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There seems to be a general lack of understanding here on HN that money laundering is incredibly harmful to society. It allows organised crime to operate with g

There seems to be a general lack of understanding here on HN that money laundering is incredibly harmful to society. It allows organised crime to operate with great ease. It facilitates the corrupt in any walk of life, be it political, corporate, or even law enforcement. Any money-trading entity needs to keep track of who money is coming from and going to and to monitor their transactions. The recent billion-dollar HSBC settlement is an example of a failure to properly monitor transactions, it is not clear that there was any criminal conspiracy involved [1]. That's very different from this BitInstant charge: the operators are accused of knowing that one of their customers was reselling hundreds of thousands of dollars worth of BitCoin on SilkRoad where the transaction was anonymous, which means it can be used to launder money. Worse still, they're accused of helping this guy circumvent their own monitoring systems so that they weren't obliged to report him. This is serious stuff. [1] The criminal charges from that case were dropped as part of a settlement, but that's an entirely separate contoversy. Failure to correctly charge possible criminals in once case does not make it ok in another.

jnbiche 13y ago
Money laundering is part of the criminalization of victimless drug use. That's why they were created, and that's how they're used. Nothing more, nothing less. Money laundering laws are almost never used to track down under the table payments to corrupt politicians or business leaders, as you seem to imply. It's always linked to the drug trade, or occasionally "terrorism" (which may or may not involve actual terrorists). Do you really think it's a good idea to criminalize non-violent, victimless drug use? If so, then we'll agree to disagree. It not, then I suggest you look into the history of money laundering laws and how they are applied. They're not doing what you seem to think they're doing.
- mh- 13y ago
  victimless drug use organized crime? human trafficking? [..]
  - SpaceRaccoon 13y ago
    Consequences of drugs being illegal, no?
    - lclarkmichalek 13y ago
      Yes, because when all drugs were legal, slavery wasn't a thing, right? No one has ever been sold into prostitution for a reason that doesn't relate to drugs.
      - SpaceRaccoon 13y ago
        No, because drugs being illegal pushes the drug trade into criminal hands. I don't do drugs (often) but I don't see why revenue should go to criminal cartels and war lords when it can be controlled and regulated by government, especially if the government is able to charge taxes- and I'd imagine, seeing how rich drug dealers are, that they can bring in a lot of tax revenue and still keep it less than street price.
      - runeks 13y ago
        The reason people are sold into prostitution in Western countries is because of restricted immigration. If they go to the police, they get escorted back to where they came from - so they don't.
  - jnbiche 13y ago
    Most modern organized crime is a result of drug trade. So yes, it's all related to victimless drug use, as I said. In the case of human trafficking, or murder/assault by organized crime, the answer is pretty clear, at least to me. You charge and convict them of crimes like murder and kidnapping, crimes which have been part of our criminal code for centuries.
    - drjesusphd 13y ago
      > Most modern organized crime is a result of drug trade. So yes, it's all related to victimless drug use, as I said. I'm sorry, this is just ridiculous.
- the_watcher 13y ago
  Makes me think of The Wire. Lester Freeman following the money always ended up killing the case.
- rayiner 13y ago
  Quite wrong about the history. Vigorous drug enforcement took off in the 1980's. The Bank Secrecy Act was passed in 1970, the same year as RICO. The target was the Mafia and other criminal organizations that are a lot scarier than Silk Road.
- camelite 13y ago
  Your comment makes sense to me only if you replace 'use' with 'distribution', though it becomes self-contradicting in the process.
- Aqueous 13y ago
