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The crazy thing about money laundering laws is that in many jurisdictions, just failing to prove the legitimate origin of your funds can be enough to lose asset

The crazy thing about money laundering laws is that in many jurisdictions, just failing to prove the legitimate origin of your funds can be enough to lose assets, and face criminal prosecution, without the state ever proving an underlying crime. It effectively shifts the burden of proof.

bjornsing 1y ago
Also, even if you can prove the legitimate origin of the funds you can’t be sure that your bank will accept them. If you can’t find a bank that will accept them then formally you may still have the ”asset” but you can’t really use the money.
XorNot 1y ago
It is extremely simple to prove legitimate origin of funds though. You're acting like the government will charge you for a $100 in your wallet.
- olalonde 1y ago
  It's extremely simple until it's not. Let's say you bought 100$ worth of BTC back in 2012 with cash at a meetup. Now it’s worth $1M, but you can't prove its origin. You now have a perfectly law-abiding person that risks being accused of "money laundering" just to keep what's rightfully theirs.
  - XorNot 1y ago
    Bitcoin literally has an immutable transaction record baked into it's model. You would be able to point to the timestamp when you took possession of the wallet which would prove providence unambiguously.
    - mothballed 1y ago
      There's no KYC to take possession of a wallet, how would you prove the wallet wasn't just traded to you (maybe even yesterday) instead of moving the bitcoins?
      - ajross 1y ago
        AML statutes don't invert the burden of proof! If the government wants to prosecute you for taking money, they still have to prove you took the money beyond a reasonable doubt. I'm always amused by the paranoia in the xxxcoin communities. If the government had and exercised the power you believe it does, why on earth do you think putting your money in bitcoin or whatever would provide any protection at all? Edit: case in point: > KYC and AML invert the burden of proof and are essentially an exception to the 4th amendment Oooph.
        mothballed 1y ago
        KYC and AML invert the burden of proof and are essentially an exception to the 4th amendment, that's why they're so controversial. I tried to open a bank account when I was moving states before I had a local state ID or any utility bill or proof of address, no one would do it because they stated the standard the feds hold them to for KYC would essentially presume I am guilty of lying and require me to provide documentation to prove I'm not.
        lcnPylGDnU4H9OF 1y ago
        > If the government wants to prosecute you Their point is that the government does not prosecute you, they threaten the banks with "regulatory incidents" if they don't comply. The result is that some people find it difficult to ever open a bank account with no means to "clear their name" as it were.
        ajross 1y ago
        That doesn't seem to be a point made upthread in the chain to which I was responding. The contention was that people could lose assets or be prosecuted. And no, they can't, that's ridiculous.
        mothballed 1y ago
        I follow some forums on international banking from time to time, occasionally I read the story of the guy who's deposits got AML flagged so they simply cut him a check, of course after they put him on world-check or some other banking black flag database that prevents him from depositing the check anywhere else. In that case in theory they don't lose their assets, but I have no idea what happens next.
    - olalonde 1y ago
      That works until it does not. What if you transferred the BTC to other wallets or exchanges in the meanwhile? Even if you still had access to the original wallet, what proves that it was really yours? etc.
      - multjoy 1y ago
        Unless you’re using mixers then it is relatively trivial to follow your BTC around the blockchain. That is the very point of it. The issue of provenance is an issue regardless of the type of funds. In most jurisdictions the burden of proof is civil, so more likely than not.
        olalonde 1y ago
        Sure, you can trace the full transaction history of any BTC through the blockchain... but that doesn't prove anything. At minimum, you need all the private keys involved (e.g. not possible if you used an exchange or deposited/withdrew from some online service or lost/deleted an old wallet). Even if you had the full list of private keys involved, going back to 2012, what proves that they were really yours and, like another commenter pointed out, that you didn't just acquire them yesterday?
