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Good timing. Yesterday, the UK Treasury released an official document stating that Bitcoin and cryptocurrencies have the lowest risk and lowest likelihood of mo

by Sealy 11y ago

Good timing. Yesterday, the UK Treasury released an official document stating that Bitcoin and cryptocurrencies have the lowest risk and lowest likelihood of money laundering amongst the areas of finance they studied. Guess who came first, Banks. Good job HSBC! You have laundered more money ever then the entire cryptocurrency industry is worth... 10x over http://www.coindesk.com/uk-treasury-digital-currencies-low-money-laundering-risk/ http://www.coindesk.com/uk-treasury-digital-currencies-low-m... HM Treasury link to the National Risk Assessment carried out by the Home Office: https://www.scribd.com/doc/290214176/UK-NRA-October-2015-Final-Web https://www.scribd.com/doc/290214176/UK-NRA-October-2015-Fin...

dtech 11y ago
> You have laundered more money ever then the entire cryptocurrency industry is worth... 10x over To be fair, the banking sector is also orders of magnitude larger
bduerst 11y ago
That's because bitcoin adoption is so low that it's not a threat. Seriously: >9.29 The money laundering risk associated with digital currencies is low, though if the use of digital currencies was to become more prevalent in the UK this risk could rise. Digital currencies are currently not a method by which terrorists raise or move money out of the UK (though they remain a viable method for doing so).
- vdaniuk 11y ago
  So why don't we see headlines like "EU clamps down on banking industry and corruption in financial institutions"?
  - bduerst 11y ago
    Because the E.U. already does and it's not news. http://www.transparencyinternational.eu/focus_areas/eu-financial-sector/ http://www.transparencyinternational.eu/focus_areas/eu-finan...
    - vdaniuk 11y ago
      Really? Transparency International is not a government organization but a non-profit registered in Belgium. edit: HN posting limit is extremely annoying, providing no way for a sustained discussion within multiple threads.
      - bduerst 11y ago
        ...Who runs a websites containing a series of announcements and headlines about financial regulation in the E.U. Next you'll say those aren't true headlines, a la no-true-scotsman.
        vdaniuk 11y ago
        How exactly the Transparency International website that contains public statements critical of E.U. financial regulation backs up your point?
        bduerst 11y ago
        Because it's proof of E.U. financial regulation. What is your point?
        Dylan16807 11y ago
        That regulation of some sort exists, not that it is effective or "clamping down"
        makomk 11y ago
        The Transparency International website that you've linked does talk about financial regulation in the EU, but Transparency International's position is that the regulators have failed - that they have not, in fact, clamped down on fraud and corruption, and that close ties between regulators and the banks they're regulating have made them unwilling to act. You're using a web page criticising regulators for failing to take action as proof that they didn't fail to take action.
  - howlingfantods 11y ago
    You do. HSBC was fined billions of dollars for money laundering. Although some argue that convictions of individuals would be better.
    - newjersey 11y ago
      Nobody got a criminal conviction. How are we OK about this?
    - ensignavenger 11y ago
      Rumor has it that their profits from money laundering were substantially greater than the fines, though.
      - xorcist 11y ago
        I don't think we have to call that just a rumor. I haven't heard anyone argue they weren't. But it's not important what the bank paid. Everyone involved got their bonuses. No one was responsible. No one paid back. I don't think anyone involved cried over any fines the company had to pay.
- return0 11y ago
  It s also not anonymous, and i guess terrorists would need something more immediately liquid.
  - bduerst 11y ago
    I'm not sure about the other digital currencies, but if you tumble with bitcoins it becomes anonymous, right?
    - maxerickson 11y ago