  You realize that this argument justifies anything even tangentially related to the drug war because they are just the side effect of the 'criminalization of victimless drug use' right? This includes the thousands of people who are beheaded each year by the Mexican/Colombian cartels, which, if you look at it this way, can be blamed on the US government's 'criminalization of victimless drug use'. The US government's policy might be stupid - but the cartels are also evil, and we should do as much as possible to try to curb these kinds of atrocities. Look the drug war is terrible, drugs should de-criminalized and treated like a health problem as they are in Europe. However, you can recognize this while recognizing that the people who traffic drugs tend to be engaged in some pretty reprehensible behavior, and money laundering is one of those things (along with human trafficking and gang violence.)
  - jnbiche 13y ago
    I strongly agree that human trafficking and gang violence are not only reprehensible, but truly sickening. However, I strongly disagree with you that money laundering belongs in that group. I mean, if we're going to arbitrarily criminalize an activity that cartels and gangs engage in, why not criminalize their mobile phone usage? It's actively used in their criminal endeavors. And yes, I agree with you that most of these horrible groups and events are a side effect of the war on drug. Without all the power that drug money brings them (which results from the fact that drugs are illegal), they would just be local bullies and psychopaths -- the kind that local police forces can deal with. But because of money that results from the war on drugs, these groups have accumulated trans-national power to the extent that the build their own submarines. Study the history of the prohibition and the mafia power that grew from prohibition..
  - slowmotiony 13y ago
    I live right in the center of europe and drugs are not treated like a health problem.
    - Aqueous 13y ago
      It was my understanding that at least in some parts of Europe, like the Netherlands, drugs were considered more of a health problem than a criminal problem.
- rtpg 13y ago
  http://www.businesspundit.com/10-most-notorious-money-laundering-cases-of-the-20th-century/ http://www.businesspundit.com/10-most-notorious-money-launde... over half are not about drugs. The US also puts a lot of effort into freezing assets of people violating human rights.
- shotwell 13y ago
  > Money laundering is part of the criminalization of victimless drug use. That's why they were created, and that's how they're used. Nothing more, nothing less. Your claim made me curious. According to the American Banker's Association, the Bank Secrecy Act was motivated by fears over foreign bank schemes and crime (specifically, the ABA mentions white collar crime). The law also sought to correct practical problems, such as grocery stores failing to photocopy checks. I think this undermines your main point about drugs, along with the fact that the "war on drugs" started after the BSA was passed in 1970. http://www.aba.com/Compliance/Documents/07cbe87f05f94aa8b84faa573c790ba5AppendixC.pdf http://www.aba.com/Compliance/Documents/07cbe87f05f94aa8b84f...
Zombieball 13y ago
Perhaps you or someone else could clarify, is BTC even considered a currency by the US government? I know there has been some crackdowns upon Mt. Gox and now these arrests which would suggest it is. However, could it not be argued in court that these people were just exchanging US currency for a bunch of crypto hashes?
- wmf 13y ago
  FinCEN ruled on the legal status of BTC back in early 2013 IIRC.
  - Zombieball 13y ago
    Thanks, this lead me to the following links: http://fincen.gov/statutes_regs/guidance/html/FIN-2013-G001.html http://fincen.gov/statutes_regs/guidance/html/FIN-2013-G001.... http://cointext.com/fincen-issues-bitcoin-friendly-ruling-for-miners/ http://cointext.com/fincen-issues-bitcoin-friendly-ruling-fo...
- Nursie 13y ago
  If it's used for money laundering, why would it matter? You could use beans or pieces of pasta, the effect would be the same and the medium irrelevant.
- dragonwriter 13y ago
  Since the charges that have been brought that involve bitcoin (including this one, in which transactions were structured to avoid US dollar limits in AML policies) have usually involved illegal things being done with dollars, the "declared status" of bitcoin as a currency or not is mostly irrelevant. That said, for financial regulation purposes, bitcoin is considered a virtual currency, which from the descriptions that apply to it seems to mean mostly not like a currency, though what exchanges that trade it for actual currencies do generally subjects them to regulation around what they are doing with the actual currency for which they exchange it.
bicknergseng 13y ago
