiture
Supervised release

Additional charges can increase exposure significantly if the case involves money laundering or other criminal activity.

Related Federal Statutes

Section 1960 is often charged alongside other federal crimes, including:

18 U.S.C. § 1951 – Hobbs Act
18 U.S.C. § 1952 – Interstate travel in aid of racketeering
18 U.S.C. § 1955 – Illegal gambling business
18 U.S.C. § 1956 – Money laundering
18 U.S.C. § 1957 – Monetary transactions in criminal proceeds
18 U.S.C. § 1959 – Violent crimes in aid of racketeering

Multi-count federal indictments can substantially increase sentencing risk.

Defenses to Unlicensed Money Transmitting Charges

An experienced federal defense attorney may pursue several strategies.

No Money Transmitting Business

The defense may argue:

The activity does not qualify as transmitting funds on behalf of the public;
The business was not engaged in covered financial activity;
The transactions were private or incidental.

No Interstate Commerce

If the government cannot show that the activity affected interstate or foreign commerce, federal jurisdiction may be challenged.

Licensing or Registration Compliance

In some cases:

Proper state licensing existed;
Registration requirements were met;
Regulatory confusion or ambiguity existed.

Compliance issues may weaken the prosecution's case.

Lack of Knowledge of Criminal Proceeds

If charged based on transmitting criminal proceeds, prosecutors must prove knowledge that the funds were derived from illegal activity.

Challenging proof of knowledge can be central to the defense.

Frequently Asked Questions About 18 U.S.C. § 1960

Is it illegal to transfer money?

No. Transferring money is legal. The crime occurs when someone operates a money transmitting business without proper licensing or registration.

Do I need a license to operate a cryptocurrency exchange?

Possibly. Depending on the structure of the business, registration with FinCEN and compliance with state money transmitter laws may be required.

Can I be charged even if I did not know I needed a license?

Yes. The statute does not always require proof that you knew licensing was required.

What is the maximum penalty?

Up to five years in federal prison, plus fines and possible forfeiture.

What should I do if contacted by federal agents?

Do not make statements without legal counsel. Pre-indictment intervention can sometimes prevent formal charges.

Federal Defense for 18 U.S.C. § 1960 Charges

Federal investigations into money transmitting businesses often involve:

FBI
IRS Criminal Investigation
Homeland Security Investigations
FinCEN

These cases can be document-intensive and involve complex regulatory issues.

If you are under investigation for operating an unlicensed money transmitting business, immediate legal representation is essential. An early strategy can significantly affect whether charges are filed and how the case proceeds.

Consult an experienced federal criminal defense attorney to protect your rights and evaluate your legal options.

The Hedding Law Firm is here to help. Schedule your consultation today. Our law firm is based in Los Angeles, CA

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