        XorNot 1y ago
        Which is a more complicated scenario then originally claimed, which was "I bought a $100 of BTC in cash many years ago and held onto it since then". If you cashed out that BTC via an exchange for example, then there will be bank transaction records showing you did but also welcome to "you were likely due taxes on your gains in the interim because it's no longer $100 of BTC - you took possession of much more in cash and later bought BTC again". Which is to say, you were ongoingly interacting with the money at decreasing intervals from the present. The original claim is easy to prove: it'll be in a wallet which was held for that amount of time. The bank isn't obligated, unless you turn up covered in blood, to prove that you didn't just beat a guy with a hammer till he gives you the password - because you'll go down for that crime by other means. But very few people engaging in ongoing criminal transactions are going to have a supply of aged BTC accounts to use in trade for goods and resources, and certainly you'll trigger red flags if you keep turning up with a brand new "held it for years" account of $50,000 each week. I mean we know this: because it makes headlines when untouched BTC accounts start moving.
    - Imustaskforhelp 1y ago
      Monero? Zano? (if you could actually see that monero actually hasn't been hacked as people say and it was all just a marketing gimick though I'd still be cautious and maybe keep my money in monero short term??)
  - ajross 1y ago
    That example doesn't work. The blockchain shows that you purchased it for $100! At absolute worst, you "laundered" $100. Likely the statutes don't even apply to numbers that low.
    - olalonde 1y ago
      See my other replies for why that doesn't work.
      - ajross 1y ago
        Your other replies rely on "assume the government has powers it does not and/or the judiciary is willing to suspend the burden of proof in criminal cases". I mean... yeah. It's true. If you assume we live in a totalitarian dystopia then sure, the government can do terrible things. But needless to say such a government doesn't need to pass boring AML laws to do that. It can just throw you in jail because it wants to. The actual rule of law under which we live doesn't have that property.
  - yogorenapan 1y ago
    I've had this exact problem before, though not with such high amounts. To make it worse, it was Monero rather than Bitcoin, which made tracing impossible. In the end, I just had to produce emails/documents proving I was paid in crypto a couple years back & the associated increase in value since then. I got the crypto into my bank via a sketchy non-kyc exchange and somehow they didn't care about that at all.
- rangestransform 1y ago
  Any circumstance where the onus is on a private citizen to prove innocence instead of the government to prove guilt is a perversion of justice. Stupid voters and the government will destroy all privacy for the sake of "the guns, the gangs, the children"
- nroets 1y ago
  No, some financial institutions like Binance only allows clients to get statements for the last year or so. P2P transaction details go back only a couple of months. Sometimes your employer goes out of business. Employees do not always preserve their payslips. Then there are countries like Georgia, it's culturally acceptable to buy real estate with cash. If no valuation of the property was made, it becomes very difficult to prove where the money came from.
- ycombinatrix 1y ago
  TSA & DEA regularly steal cash from travelers
jcz_nz 1y ago
Seriously, why would you have a problem explaining where a $5M came from? In most places this is "proceeds of crime", requiring associated convictions. In places that have unexplained wealth statutes, the bar is also pretty high - "balance of probabilities" is not hard to argue IF YOU HAVE LEGITIMATE SOURCES OF MONEY.
- alexey-salmin 1y ago
  "If you have nothing to hide you have nothing to fear."
- nickff 1y ago
  Please don't use uppercase for emphasis. If you want to emphasize a word or phrase, put asterisks around it and it will get italicized. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
  - Dilettante_ 1y ago
    I believe he wasn't just emphasizing, he was yelling specifically.
sixhobbits 1y ago
One of my favourite stats is that assets lost to forfeiture overtook assets lost to crime in the US https://www.nemannlawoffices.com/blog/law-enforcement-seized-more-from-people-than-burglars-stole-last-year.cfm https://www.nemannlawoffices.com/blog/law-enforcement-seized...