> it is not clear that there was any criminal conspiracy involved I thought it was less of a lack of understanding and more of an incredulity at the injustice and inequality of the system. > Worse still, they're accused of helping this guy circumvent their own monitoring systems so that they weren't obliged to report him. This is serious stuff. And billions of dollars of drug and terrorist money just happened to flow through HSBC.... unknowingly? > but that's an entirely separate contoversy No, it's exactly the same controversy. HSBC pays, no one goes to jail, the process repeats itself, and justice isn't served.
fennecfoxen 13y ago
There's a real lack of awareness among these comments that privacy, the fourth amendment, and the fifth amendment are incredibly harmful to society. They allow organised crime to operate with great ease. They facilitate the corrupt in any walk of life, be it political, corporate, or even law enforcement.
stefantalpalaru 13y ago
Freedom is incredibly harmful to society. It allows organised crime to operate with great ease. It facilitates the corrupt in any walk of life, be it political, corporate, or even law enforcement.
- fnordfnordfnord 13y ago
  Did you intend to parrot fennecfoxen see: https://news.ycombinator.com/item?id=7132301 https://news.ycombinator.com/item?id=7132301 Or are you both parroting someone else? Or am I witnessing the Infinite Monkey Theorem in action? https://en.wikipedia.org/wiki/Infinite_monkey_theorem https://en.wikipedia.org/wiki/Infinite_monkey_theorem EDIT: They're parroting the GP by jahewson https://news.ycombinator.com/item?id=7132006 https://news.ycombinator.com/item?id=7132006
  - unethical_ban 13y ago
    Or maybe two people came to the same logical conclusion about someone's post.
    - nhaehnle 13y ago
      It still does not justify the redundant comments. Keep an eye on that signal-to-noise ratio.
    - fnordfnordfnord 13y ago
      That would be remarkable. At least three, in the same thread, and they didn't make more than a trivial change to the text. I was kind of hoping that the original source of the comment would be revealed.
smsm42 13y ago
What you're saying is that the government should have control of any money transaction, because otherwise criminals can use it. I can only notice two things here: 1. The argument can apply to absolutely any other aspect of life - if it's useful, criminals can use it, so the government should have tight control on it. For example, criminal enterprises are much easier to conduct if you can move around on the roads freely. We can not have that, ergo we have to institute regular routine checkpoints where you have to routinely prove to the law enforcement officers you are going around on legitimate business and they should keep the database of all your movements and require all road operators to report all your movement to the government movement tracking center, in case you later prove to be a criminal. Etc., etc. 2. You can not have both money laundering laws and bitcoin (or any non-governmental money system) as it is now. If you keep the former, the government will either subjugate or shut down the latter. Either bitcoin loses virtually all its anonymity and distributed control features and allows the government to control it the same way it controls regular money, with same regulations and roadblocks, or mere touching bitcoin or related technologies will become a crime. You can see how it works with drugs - anything that can be classified as related to drugs or precursor to drugs or can be used in relation to anything to do with drugs is outlawed. Bitcoin will inevitably follow one of these roads - or maybe both.
- nhaehnle 13y ago
  On your first point: The world is not as black and white as you tend to see it. jahewson probably does not think that government should control everything related to money. However, society has a legitimate interest to keep a check on large flows of money [0]. Government law enforcement is a part of that. (edited to emphasize quantifiers) On your second point: Money laundering laws and bitcoin are compatible. You just have to make sure you comply with the laws when you run a business using bitcoin. Bitcoin is already only pseudonymous at best, and it practice it will be quite easy to eliminate anonymity; and distributed control features are not necessary to prosecute those who use bitcoin for money laundering, as the article under discussion clearly shows. [0] In case it isn't obvious: money leads to power, and society needs to keep power in check. Therefore, society needs to keep (large flows of) money in check.
  - 13y ago
marshray 13y ago
> money laundering is incredibly harmful to society A claim made without proof or any supporting arguments.

