SB1208 - Money laundering: digital assets.

Amended IN Assembly August 20, 2026 Amended IN Assembly August 13, 2026 Amended IN Assembly July 02, 2026 Amended IN Senate May 14, 2026 Amended IN Senate April 06, 2026 CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION Senate Bill No. 1208 Introduced by Senator Grayson February 19, 2026 An act to amend, repeal, and add Section Sections 186.9 and 186.10 of, and to add and repeal Section 186.13 of, the Penal Code, relating to crimes, and making an appropriation therefor. LEGISLATIVE COUNSEL'S DIGEST SB 1208, as amended, Grayson. Money laundering: digital financial assets. Existing law makes it a crime to engage in money laundering, defined as conducting a transaction involving a monetary instrument of specified value through a financial institution with the specific intent to promote or facilitate criminal activity or knowing that the monetary instrument represents the proceeds of or is derived from the proceeds of criminal activity. Existing law establishes the Restitution Fund, a continuously appropriated fund in the State Treasury, to provide funding to compensate victims of crime. This bill would, until January 1, 2032, expand the crime of money laundering to include conducting a transaction involving a monetary instrument of specified value using digital financial assets, as described. assets, as defined. The bill would make other technical, nonsubstantive changes, as provided. By expanding the scope of a crime, this bill would impose a state-mandated local program. Existing law, the California Control of Profits of Organized Crime Act, establishes a procedure for the forfeiture of property and proceeds acquired through a pattern of criminal profiteering activity, as defined, upon the conviction of the underlying criminal offense, including money laundering, and requires the prosecuting agency to file a petition of forfeiture in conjunction with certain criminal proceedings. Existing law authorizes any person claiming an interest in property or proceeds subject to forfeiture to file with the superior court in which the forfeiture action is pending a verified claim stating their interest in the property or proceeds, as specified. This bill would, until January 1, 2032, authorize a law enforcement officer or prosecuting agency, as defined, to obtain a search warrant to seize digital financial assets or wallets, accounts, or similar things containing digital financial assets (collectively “digital financial assets (collectively “digital assets”) upon a showing of probable cause that the digital financial assets contain proceeds of a crime or proceeds traceable to a crime or have been used to facilitate a crime. The bill would require the search warrant to specify any centralized exchanges, custodians of digital assets, addresses, or other locations from which the digital financial assets will be seized, to describe how the warrant will be served, and to specify the amount of digital financial assets to be seized, as specified. The bill would authorize, within 180 days of any seizure, a prosecuting agency to initiate a special proceeding to forfeit the seized digital financial assets, including providing notice to all readily ascertainable potential owners of the digital financial assets and anyone with a known security interest. The bill would require any person with a claim to the seized digital financial assets to file a verified claim under penalty of perjury and supported by admissible evidence within 30 days of the date of service of the notice from the prosecuting agency, as specified. By expanding the crime of perjury, the bill would impose a state-mandated local program. The bill would provide a process for a court to adjudicate and resolve these verified claims, as specified. The bill would require the court, after all the claims are resolved, to issue a final judgment forfeiting the remaining digital financial assets and would provide a process for a prosecuting agency to distribute the remaining digital assets to victims, as specified. The bill would require any digital financial assets not distributed to victims to be kept in the custody of law enforcement or prosecuting agency for a maximum of 3 years, after which the forfeited assets would be deposited into the Restitution Fund for the purpose of providing victim services. By expanding the revenue sources of a continuously appropriated fund, and by expanding the purposes for which moneys in a continuously appropriated fund may be used, the bill would make an appropriation. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason. Digest Key Vote: 2/3 Appropriation: YES Fiscal Committee: YES Local Program: YES Bill Text The people of the State of California do enact as follows: SECTION 1. The Legislature finds and declares all of the following: (a) The global accessibility and transferability of digital financial assets present unique challenges to law enforcement, particularly in their effort to combat online frauds targeting Californians. (b) Existing asset forfeiture laws require California state and local law enforcement to locate a suspect, charge them with a crime, and obtain a conviction before forfeiture can occur. (c) Transnational criminal organizations are targeting California residents with sophisticated internet scams using cryptocurrency to steal and launder the fraud proceeds. (d) Transnational criminal organizations often operate from countries with limited diplomatic cooperation and are protected by government corruption. Many organizations engage in human trafficking so that the person committing the scam is actually the victim of the criminal enterprise. Given all of these challenges, California state and local law enforcement have limited ability to identify the individual perpetrator, extradite them, and obtain a criminal conviction. However, these organizations can be disrupted by seizing traceable proceeds of fraud and other funds they use in laundering the proceeds of fraud. Other funds may include legitimate funds and proceeds of other crimes, such as drug trafficking. (e) Existing state laws need to be updated to combat the devastating consequences of this new and emerging threat. (f) It is the intent of the Legislature to enable state and local law enforcement to return seized cryptocurrency to Californians and victims in other states who are victims of fraud, deny cryptocurrency to perpetrators and organizations committing fraud, and disrupt their ability to use cryptocurrency for money laundering. SEC. 2. Section 186.9 of the Penal Code is amended to read: 186.9. As used in this chapter: (a) “Conducts” includes, but is not limited to, initiating, concluding, or participating in conducting, initiating, or concluding a transaction. (b) “Financial institution” means, when located or doing business in this state, any national bank or banking association, state bank or banking association, commercial bank or trust company organized under the laws of the United States or any state, any private bank, industrial savings bank, savings bank or thrift institution, savings and loan association, or building and loan association organized under the laws of the United States or any state, any insured institution as defined in Section 401 of the National Housing Act (12 U.S.C. Sec. 1724(a)), any credit union organized under the laws