      Only sort of, and only if you have a lot of other people willing to participate with you. If you are just looking to see how money is flowing, you just see the tumble cloud between your collections of interesting source and destination addresses, you are not foiled by it (in the worst case scenario you consider every output address interesting, but then you start paring that down with other information). I wonder if some of the bitcoin gambling sites have really been operated by people trying to obscure the history of their bitcoin. If they can control how fast their coin moves through the site, they have some more assurance of how many addresses they are mixed with.
    - paulsutter 11y ago
      Believe in your lucky sunglasses all you want, but how much would you really stake on a tumbler? "Such tumblers do a very poor job of hiding transactions, especially when dealing with a thousand or a hundred thousand bitcoins. The simplest approach is to simply look for common flow patterns." - http://www.forbes.com/sites/valleyvoices/2015/01/15/how-prosecutors-might-nail-ross-ulbricht-using-the-supposedly-anonymous-bitcoin/ http://www.forbes.com/sites/valleyvoices/2015/01/15/how-pros...
      - bduerst 11y ago
        Interesting article, but isn't that survivor bias? All the tumblers seem inept when the only detectable tumblers are inept. You don't see the competent or succesful tumblers.
bko 11y ago
I'm a big supporter of bitcoin and I have a superficial understanding of how the public ledger works, but why is it not incredibly easy to launder money through bitcoin? Since the currency is fungible, aren't there services that allow you to send bitcoins and it will send move your bitcoin around through many other accounts, including bitcoin from deposits of others? The end result being that the end state of some bitcoin cannot be traced back to the origin. How would someone reasonably trace that with any degree of certainty?
- Natanael_L 11y ago
  There are, called Bitcoin mixers. Also there's coinjoin matching services that's fairly automatic (community coordinated mixing instead of going through central servers). Edit: How is this not relevant? Why is this downvoted?
  - bko 11y ago
    Yes, so isn't this an effective way of laundering money?
    - mootothemax 11y ago
      >>The process is called tumbling, and it's primarily how bitcoin tax evaders use it now to get around the "public" ledger. No, because they don't work, and even if they did successfully split up $1,000+ transactions, you can still analyse the public ledger to figure out where it all came from. Edit: the proponents of such services also ignore the fact that anyone could be behind the tumbling services, governments included.
      - Natanael_L 11y ago
        Bitcoin don't have individual coins. Each transaction is like taking several pieces of gold and melting them together and splitting them up in new pieces. Mixing multiple transactions from multiple people do not reveal what came from where - you only know sending addresses, receiving addresses and amounts - but no links between which senders are tied to which recievers. Instead of having a bunch of individual historical lines for each "coin" and each person there's a big web of unknown addresses, with only a few known original senders and maybe a few known recievers. Coinjoin lets strangers securely pool together their coins and get the same amount of coins out to several new addresses of yours, except that now nobody knows which addresses belong together and which coins belongs to which sender.
ucaetano 11y ago
You're mixing money laundering and terrorism funding. Terrorism doesn't need money laundering, they just need the money. They don't hold large accounts in Europe where they send the proceeds from their criminal activities to fund their retirements, quite the opposite. Money laundering is about moving money from illicit to licit activities. Terrorism funding is exactly the opposite.
- jbssm 11y ago
  The moment, licit activities move money to illicit activities, they get targeted as illicit activities themselves. So, yeah, money laundering needs to work both ways.
- newjersey 11y ago
  > Terrorism doesn't need money laundering, they just need the money. You're absolutely correct. The whole thing reeks of security theater. Those people need money for logistics -- food, clothes, lodging and so on while they plan their crimes. I don't believe that there is anything safer than cash for such purposes. Even gold would be to suspicious. I'd imagine you'd want as few people to be in the know of the activity before it happens.