jnbiche 13y ago

Money laundering is part of the criminalization of victimless drug use. That's why they were created, and that's how they're used. Nothing more, nothing less. Money laundering laws are almost never used to track down under the table payments to corrupt politicians or business leaders, as you seem to imply. It's always linked to the drug trade, or occasionally "terrorism" (which may or may not involve actual terrorists). Do you really think it's a good idea to criminalize non-violent, victimless drug use? If so, then we'll agree to disagree. It not, then I suggest you look into the history of money laundering laws and how they are applied. They're not doing what you seem to think they're doing.

mh- 13y ago
victimless drug use organized crime? human trafficking? [..]
- SpaceRaccoon 13y ago
  Consequences of drugs being illegal, no?
  - lclarkmichalek 13y ago
    Yes, because when all drugs were legal, slavery wasn't a thing, right? No one has ever been sold into prostitution for a reason that doesn't relate to drugs.
    - SpaceRaccoon 13y ago
      No, because drugs being illegal pushes the drug trade into criminal hands. I don't do drugs (often) but I don't see why revenue should go to criminal cartels and war lords when it can be controlled and regulated by government, especially if the government is able to charge taxes- and I'd imagine, seeing how rich drug dealers are, that they can bring in a lot of tax revenue and still keep it less than street price.
    - runeks 13y ago
      The reason people are sold into prostitution in Western countries is because of restricted immigration. If they go to the police, they get escorted back to where they came from - so they don't.
- jnbiche 13y ago
  Most modern organized crime is a result of drug trade. So yes, it's all related to victimless drug use, as I said. In the case of human trafficking, or murder/assault by organized crime, the answer is pretty clear, at least to me. You charge and convict them of crimes like murder and kidnapping, crimes which have been part of our criminal code for centuries.
  - drjesusphd 13y ago
    > Most modern organized crime is a result of drug trade. So yes, it's all related to victimless drug use, as I said. I'm sorry, this is just ridiculous.
the_watcher 13y ago
Makes me think of The Wire. Lester Freeman following the money always ended up killing the case.
rayiner 13y ago
Quite wrong about the history. Vigorous drug enforcement took off in the 1980's. The Bank Secrecy Act was passed in 1970, the same year as RICO. The target was the Mafia and other criminal organizations that are a lot scarier than Silk Road.
camelite 13y ago
Your comment makes sense to me only if you replace 'use' with 'distribution', though it becomes self-contradicting in the process.
Aqueous 13y ago
You realize that this argument justifies anything even tangentially related to the drug war because they are just the side effect of the 'criminalization of victimless drug use' right? This includes the thousands of people who are beheaded each year by the Mexican/Colombian cartels, which, if you look at it this way, can be blamed on the US government's 'criminalization of victimless drug use'. The US government's policy might be stupid - but the cartels are also evil, and we should do as much as possible to try to curb these kinds of atrocities. Look the drug war is terrible, drugs should de-criminalized and treated like a health problem as they are in Europe. However, you can recognize this while recognizing that the people who traffic drugs tend to be engaged in some pretty reprehensible behavior, and money laundering is one of those things (along with human trafficking and gang violence.)
- jnbiche 13y ago
  I strongly agree that human trafficking and gang violence are not only reprehensible, but truly sickening. However, I strongly disagree with you that money laundering belongs in that group. I mean, if we're going to arbitrarily criminalize an activity that cartels and gangs engage in, why not criminalize their mobile phone usage? It's actively used in their criminal endeavors. And yes, I agree with you that most of these horrible groups and events are a side effect of the war on drug. Without all the power that drug money brings them (which results from the fact that drugs are illegal), they would just be local bullies and psychopaths -- the kind that local police forces can deal with. But because of money that results from the war on drugs, these groups have accumulated trans-national power to the extent that the build their own submarines. Study the history of the prohibition and the mafia power that grew from prohibition..
- slowmotiony 13y ago
  I live right in the center of europe and drugs are not treated like a health problem.
  - Aqueous 13y ago
    It was my understanding that at least in some parts of Europe, like the Netherlands, drugs were considered more of a health problem than a criminal problem.
rtpg 13y ago
http://www.businesspundit.com/10-most-notorious-money-laundering-cases-of-the-20th-century/ http://www.businesspundit.com/10-most-notorious-money-launde... over half are not about drugs. The US also puts a lot of effort into freezing assets of people violating human rights.
shotwell 13y ago
> Money laundering is part of the criminalization of victimless drug use. That's why they were created, and that's how they're used. Nothing more, nothing less. Your claim made me curious. According to the American Banker's Association, the Bank Secrecy Act was motivated by fears over foreign bank schemes and crime (specifically, the ABA mentions white collar crime). The law also sought to correct practical problems, such as grocery stores failing to photocopy checks. I think this undermines your main point about drugs, along with the fact that the "war on drugs" started after the BSA was passed in 1970. http://www.aba.com/Compliance/Documents/07cbe87f05f94aa8b84faa573c790ba5AppendixC.pdf http://www.aba.com/Compliance/Documents/07cbe87f05f94aa8b84f...

Zombieball 13y ago

Perhaps you or someone else could clarify, is BTC even considered a currency by the US government? I know there has been some crackdowns upon Mt. Gox and now these arrests which would suggest it is. However, could it not be argued in court that these people were just exchanging US currency for a bunch of crypto hashes?

wmf 13y ago
FinCEN ruled on the legal status of BTC back in early 2013 IIRC.
- Zombieball 13y ago
  Thanks, this lead me to the following links: http://fincen.gov/statutes_regs/guidance/html/FIN-2013-G001.html http://fincen.gov/statutes_regs/guidance/html/FIN-2013-G001.... http://cointext.com/fincen-issues-bitcoin-friendly-ruling-for-miners/ http://cointext.com/fincen-issues-bitcoin-friendly-ruling-fo...
Nursie 13y ago
If it's used for money laundering, why would it matter? You could use beans or pieces of pasta, the effect would be the same and the medium irrelevant.
dragonwriter 13y ago
Since the charges that have been brought that involve bitcoin (including this one, in which transactions were structured to avoid US dollar limits in AML policies) have usually involved illegal things being done with dollars, the "declared status" of bitcoin as a currency or not is mostly irrelevant. That said, for financial regulation purposes, bitcoin is considered a virtual currency, which from the descriptions that apply to it seems to mean mostly not like a currency, though what exchanges that trade it for actual currencies do generally subjects them to regulation around what they are doing with the actual currency for which they exchange it.

