Moving money around is a crime...why? It results in massive intrusiveness by government: full insight into everyone's finances, without evidence of a crime.
And, yes, this does get abused. Government is people, some of whom are evil, or out for revenge, or whatever. I had an acquaintance whose accounts were periodically frozen by the IRS, because he had pissed off the local office. He would get them unblocked, but only after weeks of missing mortgage payments and other bills.
pjc50 · 14m ago
> Moving money around is a crime...why?
The short answer is that said money is either the proceeds of a crime, or (in the other direction) being sent to or from a sanctioned person, organization, or country.
This is why it's so hard to push back against, like the TSA. "Do you want terrorists using the banking system?" is a killer argument for midwits.
fuoqi · 4m ago
Just replace "money" with a gold bricks. If I have them in the trunk of my car and move it around, you can't arrest my car on the assumption that the bricks are "the proceeds of a crime". You have to reasonably prove it with all the red tape involved, or GTFO of my way.
efitz · 55s ago
Civil asset forfeiture- a law enforcement officer in many jurisdictions in the US can seize the gold bar without charging you with anything, under the assumption that it is proceeds for a crime, and in an insane twist, they get to keep part or most of the value of the seized property when it is sold at auction. It’s insane.
benmmurphy · 2m ago
My understanding was the police were able to do this in the US using civil forfeiture.
kiratp · 1m ago
lol look up Civil Asset Forfeiture.
BMc2020 · 7m ago
Money launderning is making it look like the taxes have been paid.
After you pay your W2 income taxes for the year, your income for the year is no longer taxable.
mothballed · 5m ago
Just using an unlicensed hawaladar to transmit legally earned and taxed money is money laundering. The whole system is absolutely insane.
tim333 · 1h ago
The money laundering control systems, as well as being ineffective at controlling crime can be a pain in the neck for the law abiding. I have money from my grandad, received 40 years ago. No one really has records going back that far but you try buying a house and they want proof of the origin of the funds. Trying going to your bank to get records from five years ago often gives a date out of range error.
gruez · 50m ago
>The money laundering control systems, as well as being ineffective at controlling crime
The point of AML/KYC regulations isn't to stop all crime, just like the point of US sanctions on Russia isn't to stop all Russian exports. In both cases it's to raise the cost of doing business for the entity being targeted. In the case of Russia, they can still sell their oil to India or whatever, but at a steep discount. In the case of drug cartels, they can still get their funds into the regular banking system, but also at a steep discount. Smuggling pallets of dollar bills across the border and setting up a network of front companies is expensive. Doing all that also which implicate them in even more crimes, so even if there's no evidence of them smuggling fentanyl, they can be prosecuted purely on the basis of having a car full of cash.
>I have money from my grandad, received 40 years ago. No one really has records going back that far but you try buying a house and they want proof of the origin of the funds.
The better question is why are you were sitting on cash for 40 years. In that time inflation already ate 66% of the value, and if you factor in the opportunity cost of not investing the money in stocks/bonds, the loss is even greater.
mothballed · 25m ago
The point is to raise the barriers/cost of business high enough so that the larger criminal enterprises do not have competition from the smaller ones. Ensuring the greatest threats become even bigger ones, but also that any corrupt politicians/officials/bankers get even bigger payouts and the payouts they get are more predictable from fewer channels.
jacquesm · 26m ago
If I get the OP correctly it wasn't 'cash' that they were sitting on but it was a balance in a bank account. You can turn that into cash (unless lots of other people try to do the same thing at the same time, see also 'bank run') but strictly speaking it isn't cash.
bee_rider · 38m ago
I don’t think that really is the better question. It’s their money, if they want to do silly things with it that’s up to them.
jacquesm · 28m ago
Yes, but they are now aiming to use these funds to buy real estate and of course that is going to raise a bunch of flags. If the government would accept this without challenge criminals would suddenly be left all kinds of crazy inheritances. At a minimum you'd expect some documentation of how that money landed in their possession in the first place, for instance a will, a final balance of an estate and so on.
