If you're at the point where you're offering explanations as to the source of your cash, then it's too late. You're being investigated and that's what you want to prevent. Also, how do you sell BC for physical cash?
Why do you have to sell for cash ? You're in the clear once you can explain where your money came from, so it can go to your bank account and then you pay taxes like a good citizen.
I agree that it is ideal not to be investigated, but I'd think if you're making lots of money illegally, then authorities already have a decent idea of suspicion.
Presumably you have a pile of dirty cash you need to make clean. That cash needs to enter the banking system somehow. If you show up to the bank and say, "I got this money from selling Bitcoin", they'll likely wonder how you received it in that form, rather than as an ACH, wire transfer, or other non-cash form. So the question is, how did you arrange to sell BC for physical cash?
EDIT: Ok, I'm looking at it the wrong-way around. I guess you buy the BC locally with the cash, then tumble it, then sell it and claim that those coins were purchased back when you were a shrewd BC investor. I think the point still stands though that this is a risky maneuver, because the cover is a red flag in its own right, versus a restaurant that appears to be doing normal business.
It wouldn't necessarily be quite that simple, but it does seem to me as well that BTC could potentially be used for money laundering, and could provide a reasonable cover.