of the United States or any state, any national banking association or corporation acting under Chapter 6 (commencing with Section 601) of Title 12 of the United States Code, any agency, agent or branch of a foreign bank, any currency dealer or exchange, any person or business engaged primarily in the cashing of checks, any person or business who regularly engages in the issuing, selling, or redeeming of traveler’s checks, money orders, or similar instruments, any broker or dealer in securities registered or required to be registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934 or with the Commissioner of Financial Protection and Innovation under Part 3 (commencing with Section 25200) of Division 1 of Title 4 of the Corporations Code, any licensed transmitter of funds or other person or business regularly engaged in transmitting funds to a foreign nation for others, any investment banker or investment company, any insurer, any dealer in gold, silver, or platinum bullion or coins, diamonds, emeralds, rubies, or sapphires, any pawnbroker, any telegraph company, any person or business regularly engaged in the delivery, transmittal, or holding of mail or packages, any person or business that conducts a transaction involving the transfer of title to any real property, vehicle, vessel, or aircraft, any personal property broker, any person or business acting as a real property securities dealer within the meaning of Section 10237 of the Business and Professions Code, whether licensed to do so or not, any person or business acting within the meaning and scope of subdivisions (d) and (e) of Section 10131 and Section 10131.1 of the Business and Professions Code, whether licensed to do so or not, any person or business regularly engaged in gaming within the meaning and scope of Section 330, any person or business regularly engaged in pool selling or bookmaking within the meaning and scope of Section 337a, any person or business regularly engaged in horse racing whether licensed to do so or not under the Business and Professions Code, any person or business engaged in the operation of a gambling ship within the meaning and scope of Section 11317, any person or business engaged in controlled gambling within the meaning and scope of subdivision (e) of Section 19805 of the Business and Professions Code, whether registered to do so or not, and any person or business defined as a “bank,” “financial agency,” or “financial institution” by Section 5312 of Title 31 of the United States Code or Section 103.11 of Title 31 of the Code of Federal Regulations and any successor provisions thereto. (c) “Transaction” includes the deposit, withdrawal, transfer, bailment, loan, pledge, payment, or exchange of currency, or a monetary instrument, as defined by subdivision (d), or the electronic, wire, magnetic, or manual transfer of funds between accounts by, through, or to, a financial institution as defined by subdivision (b). (d) “Monetary instrument” means United States currency and coin; the currency, coin, and foreign bank drafts of any foreign country; payment warrants issued by the United States, this state, or any city, county, or city and county of this state or any other political subdivision thereof; any bank check, cashier’s check, traveler’s check, or money order; any personal check, stock, investment security, or negotiable instrument in bearer form or otherwise in a form in which title thereto passes upon delivery; gold, silver, or platinum bullion or coins; and diamonds, emeralds, rubies, or sapphires. Except for foreign bank drafts and federal, state, county, or city warrants, “monetary instrument” does not include personal checks made payable to the order of a named party which have not been endorsed or which bear restrictive endorsements, and also does not include personal checks which have been endorsed by the named party and deposited by the named party into the named party’s account with a financial institution. (e) “Criminal activity” means a criminal offense punishable under the laws of this state by death, imprisonment in the state prison, or imprisonment pursuant to subdivision (h) of Section 1170 or from a criminal offense committed in another jurisdiction punishable under the laws of that jurisdiction by death or imprisonment for a term exceeding one year. (f) “Foreign bank draft” means a bank draft or check issued or made out by a foreign bank, savings and loan, casa de cambio, credit union, currency dealer or exchanger, check cashing business, money transmitter, insurance company, investment or private bank, or any other foreign financial institution that provides similar financial services, on an account in the name of the foreign bank or foreign financial institution held at a bank or other financial institution located in the United States or a territory of the United States. (g) “Digital asset” means any digital representation of value which is recorded on a cryptographically secured distributed ledger or other similar technology. (h) This section shall remain in effect only until January 1, 2032, and as of that date is repealed. SEC. 3. Section 186.9 is added to the Penal Code, to read: 186.9. As used in this chapter: (a) “Conducts” includes, but is not limited to, initiating, concluding, or participating in conducting, initiating, or concluding a transaction. (b) “Financial institution” means, when located or doing business in this state, any national bank or banking association, state bank or banking association, commercial bank or trust company organized under the laws of the United States or any state, any private bank, industrial savings bank, savings bank or thrift institution, savings and loan association, or building and loan association organized under the laws of the United States or any state, any insured institution as defined in Section 401 of the National Housing Act (12 U.S.C. Sec. 1724(a)), any credit union organized under the laws of the United States or any state, any national banking association or corporation acting under Chapter 6 (commencing with Section 601) of Title 12 of the United States Code, any agency, agent or branch of a foreign bank, any currency dealer or exchange, any person or business engaged primarily in the cashing of checks, any person or business who regularly engages in the issuing, selling, or redeeming of traveler’s checks, money orders, or similar instruments, any broker or dealer in securities registered or required to be registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934 or with the Commissioner of Financial Protection and Innovation under Part 3 (commencing with Section 25200) of Division 1 of Title 4 of the Corporations Code, any licensed transmitter of funds or other person or business regularly engaged in transmitting funds to a foreign nation for others, any investment banker or investment company, any insurer, any dealer in gold, silver, or platinum bullion or coins, diamonds, emeralds, rubies, or sapphires, any pawnbroker, any telegraph company, any person or business regularly engaged in the delivery, transmittal, or holding of mail or packages, any person or business that conducts a transaction involving the transfer of title to any real property, vehicle, vessel, or aircraft, any personal property broker, any person or bu [Text truncated for display. Full text available on Congress.gov.]