I've handled a couple of these for family members and the amount of paperwork around even a minor inheritance can be pretty impressive.
mothballed · 12m ago
I'd expect a presumption of innocence, and at the very least I'd expect some documentation from the government showing probable cause of a specific crime the money was involved in before blocking the transaction. The presumptive innocent party shouldn't have to provide anything by default.
jacquesm · 7m ago
You have a presumption of innocence up to a certain amount. After that there is a - minor - burden of proof. Not a single time that this happened to me did any of this appear to me to be unduly burdensome or invasive, and whoever did the investigation went out of their way to state that they did these checks as a formality, not because I was suspected to be in any way out of line. I don't recall it ever taking more than a few minutes (if that) either.
If I showed up with 50K in cash at the tellers window or a local notary to pay in part for a house tomorrow morning though I would expect the conversation would be an entirely different one.
cortesoft · 5m ago
That requirement isn’t about money laundering at all. They are wanting to make sure that you aren’t borrowing the down payment from someone else, because that would mean you don’t actually have as much (or any) of your own money invested in the property.
The point of a down payment is to make it so the borrower has an incentive to not default on the loan, because the borrower would lose the down payment.
If the down payment is actually borrowed money as well (like suppose you get a credit card advance for the money), then the borrower won’t lose anything if they stop paying the loan, and there is increased risk that the loan defaults.
bob1029 · 49m ago
One fun way to get around this is to have enough money to sidestep the bank altogether. The title company does not give a shit about where the money came from. All they will want to see is a screenshot of your current balance so they know you aren't wasting everyone's time.
gnopgnip · 45m ago
The lender only needs you to show proof of the origin of funds if they were transferred in the last 60 days
jacquesm · 25m ago
Depends on the jurisdiction and it may not be the lender that requires proof of origin but the party handling the transaction. They may even have a reporting requirement for 'suspicious transactions'.
spydum · 49m ago
They have them, but not from a web interface. Probably will require talking to a human, and a service fee to retrieve the records from physical storage.
phkahler · 1h ago
We all complain about big brother, new surveillance tech, and the easy sharing of personal data with government. And yet, some of the biggest problems seem to be untouched. Is this incompetence, beuacracy, complicity?
throw101010 · 43m ago
The moment you try to look into the fines governments impose on banks caught money laundering and the rare cases in which bankers actually see a prison cell, your last option is the most likely one, with a sprinkle of the two others.
My main issue is that all the AML/KYC/KYB barriers we have to deal with never seem to be subject to efficiency tests, all the studies I read and the few audits of these system seem content with it's likely better than doing nothing... but never measure the lost opportunities in trade/business they cause.
In a way it's the same hopless fight against so-called piracy for movies/games. The motivated actors who want to break the law find ways to do it at a large scale, mostly without consequences... and the honest people are just hindered when they want to use their content (even lose access to it when DRMs rely on the existence of the developer/publisher and their goodwill to maintain it way past the time when that media was able to generate revenues).
giantg2 · 1h ago
You'd be better off not implementing the majority of the AML stuff and then just freezing/seizing the assets of known criminals once it's in the system.
gruez · 1h ago
>just freezing/seizing the assets of known criminals once it's in the system.
How does that even work? You think that without an AML system, el chapo is going to be opening a wells fargo account with his real name?
throw101010 · 24m ago
You think El Chapo had a lot of banking issues in practice? He went around most of these hurdles with and without the complicity of banks and governments.
HSBC's cash deposit tellers in Mexico were even reported to be wider to accommodate the larger cash deposits from the cartels [1]
The same people we put in charge of watching their own activites are the ones breaking the law, repeatedly... and the governments enable it by arguing that fines are "preferable" to real prosecutions and firm/long prison time for complicit bankers.