bjornsing 1y ago

Also, even if you can prove the legitimate origin of the funds you can’t be sure that your bank will accept them. If you can’t find a bank that will accept them then formally you may still have the ”asset” but you can’t really use the money.

XorNot 1y ago

It is extremely simple to prove legitimate origin of funds though. You're acting like the government will charge you for a $100 in your wallet.

olalonde 1y ago
It's extremely simple until it's not. Let's say you bought 100$ worth of BTC back in 2012 with cash at a meetup. Now it’s worth $1M, but you can't prove its origin. You now have a perfectly law-abiding person that risks being accused of "money laundering" just to keep what's rightfully theirs.
- XorNot 1y ago
  Bitcoin literally has an immutable transaction record baked into it's model. You would be able to point to the timestamp when you took possession of the wallet which would prove providence unambiguously.
  - mothballed 1y ago
    There's no KYC to take possession of a wallet, how would you prove the wallet wasn't just traded to you (maybe even yesterday) instead of moving the bitcoins?
    - ajross 1y ago
      AML statutes don't invert the burden of proof! If the government wants to prosecute you for taking money, they still have to prove you took the money beyond a reasonable doubt. I'm always amused by the paranoia in the xxxcoin communities. If the government had and exercised the power you believe it does, why on earth do you think putting your money in bitcoin or whatever would provide any protection at all? Edit: case in point: > KYC and AML invert the burden of proof and are essentially an exception to the 4th amendment Oooph.
      - mothballed 1y ago
        KYC and AML invert the burden of proof and are essentially an exception to the 4th amendment, that's why they're so controversial. I tried to open a bank account when I was moving states before I had a local state ID or any utility bill or proof of address, no one would do it because they stated the standard the feds hold them to for KYC would essentially presume I am guilty of lying and require me to provide documentation to prove I'm not.
      - lcnPylGDnU4H9OF 1y ago
        > If the government wants to prosecute you Their point is that the government does not prosecute you, they threaten the banks with "regulatory incidents" if they don't comply. The result is that some people find it difficult to ever open a bank account with no means to "clear their name" as it were.
        ajross 1y ago
        That doesn't seem to be a point made upthread in the chain to which I was responding. The contention was that people could lose assets or be prosecuted. And no, they can't, that's ridiculous.
        mothballed 1y ago
        I follow some forums on international banking from time to time, occasionally I read the story of the guy who's deposits got AML flagged so they simply cut him a check, of course after they put him on world-check or some other banking black flag database that prevents him from depositing the check anywhere else. In that case in theory they don't lose their assets, but I have no idea what happens next.
  - olalonde 1y ago
    That works until it does not. What if you transferred the BTC to other wallets or exchanges in the meanwhile? Even if you still had access to the original wallet, what proves that it was really yours? etc.
    - multjoy 1y ago
      Unless you’re using mixers then it is relatively trivial to follow your BTC around the blockchain. That is the very point of it. The issue of provenance is an issue regardless of the type of funds. In most jurisdictions the burden of proof is civil, so more likely than not.
      - olalonde 1y ago
        Sure, you can trace the full transaction history of any BTC through the blockchain... but that doesn't prove anything. At minimum, you need all the private keys involved (e.g. not possible if you used an exchange or deposited/withdrew from some online service or lost/deleted an old wallet). Even if you had the full list of private keys involved, going back to 2012, what proves that they were really yours and, like another commenter pointed out, that you didn't just acquire them yesterday?
        XorNot 1y ago
        Which is a more complicated scenario then originally claimed, which was "I bought a $100 of BTC in cash many years ago and held onto it since then". If you cashed out that BTC via an exchange for example, then there will be bank transaction records showing you did but also welcome to "you were likely due taxes on your gains in the interim because it's no longer $100 of BTC - you took possession of much more in cash and later bought BTC again". Which is to say, you were ongoingly interacting with the money at decreasing intervals from the present. The original claim is easy to prove: it'll be in a wallet which was held for that amount of time. The bank isn't obligated, unless you turn up covered in blood, to prove that you didn't just beat a guy with a hammer till he gives you the password - because you'll go down for that crime by other means. But very few people engaging in ongoing criminal transactions are going to have a supply of aged BTC accounts to use in trade for goods and resources, and certainly you'll trigger red flags if you keep turning up with a brand new "held it for years" account of $50,000 each week. I mean we know this: because it makes headlines when untouched BTC accounts start moving.
  - Imustaskforhelp 1y ago
    Monero? Zano? (if you could actually see that monero actually hasn't been hacked as people say and it was all just a marketing gimick though I'd still be cautious and maybe keep my money in monero short term??)
- ajross 1y ago
  That example doesn't work. The blockchain shows that you purchased it for $100! At absolute worst, you "laundered" $100. Likely the statutes don't even apply to numbers that low.
  - olalonde 1y ago
    See my other replies for why that doesn't work.
    - ajross 1y ago
      Your other replies rely on "assume the government has powers it does not and/or the judiciary is willing to suspend the burden of proof in criminal cases". I mean... yeah. It's true. If you assume we live in a totalitarian dystopia then sure, the government can do terrible things. But needless to say such a government doesn't need to pass boring AML laws to do that. It can just throw you in jail because it wants to. The actual rule of law under which we live doesn't have that property.
- yogorenapan 1y ago
  I've had this exact problem before, though not with such high amounts. To make it worse, it was Monero rather than Bitcoin, which made tracing impossible. In the end, I just had to produce emails/documents proving I was paid in crypto a couple years back & the associated increase in value since then. I got the crypto into my bank via a sketchy non-kyc exchange and somehow they didn't care about that at all.
rangestransform 1y ago
Any circumstance where the onus is on a private citizen to prove innocence instead of the government to prove guilt is a perversion of justice. Stupid voters and the government will destroy all privacy for the sake of "the guns, the gangs, the children"
nroets 1y ago
No, some financial institutions like Binance only allows clients to get statements for the last year or so. P2P transaction details go back only a couple of months. Sometimes your employer goes out of business. Employees do not always preserve their payslips. Then there are countries like Georgia, it's culturally acceptable to buy real estate with cash. If no valuation of the property was made, it becomes very difficult to prove where the money came from.
ycombinatrix 1y ago
TSA & DEA regularly steal cash from travelers

jcz_nz 1y ago

Seriously, why would you have a problem explaining where a $5M came from? In most places this is "proceeds of crime", requiring associated convictions. In places that have unexplained wealth statutes, the bar is also pretty high - "balance of probabilities" is not hard to argue IF YOU HAVE LEGITIMATE SOURCES OF MONEY.

alexey-salmin 1y ago
"If you have nothing to hide you have nothing to fear."
nickff 1y ago
Please don't use uppercase for emphasis. If you want to emphasize a word or phrase, put asterisks around it and it will get italicized. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
- Dilettante_ 1y ago
  I believe he wasn't just emphasizing, he was yelling specifically.

sixhobbits 1y ago

One of my favourite stats is that assets lost to forfeiture overtook assets lost to crime in the US https://www.nemannlawoffices.com/blog/law-enforcement-seized-more-from-people-than-burglars-stole-last-year.cfm https://www.nemannlawoffices.com/blog/law-enforcement-seized...