by Sealy 11y ago

dtech 11y ago

> You have laundered more money ever then the entire cryptocurrency industry is worth... 10x over To be fair, the banking sector is also orders of magnitude larger

bduerst 11y ago

That's because bitcoin adoption is so low that it's not a threat. Seriously: >9.29 The money laundering risk associated with digital currencies is low, though if the use of digital currencies was to become more prevalent in the UK this risk could rise. Digital currencies are currently not a method by which terrorists raise or move money out of the UK (though they remain a viable method for doing so).

vdaniuk 11y ago
So why don't we see headlines like "EU clamps down on banking industry and corruption in financial institutions"?
- bduerst 11y ago
  Because the E.U. already does and it's not news. http://www.transparencyinternational.eu/focus_areas/eu-financial-sector/ http://www.transparencyinternational.eu/focus_areas/eu-finan...
  - vdaniuk 11y ago
    Really? Transparency International is not a government organization but a non-profit registered in Belgium. edit: HN posting limit is extremely annoying, providing no way for a sustained discussion within multiple threads.
    - bduerst 11y ago
      ...Who runs a websites containing a series of announcements and headlines about financial regulation in the E.U. Next you'll say those aren't true headlines, a la no-true-scotsman.
      - vdaniuk 11y ago
        How exactly the Transparency International website that contains public statements critical of E.U. financial regulation backs up your point?
        bduerst 11y ago
        Because it's proof of E.U. financial regulation. What is your point?
        Dylan16807 11y ago
        That regulation of some sort exists, not that it is effective or "clamping down"
      - makomk 11y ago
        The Transparency International website that you've linked does talk about financial regulation in the EU, but Transparency International's position is that the regulators have failed - that they have not, in fact, clamped down on fraud and corruption, and that close ties between regulators and the banks they're regulating have made them unwilling to act. You're using a web page criticising regulators for failing to take action as proof that they didn't fail to take action.
- howlingfantods 11y ago
  You do. HSBC was fined billions of dollars for money laundering. Although some argue that convictions of individuals would be better.
  - newjersey 11y ago
    Nobody got a criminal conviction. How are we OK about this?
  - ensignavenger 11y ago
    Rumor has it that their profits from money laundering were substantially greater than the fines, though.
    - xorcist 11y ago
      I don't think we have to call that just a rumor. I haven't heard anyone argue they weren't. But it's not important what the bank paid. Everyone involved got their bonuses. No one was responsible. No one paid back. I don't think anyone involved cried over any fines the company had to pay.
return0 11y ago
It s also not anonymous, and i guess terrorists would need something more immediately liquid.
- bduerst 11y ago
  I'm not sure about the other digital currencies, but if you tumble with bitcoins it becomes anonymous, right?
  - maxerickson 11y ago
    Only sort of, and only if you have a lot of other people willing to participate with you. If you are just looking to see how money is flowing, you just see the tumble cloud between your collections of interesting source and destination addresses, you are not foiled by it (in the worst case scenario you consider every output address interesting, but then you start paring that down with other information). I wonder if some of the bitcoin gambling sites have really been operated by people trying to obscure the history of their bitcoin. If they can control how fast their coin moves through the site, they have some more assurance of how many addresses they are mixed with.
  - paulsutter 11y ago
    Believe in your lucky sunglasses all you want, but how much would you really stake on a tumbler? "Such tumblers do a very poor job of hiding transactions, especially when dealing with a thousand or a hundred thousand bitcoins. The simplest approach is to simply look for common flow patterns." - http://www.forbes.com/sites/valleyvoices/2015/01/15/how-prosecutors-might-nail-ross-ulbricht-using-the-supposedly-anonymous-bitcoin/ http://www.forbes.com/sites/valleyvoices/2015/01/15/how-pros...
    - bduerst 11y ago
      Interesting article, but isn't that survivor bias? All the tumblers seem inept when the only detectable tumblers are inept. You don't see the competent or succesful tumblers.

bko 11y ago

I'm a big supporter of bitcoin and I have a superficial understanding of how the public ledger works, but why is it not incredibly easy to launder money through bitcoin? Since the currency is fungible, aren't there services that allow you to send bitcoins and it will send move your bitcoin around through many other accounts, including bitcoin from deposits of others? The end result being that the end state of some bitcoin cannot be traced back to the origin. How would someone reasonably trace that with any degree of certainty?

Natanael_L 11y ago
There are, called Bitcoin mixers. Also there's coinjoin matching services that's fairly automatic (community coordinated mixing instead of going through central servers). Edit: How is this not relevant? Why is this downvoted?
- bko 11y ago
  Yes, so isn't this an effective way of laundering money?
  - mootothemax 11y ago
    >>The process is called tumbling, and it's primarily how bitcoin tax evaders use it now to get around the "public" ledger. No, because they don't work, and even if they did successfully split up $1,000+ transactions, you can still analyse the public ledger to figure out where it all came from. Edit: the proponents of such services also ignore the fact that anyone could be behind the tumbling services, governments included.
    - Natanael_L 11y ago
      Bitcoin don't have individual coins. Each transaction is like taking several pieces of gold and melting them together and splitting them up in new pieces. Mixing multiple transactions from multiple people do not reveal what came from where - you only know sending addresses, receiving addresses and amounts - but no links between which senders are tied to which recievers. Instead of having a bunch of individual historical lines for each "coin" and each person there's a big web of unknown addresses, with only a few known original senders and maybe a few known recievers. Coinjoin lets strangers securely pool together their coins and get the same amount of coins out to several new addresses of yours, except that now nobody knows which addresses belong together and which coins belongs to which sender.

ucaetano 11y ago

You're mixing money laundering and terrorism funding. Terrorism doesn't need money laundering, they just need the money. They don't hold large accounts in Europe where they send the proceeds from their criminal activities to fund their retirements, quite the opposite. Money laundering is about moving money from illicit to licit activities. Terrorism funding is exactly the opposite.

jbssm 11y ago
The moment, licit activities move money to illicit activities, they get targeted as illicit activities themselves. So, yeah, money laundering needs to work both ways.
newjersey 11y ago
> Terrorism doesn't need money laundering, they just need the money. You're absolutely correct. The whole thing reeks of security theater. Those people need money for logistics -- food, clothes, lodging and so on while they plan their crimes. I don't believe that there is anything safer than cash for such purposes. Even gold would be to suspicious. I'd imagine you'd want as few people to be in the know of the activity before it happens.