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What's the difference between money launderying features and privacy features? Tornado Cash in itself does is not launderying money because you still have to p

What's the difference between money launderying features and privacy features? Tornado Cash in itself does is not launderying money because you still have to prove to the IRS how you got the money or the asset(i.e bills, invoice etc) and you still have to obey KYC rules. You can't just say the money is from Tornado Cash and be done with it. Is the U.S Mint a money launderying service because it provides an untraceable method (cash) to conduct transactions?

woodruffw 4y ago
The features don't matter. What matters is intent and demonstrating that intent. Both the Treasury and Dutch authorities have reason to believe that Tornado Cash was operated with the intent of facilitating money laundering. It's up to a court to determine the veracity of that accusation.
- npc54321 4y ago
  Guilty until proven innocent (they are blacklisted/sanctioned) I see.
  - A4ET8a8uTh0 4y ago
    FWIW, the money sanctioned under OFAC is still that of the owner so there is a process in place that has a semblance of the rules of law. However, getting that money released by the bank is nothing short of a herculean effort based on cases I have seen over the years.
  - woodruffw 4y ago
    Not only am I not a court of law, but I specifically said that it's up to a court to make a decision of legal guilt here. In the mean time, yes: the government is allowed to halt activities that it believes are part of an active criminal scheme. Every country with a functioning legal system proscribes this, and establishes a broad swath of controls to ensure that the government can't indefinitely tie up resources.
mattficke 4y ago
To your last question, this is why financial institutions are required to report cash transactions over $10,000. There are a number of constraints on how untraceable cash is.
- TEP_Kim_Il_Sung 4y ago
  Has this amount ever been adjusted for inflation? It is my understanding, that $10,000 at the time this law was set, was about ¼ the price of a small home.
  - A4ET8a8uTh0 4y ago
    No. Also, there were several recent articles/speeches from various AML/BSA/Fraud folks to lower that amount even further for several purposes including CTR. For better or worse, BSA has become its own industry with a lot of money riding on keeping things annoying to regular people ( and barely doing anything to stop actual criminals, who have skills, patience and resources to bypass all the safeguards ).
pigtailgirl 4y ago
-- if I move $10k - my institution automatically tells the government I moved $10k - if in the US - the receiving institution also tells the government - I don't have an expectation of privacy - is this also true with Tornado Cash? --
- chrischattin 4y ago
  If you use cash, it's a private transaction (no notification).
salawat 4y ago
KYC applies to money transmitters directly. End consumers only indirectly by virtue of any financial institution ending up in hot water for non-compliance. You don't get to shift regulatory burden to the consumer.
marcus_holmes 4y ago
> What's the difference between money launderying features and privacy features? Really good question. I'd say "if your privacy feature allows you to trade above the trigger limit (usually 10K USD/EUR/GBP) without having to state the source of your funds, then it's actually a money laundering feature"
- ashwagary 4y ago
  If the funds aren't procured through criminal activity, then it can't be considered money laundering. Only if the individual doesn't declare a taxable event to a tax authority has a crime been committed.
  - marcus_holmes 4y ago
    no, it's money laundering even if the funds haven't been procured from criminal activity. The regulations don't care where the money comes from, they're just specifying what reporting needs to happen around the movement of money. Not being able to properly describe where the money comes from is a crime. I've worked in the finance industry, and I've worked with people who've seen bad guys turn up with suitcases full of other people's money. I'm totally happy that these regulations are in place.
    - ashwagary 4y ago
      >>no, it's money laundering even if the funds haven't been procured from criminal activity. You are wrong. FINCEN "Money laundering involves disguising financial assets so they can be used without detection of the illegal activity that produced them." WIKIPEDIA "Money laundering is the process of concealing the origin of money obtained from illicit activities such as drug trafficking, corruption, embezzlement or gambling, by converting it into a legitimate source." https://www.fincen.gov/what-money-laundering https://www.fincen.gov/what-money-laundering https://en.wikipedia.org/wiki/Money_laundering https://en.wikipedia.org/wiki/Money_laundering

woodruffw 4y ago

The features don't matter. What matters is intent and demonstrating that intent. Both the Treasury and Dutch authorities have reason to believe that Tornado Cash was operated with the intent of facilitating money laundering. It's up to a court to determine the veracity of that accusation.

npc54321 4y ago
Guilty until proven innocent (they are blacklisted/sanctioned) I see.
- A4ET8a8uTh0 4y ago
  FWIW, the money sanctioned under OFAC is still that of the owner so there is a process in place that has a semblance of the rules of law. However, getting that money released by the bank is nothing short of a herculean effort based on cases I have seen over the years.
- woodruffw 4y ago
  Not only am I not a court of law, but I specifically said that it's up to a court to make a decision of legal guilt here. In the mean time, yes: the government is allowed to halt activities that it believes are part of an active criminal scheme. Every country with a functioning legal system proscribes this, and establishes a broad swath of controls to ensure that the government can't indefinitely tie up resources.

mattficke 4y ago

To your last question, this is why financial institutions are required to report cash transactions over $10,000. There are a number of constraints on how untraceable cash is.

TEP_Kim_Il_Sung 4y ago
Has this amount ever been adjusted for inflation? It is my understanding, that $10,000 at the time this law was set, was about ¼ the price of a small home.
- A4ET8a8uTh0 4y ago
  No. Also, there were several recent articles/speeches from various AML/BSA/Fraud folks to lower that amount even further for several purposes including CTR. For better or worse, BSA has become its own industry with a lot of money riding on keeping things annoying to regular people ( and barely doing anything to stop actual criminals, who have skills, patience and resources to bypass all the safeguards ).

pigtailgirl 4y ago

-- if I move $10k - my institution automatically tells the government I moved $10k - if in the US - the receiving institution also tells the government - I don't have an expectation of privacy - is this also true with Tornado Cash? --

chrischattin 4y ago
If you use cash, it's a private transaction (no notification).

salawat 4y ago

KYC applies to money transmitters directly. End consumers only indirectly by virtue of any financial institution ending up in hot water for non-compliance. You don't get to shift regulatory burden to the consumer.

marcus_holmes 4y ago

> What's the difference between money launderying features and privacy features? Really good question. I'd say "if your privacy feature allows you to trade above the trigger limit (usually 10K USD/EUR/GBP) without having to state the source of your funds, then it's actually a money laundering feature"

ashwagary 4y ago
If the funds aren't procured through criminal activity, then it can't be considered money laundering. Only if the individual doesn't declare a taxable event to a tax authority has a crime been committed.
- marcus_holmes 4y ago
  no, it's money laundering even if the funds haven't been procured from criminal activity. The regulations don't care where the money comes from, they're just specifying what reporting needs to happen around the movement of money. Not being able to properly describe where the money comes from is a crime. I've worked in the finance industry, and I've worked with people who've seen bad guys turn up with suitcases full of other people's money. I'm totally happy that these regulations are in place.
  - ashwagary 4y ago
    >>no, it's money laundering even if the funds haven't been procured from criminal activity. You are wrong. FINCEN "Money laundering involves disguising financial assets so they can be used without detection of the illegal activity that produced them." WIKIPEDIA "Money laundering is the process of concealing the origin of money obtained from illicit activities such as drug trafficking, corruption, embezzlement or gambling, by converting it into a legitimate source." https://www.fincen.gov/what-money-laundering https://www.fincen.gov/what-money-laundering https://en.wikipedia.org/wiki/Money_laundering https://en.wikipedia.org/wiki/Money_laundering