They are just taking their share on the illegal traffic revenues, like mob bosses do. No intent to stop them. And in the mean time all these AML hurdles hinder legal activites.
Only read the abstract, but this doesn't seem surprising seeing that crypto, despite maybe noble intentions, has evolved in the worlds' easiest way to launder money and the president himself happily makes a couple of 100 mil with his own shitcoin.
Stagnant · 1h ago
In the grand scheme of things crypto-related money laundering is just a drop in the bucket compared to the amounts being laundered using more traditional methods.
PaulHoule · 1h ago
Most crypto coins (not Monero) are pseudonymous. If a particular bitcoin wallet comes to somebody's attention they can investigate hassle anybody that this person tries to trade with, tell exchanges not to redeem cash, etc.
Thing is these tactics aren't just available to the authorities but also to anyone like intelligence agencies, the mafia, etc. so the confidentiality problems are much much worse with crypto.
paulgerhardt · 36m ago
> Most crypto coins (not Monero) are pseudonymous.
> Monero users with extreme threat models should be aware that anti-privacy adversaries can leverage timing information to increase the probability of guessing the real spend in a ring signature to approximately 1-in-4.2 instead of 1-in-16.
So slightly worse odds than Russian Roulette. Cool. Cool.
whatsupdog · 1h ago
> tell exchanges not to redeem cash
Try telling it to Chinese, Russian, Indian exchanges.
PaulHoule · 2m ago
What if it is the Chinese or Russian or Indian governments you're worried about? None of those have a libertarian attitude, even if they think it's cool to thumb their nose at Uncle Sam from time to time.
pavlov · 1h ago
But it’s intentionally set up to be much more accessible than the traditional laundering methods.
Crypto advocates love this “drop in the bucket” excuse. By the same logic, it’s not a problem if I manufacture extra strong alpha-PVP and hand it to school children, because my drug distribution is just a drop in the bucket compared to the global cocaine trade.
kalaksi · 43m ago
> Crypto advocates love this “drop in the bucket” excuse.
Or so you think.
Notch123 · 1h ago
No clue, but likely
bob1029 · 1h ago
> For example, the United States has not required the disclosure of beneficial ownership information for establishing corporations (violating rec. 24) until recently.
I worked on a front line product for US banks and built a process to verify beneficial ownership for business account openings. I found the current expectations to be laughable:
> An individual may be a beneficial owner of a reporting company by indirectly holding 25 percent or more of the ownership interests of the reporting company through multiple exempt entities.
Getting around this is not very difficult if you are clever and wealthy.
The overall takeaway I had was that these kinds of rules don't really work in the cases where they need to the most. I don't know how much of a deterrent this could ever hope to be. We even developed an override process for this based on a request from one of our clients.
eep_social · 34m ago
unsurprisingly they killed off the BOI reporting requirement in March [1]:
> ALERT [Updated March 26, 2025]: All entities created in the United States — including those previously known as “domestic reporting companies” — and their beneficial owners are now exempt from the requirement to report beneficial ownership information (BOI) to FinCEN.
Yea, AFTER you had to file the report to go to jail- and BEFORE it could be retroactively shot down nationally in court. (They already lost in some states)
DennisP · 1h ago
Indirectly holding through multiple entities still counts? How would someone legally get around that? It seems like whatever you do, it's still summing up.
bob1029 · 53m ago
Not all entities count. There are 23 types that are conveniently exempt from this regulation.
This is such an eye-opening overview of the AML system. It really highlights how much effort, money, and regulation goes into preventing money laundering, yet the results seem limited.
stivatron · 40m ago
I wholeheartedly hope it fails and continues to fail forever.
OutOfHere · 48m ago
Money laundering is an absurd concept made up by a lazy government that fails to go after the actual underlying crime or criminals. They don't really have evidence of actual crime, so instead they target anyone they don't like. The ultimate effect it will have is of people exiting the government controlled financial system altogether.
fuoqi · 15m ago
I agree. We already see instances of debanking (logical evolution of money laundering "control") being used to pressure political opponents and dissenters even in the "free" West. Even worse, governments silently share this power with private entities to pressure stuff they do not like as was recently demonstrated by the MasterCard/Visa debacle.
