A California Man Admits to Failing Anti-Money Laundering Protections in Cryptocurrency Exchange

Introduction

A California man, Charles James Randol, has admitted to not implementing anti-money laundering protections in his cryptocurrency exchange, allowing scammers and drug traffickers to launder millions of dollars through the service. Randol now faces potential prison time and hefty fines for his actions.

The Details

Randol operated a virtual-currency money company called Bitcoins4Less, later renamed Digital Coin Strategies, from October 2017 to July 2021. The business offered cash for Bitcoin and vice versa, with Randol earning a commission on the transactions. However, he failed to verify the identities of customers, which is a requirement under regulatory guidelines.

In-Person Transactions

Randol admitted to conducting three in-person transactions between October 2020 and January 2021, where he exchanged a total of $273,940 in cash for Bitcoin with an undercover FBI agent. He did not collect any personal information or verify the source of the funds during these transactions.

Automated Kiosks and Snail Mail

Randol also operated a network of automated kiosks in Southern California that converted cash to cryptocurrency and vice versa. Additionally, he accepted large amounts of cash through the mail, often packaged in suspicious ways, such as hidden inside children’s books or concealed within fake birthday presents.

Regulatory Violations

Randol advertised his services on his website and third-party sites, falsely claiming to be a fully compliant FinCEN registered money services business. However, he intentionally failed to comply with the Bank Secrecy Act, which requires money services businesses to develop anti-money laundering programs, file transaction reports, conduct due diligence on customers, and report suspicious activities.

Failure to Comply

Randol did not collect appropriate information about his customers, file transaction reports, or report suspicious transactions to the government. Although he had a written anti-money laundering policy, he did not take any measures to prevent money laundering. He also ignored the advice of a compliance officer he had hired, who warned him about using certain accounts and conducting in-person transactions.

Conclusion

Randol’s failure to implement anti-money laundering protections in his cryptocurrency exchange has led to potential legal consequences. His actions allowed scammers and drug traffickers to launder millions of dollars through his service. He will plead guilty to the charges in court in the coming weeks.