bicknergseng 13y ago

> it is not clear that there was any criminal conspiracy involved I thought it was less of a lack of understanding and more of an incredulity at the injustice and inequality of the system. > Worse still, they're accused of helping this guy circumvent their own monitoring systems so that they weren't obliged to report him. This is serious stuff. And billions of dollars of drug and terrorist money just happened to flow through HSBC.... unknowingly? > but that's an entirely separate contoversy No, it's exactly the same controversy. HSBC pays, no one goes to jail, the process repeats itself, and justice isn't served.

fennecfoxen 13y ago

There's a real lack of awareness among these comments that privacy, the fourth amendment, and the fifth amendment are incredibly harmful to society. They allow organised crime to operate with great ease. They facilitate the corrupt in any walk of life, be it political, corporate, or even law enforcement.

stefantalpalaru 13y ago

Freedom is incredibly harmful to society. It allows organised crime to operate with great ease. It facilitates the corrupt in any walk of life, be it political, corporate, or even law enforcement.

fnordfnordfnord 13y ago
Did you intend to parrot fennecfoxen see: https://news.ycombinator.com/item?id=7132301 https://news.ycombinator.com/item?id=7132301 Or are you both parroting someone else? Or am I witnessing the Infinite Monkey Theorem in action? https://en.wikipedia.org/wiki/Infinite_monkey_theorem https://en.wikipedia.org/wiki/Infinite_monkey_theorem EDIT: They're parroting the GP by jahewson https://news.ycombinator.com/item?id=7132006 https://news.ycombinator.com/item?id=7132006
- unethical_ban 13y ago
  Or maybe two people came to the same logical conclusion about someone's post.
  - nhaehnle 13y ago
    It still does not justify the redundant comments. Keep an eye on that signal-to-noise ratio.
  - fnordfnordfnord 13y ago
    That would be remarkable. At least three, in the same thread, and they didn't make more than a trivial change to the text. I was kind of hoping that the original source of the comment would be revealed.

smsm42 13y ago

What you're saying is that the government should have control of any money transaction, because otherwise criminals can use it. I can only notice two things here: 1. The argument can apply to absolutely any other aspect of life - if it's useful, criminals can use it, so the government should have tight control on it. For example, criminal enterprises are much easier to conduct if you can move around on the roads freely. We can not have that, ergo we have to institute regular routine checkpoints where you have to routinely prove to the law enforcement officers you are going around on legitimate business and they should keep the database of all your movements and require all road operators to report all your movement to the government movement tracking center, in case you later prove to be a criminal. Etc., etc. 2. You can not have both money laundering laws and bitcoin (or any non-governmental money system) as it is now. If you keep the former, the government will either subjugate or shut down the latter. Either bitcoin loses virtually all its anonymity and distributed control features and allows the government to control it the same way it controls regular money, with same regulations and roadblocks, or mere touching bitcoin or related technologies will become a crime. You can see how it works with drugs - anything that can be classified as related to drugs or precursor to drugs or can be used in relation to anything to do with drugs is outlawed. Bitcoin will inevitably follow one of these roads - or maybe both.

nhaehnle 13y ago
On your first point: The world is not as black and white as you tend to see it. jahewson probably does not think that government should control everything related to money. However, society has a legitimate interest to keep a check on large flows of money [0]. Government law enforcement is a part of that. (edited to emphasize quantifiers) On your second point: Money laundering laws and bitcoin are compatible. You just have to make sure you comply with the laws when you run a business using bitcoin. Bitcoin is already only pseudonymous at best, and it practice it will be quite easy to eliminate anonymity; and distributed control features are not necessary to prosecute those who use bitcoin for money laundering, as the article under discussion clearly shows. [0] In case it isn't obvious: money leads to power, and society needs to keep power in check. Therefore, society needs to keep (large flows of) money in check.
- 13y ago

marshray 13y ago

> money laundering is incredibly harmful to society A claim made without proof or any supporting arguments.