Is currency trading legal in US? I am trying to open a business where a client can trade their currency to me. For example, if a client has money in their PayPal, they can send it to me, then I will give the the equivalent in their local currency (removing scam). I am wondering if this is legal (in the United States). A coworker said it's money laundering and not legal. Any source will also help.
Obviously, it's not simply illegal to have a business that exchanges currency - legal currency exchanges do exist, after all. But you'd have to be careful if you wanted to open a business that does this. According to 31 CFR 1010.100, you are considered a "dealer in foreign exchange", and thus a "money services business", and thus a "financial institution", if you are: A person that accepts the currency, or other monetary instruments, funds, or other instruments denominated in the currency, of one or more countries in exchange for the currency, or other monetary instruments, funds, or other instruments denominated in the currency, of one or more other countries in an amount greater than $1,000 for any other person on any day in one or more transactions, whether or not for same-day delivery. You are not considered a "money services business" if you do this "on an infrequent basis and not for gain or profit", but you say you want to "open a business" that does this, so this exemption wouldn't apply to you. If you are considered a financial institution, then you must comply with all sorts of anti-money-laundering regulations, including, for example, verifying the identity of your customers, and filing reports with the US Treasury. You would definitely want to hire a lawyer to guide you through the requirements.
You cannot do this legally General rules Under US law you are required to file a Form 1099 with the IRS for this payment if it was for a trade or business purpose. ( $1,000.00 is above the current reporting limit of $600.) This you cannot do without the recipient's name (personal or business) and address. You will also need their SSN or TIN. Failure to file the 1099 may be a violation of law. Private people, as well as businesses, get 1099s which are also filed with the IRS. I myself have received 1099s as a private individual for freelance work. (Corporations mostly do not get 1099s.) Private individuals as well as businesses report payments on 1099s. Such a person might be involved in unlawful tax evasion, and the demand for payment in bitcoin might support a reasonable suspicion of this. If so, you might be accused of being an accessory. If the person is foreign (non-US) and the work was not done in the US it may not need to be reported, but if you do not know the person's location you cannot safely assert that it is outside the US. If you intend to deduct the payment on your own taxes as a business expense, you may also need to have a receipt showing the recipient of the money. It would seem that if the payor/client is in the US and the work was done for a trade or business (which includes a non-profit, but not a hobby or personal site) and the amount is $600 or more, there is no safe and legal way to hire a person or firm without knowing the name, address, and (in most cases) TIN (taxpayer identification number) of the contractor, or at least using ones &quot;best efforts&quot; to obtain the TIN. See the various IRS instructions below for details. IRS Instructions According to the Form 1099-Misc/1099-NEC insatructions Report on Form 1099-MISC [or 1099-NEC] only when payments are made in the course of your trade or business. Personal payments are not reportable. You are engaged in a trade or business if you operate for gain or profit. However, nonprofit organizations are considered to be engaged in a trade or business and are subject to these reporting requirements. Generally, payments to a corporation (including a limited liability company (LLC) that is treated as a C or S corporation) [are not reportable]. If you are required to file Form 1099-MISC, you must furnish a statement to the recipient. Enter [in Box 3] other income of $600 or more required to be reported on Form 1099-MISC that is not reportable in one of the other boxes on the form. File Form 1099-NEC, Nonemployee Compensation (NEC), for each person in the course of your business to whom you have paid the following during the year: At least $600 in ... Services performed by someone who is not your employee (including parts and materials) (box 1); Generally, you must report payments to independent contractors on Form 1099-NEC in box 1. If the following four conditions are met, you must generally report a payment as NEC. You made the payment to someone who is not your employee. You made the payment for services in the course of your trade or business (including government agencies and nonprofit organizations). You made the payment to an individual, partnership, estate, or, in some cases, a corporation; You made payments to the payee of at least $600 during the year. Instructions for Form 1042-S specify that one must report for foreign payees: Compensation for independent personal services performed in the United States. General Instructions for Certain Information Returns says: Recipient names. Show the full name and address in the section provided on the information return. If payments have been made to more than one recipient or the account is in more than one name, show on the first name line the name of the recipient whose TIN is first shown on the return. ... TINs. TINs are used to associate and verify amounts you report to the IRS with corresponding amounts on tax returns. Therefore, it is important that you report correct names, social security numbers (SSNs), individual taxpayer identification numbers (ITINs), employer identification numbers (EINs), or adoption taxpayer identification numbers (ATINs) for recipients on the forms sent to the IRS.
