The Risk of Money Laundering Through Crowdfunding: A Funding Portal's Guide to Compliance and Crime Fighting

Citation data:

Vol: 4, Issue: 1, Page: 113-130

Publication Year:
2014
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Repository URL:
https://repository.law.umich.edu/mbelr/vol4/iss1/4
Author(s):
Robock, Zachary
Tags:
Jumpstart Our Business Startups Act; Money laundering; Crowdfunding; Crimes; Funding; Compliance; Investors; Fraud; Regulation; Law reform; Banking and Finance Law; Criminal Law; Legislation
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With the recent passage of the Jumpstart Our Business Startups Act (“JOBS Act”) and proposed regulations, equity crowdfunding is poised to play an important role in fundraising for many types of emerging growth companies. A fundamental purpose of crowdfunding is to reduce economic barriers to capital markets for emerging growth companies, in part by relaxing rigorous information disclosure requirements currently mandated by the Securities and Exchange Commission (“SEC”). Relaxed regulation should help reduce the cost of fundraising, but it will also present certain risks. Investor fraud is a common concern, which is addressed at length in the JOBS Act and related regulation. Perhaps less obvious, but nonetheless present, is the risk of money laundering, which is the subject of this Note.