Legal issues / banking issues selling Bitcoins to people OTC? I'm wondering what the practical / legal limits are on selling Bitcoin as an individual using Craigslist and LocalBitcoins. Will I run into legal issues / frozen bank accounts as I scale this? Right now I'm doing about $1K of selling per month, but I could see that expanding to $1K - $3K per week.

I take all the payments in cash, so this will be 1-3K per week in cash going into my credit union ATM.
Note: This is a US-centric answer. Other countries may differ. I'll add other countries as people leave comments.


There is an arbitrary limit of $1,000 per person per day that triggers the necessity to register as a money service business. Stay under that FinCEN is unlikely to care about you, although you still may legally need to register for smaller transactions.
As long as a single transaction does not exceed $10,000, your financial institution should not file a Suspicious Activity Report.
You are best opening an account at an institution separate from your personal, general use accounts.
Try to keep cash liquid. Buy local, sell local. If you've got enough volume, use money orders to get fiat into your exchange of choice. It'll cut into your profits a little, but it reduces the number of parties privy to your transactions. Do not fraudulently fill out money orders.
Keep solid books that include the fiat price at the time you purchased your bitcoin and the price of sale. This will help you calculate capital gains taxes.
Pay taxes. Assuming you're in the US, this means paying taxes quarterly instead of yearly, unless you expect to owe less than $1,000.
If you do register with FinCEN, please document the process and broadcast here, on BitcoinTalk, and on /r/bitcoin.
Be truthful, upfront, and, most of all, careful. When in doubt, talk to a lawyer.