In the US, "insider trading" includes both legal and illegal versions. When a corporate employee buys or sells shares of their company, they are insiders and they are trading (there is a requirement to report to the government). The illegal version involves breach of fiduciary duty or confidence. The relevant section of the federal regulations is 17 CFR 240.10b on "Manipulative and Deceptive Devices and Contrivances", and you will note that the section does not rely on the term "insider" in the law part, instead it directly characterizes what acts are illegal. Thus it would not matter, from a legal perspective, if someone considers you an insider. It is illegal to trade in securities using a “manipulative, deceptive, or other fraudulent device or contrivance”. This relates to what is commonly known as insider trading via rule 240.10b5-1, by defining as manipulative and deceptive trading on the basis of material nonpublic information about that security or issuer, in breach of a duty of trust or confidence that is owed directly, indirectly, or derivatively, to the issuer of that security or the shareholders of that issuer, or to any other person who is the source of the material nonpublic information (emphasis added to focus on the core requirements). Whether or not you have a "duty of trust or confidence" is determined by common law standards, that is, it depends on how courts have ruled on similar matters. For instance if the CEO of Apple tells you "Our computers explode and it's gonna be on the news tonight, the stock is gonna tank, but it would be illegal for you to act on that information", then it would be illegal, because you are aware that the CEO has a duty to not use that information (thus you "inherit" the duty). This also holds if he doesn't tell you that acting on the information, since it is expected that you know that the CEO of Apple could not legally act on that information (even if in fact you are unaware of the law -- ignorance of the law doesn't get you anywhere good). However, if you are unaware and could not know that the person making the factual disclosure is divulging information that he has a duty to shut up about, then you might not get prosecuted.
The reason that you are being asked to comply with a US law is because PayPal, a US company, is required to comply with US laws. If you do not comply, it is likely that they will be non-compliant and subject to sanctions. For more background, FATCA reporting is used to identify businesses that a company does business with. In this scenario PayPal does business with you, 'Kenorb Inc', and so must prove to the regulatory agencies that you are not a US based company, hence the need for the W-8BENE. In a similar way - people from other countries cannot simply ignore UK law when dealing with your business. As for your quotes - they are not contradictory.
What does the contract say? I write that so often I should get a stamp made. If the contract is silent, then it is implied that payment in US currency is acceptable, as is any other method of payment the parties agree to. As you have correctly quoted, there is no limit to the number of US coins that are valid for payments, unlike in many other jurisdictions where there is such a limit. Accept the coins, make the tenant wait while you count them one by one and then give them a receipt. Oh, and change your lease when you can to nominate sensible forms of payment like electronic transfer.
Laundering physical money Let's say a career criminal committed a couple crimes and is now in possession of a large heap of money in form of coins and paper currency. They want to use that money to buy themselves a nice house. But showing up with a huge bag of money at a bank or real estate agency would look very suspicious. It is very likely that they will get reported and then investigated by law enforcement. What do they do? They need some explanation where that money comes from. A good way to turn that dirty money into apparently clean money is by running a legitimate cash-based business. The criminal then goes to the bank each week and deposits a chunk of their ill-gotten cash claiming it's income from their business. Common choices are restaurants, casinos or the name-giver laundromats which were famously used by crime boss Al Capone to launder his illegal income. But they can use any business for this purpose which takes payment in cash and doesn't leave easy to analyze evidence how much business they really performed. Now the criminal has all that ill-gotten money on a regular bank account and can use it to buy what they want without raising any further suspicion. Laundering electronic money Another category of money laundering which got very relevant in the age of online banking is to launder illegally obtained money which can be found on bank accounts. For example by hacking online banking accounts or running scams. If the criminal would just send that money to their personal account, then the investigators would just need to subpoena their bank and their real identity would be revealed. So they need some way to move that money which is hard to trace. Common methods are: Transfering money to accounts in foreign countries in order to tie up investigators with the bureaucracy of international investigations. Transferring money in ways which are hard to trace, like cryptocurrency, gift cards, private money transfer services or private people they recruited to forward money through their personal accounts. Buying, transfering and selling virtual assets in online games. Buying physical items from online stores using false identities and selling them again under their real identity. Fortunately none of these methods of money laundering are completely untraceable. They make the work of law enforcement more difficult, but not completely impossible. The criminals usually hope to frustrate law enforcement to the point that they give up and prioritize "larger fish".
Yes, its legal Economically, there is no difference between a cash discount and a card surcharge; legally, there is. That’s because the law prohibits charging more than the advertised price for a given payment method but doesn’t prohibit charging less. Of course, it’s likely there is some illegality here but it’s not against the customer. A business doesn't give a 10% discount to avoid paying a 1-2% fee. They do it because they are not reporting (some of) their cash sales to the tax authorities and are therefore saving the 25% VAT and 18% company tax.
You can purchase any expensive item for cash, if the seller will accept it. In the US and many other jurisdictions, a seller is not required to accept cash, but many will. In the US and many other jurisdictions banks are required to report large cash deposits to government authorities, to help combat money-laundering, drug-dealing, and tax-evasion. Such a report may trigger an investigation, and during that investigation a person who bought an expensive item for cash may well be asked about the source of the cash. Whether an answer is legally required will depend on the law in the particular place. But even if it is not legally required, refusing to answer such questions may trigger additional investigation.