Sources of secondary income known as side hustles are relatively common. People might make sourdough bread that they sell at craft shows on the weekends, crochet amigurumi plush animals that they sell on the internet or provide delivery services to people in their community. Frequently, those diversifying their income streams use payment apps, such as Venmo, to facilitate quick payment from customers and clients.
Those with secondary sources of income have to report that money to the Internal Revenue Service (IRS) as income. If they generate more than $600 in miscellaneous income, they have to report those funds. Those using third-party apps and online marketplaces to generate revenue generally need to report that income once they earn $20,000 or conduct 200 transactions under the IRS’s 2025 standards. Even those who are compliant with income tax rules may find that their use of Venmo and similar platforms could potentially lead to allegations of money laundering.
Small transactions may look like layering
Money laundering is a very complex process. Those who generate revenue through illicit means have to take numerous steps to make those funds appear legitimate. Frequently, parties engaged in money laundering fabricate a series of small transactions or make deposits that avoid reporting thresholds.
However, digital reporting by financial institutions and apps can lead to federal regulatory authorities scrutinizing truly innocuous transactions. The layering process during money laundering often involves fabricating a series of smaller transactions to make a large amount of illicit cash appear legitimate.
The frequent $20 transactions conducted over Venmo in return for handmade goods or household services may look like an attempt to obfuscate the true origins of ill-gotten financial gains. Individuals who have played no role in organized criminal activity may suddenly find themselves subject to a federal investigation and accused of potentially life-altering financial crimes.
In such scenarios, a thorough review of the evidence and the collection of additional documentation, such as records of participation in craft shows or testimony from individual clients, could help the person accused of money laundering. Those facing federal prosecution can easily make mistakes that put them at increased legal risk, such as trying to discuss the matter directly with federal investigators without legal guidance.
Sitting down to review allegations of money laundering and a side hustle that triggered those claims with a skilled legal team can help people develop viable criminal defense strategies. Small transactions can potentially lead to big consequences if people don’t respond appropriately to accusations of inappropriate financial conduct.