Ideally, access to the financial system and secrecy of financial transactions should be protected by constitutions in the same way as secrecy of correspondence and right to privacy. Unfortunately, most constitutions were written in the age when it was a given, since most people relied on physical cash and were was no need to explicitly protect this right.
alphazard · 41m ago
This 100%.
It's strange to see otherwise smart people correctly identify the "think of the children" fallacy in E2E encryption or net neutrality issues, but fail to identify the same exact fallacy when network traffic is measured in dollars and not bits.
mothballed · 18m ago
They falsely assume the major burden of KYC/AML lies on the rich/criminals when in fact, as implemented in the USA, the burden falls largely on the innocent with pretty vague data on whether there is much payback.
cluckindan · 1h ago
Considering the amounts being laundered, it seems likely that a lot of the money is ultimately being invested.
If we stopped money laundering totally and completely, and managed to track down and confiscate all that money, the stock market would crash, hard. So would real estate.
fugazithehaxoar · 1h ago
Residential real estate costs roughly tice what it did 10 years ago. A "crash" back closer to fair market prices would be the desired effect.
Telemakhos · 1h ago
That would be the desired effect for those seeking to enter the real estate market for the first time, but it would be disastrous for those who took out mortgages in the last few years, and it would be unwelcome to those who owned their homes longer and consider it a large (or only) asset in their personal wealth. I doubt that real estate prices will be allowed to drop much, simply because homeowners vote more reliably than renters, and they won't vote against their own financial interests.
RankingMember · 53m ago
The proceeds of crime propping up some aspect of our economy seems like a bad reason to let it continue unabated.
dec0dedab0de · 1h ago
only if they immediately sold all the confiscated assets. The government that did the confiscation could slowly divest on a schedule to minimize the effect on any markets involved.
jollyllama · 1h ago
It depends on the degree to which the continued flow of ill-gotten gains into the system is priced into current valuations.
wazoox · 1h ago
And that would be excellent news, because it would be a "great equalizer". And a more egalitarian world would be much happier.
shrubby · 1h ago
I see that the more egalitarian world is a must for us NOT going extinct.
And we're in the last minute to do that, if it's not too late already.
World seems to be headed to a short dystopian fascist phase before the collapse. A metacrisis caused by these tax-free metahumans with the tax fee multinational abstraction of individual power called corporations.
Left vs. right doesn't work to solve it, but the true dichotomy of people vs. billionaires with their sycophants.
And, yes, this does get abused. Government is people, some of whom are evil, or out for revenge, or whatever. I had an acquaintance whose accounts were periodically frozen by the IRS, because he had pissed off the local office. He would get them unblocked, but only after weeks of missing mortgage payments and other bills.
The short answer is that said money is either the proceeds of a crime, or (in the other direction) being sent to or from a sanctioned person, organization, or country.
This is why it's so hard to push back against, like the TSA. "Do you want terrorists using the banking system?" is a killer argument for midwits.
After you pay your W2 income taxes for the year, your income for the year is no longer taxable.
The point of AML/KYC regulations isn't to stop all crime, just like the point of US sanctions on Russia isn't to stop all Russian exports. In both cases it's to raise the cost of doing business for the entity being targeted. In the case of Russia, they can still sell their oil to India or whatever, but at a steep discount. In the case of drug cartels, they can still get their funds into the regular banking system, but also at a steep discount. Smuggling pallets of dollar bills across the border and setting up a network of front companies is expensive. Doing all that also which implicate them in even more crimes, so even if there's no evidence of them smuggling fentanyl, they can be prosecuted purely on the basis of having a car full of cash.
>I have money from my grandad, received 40 years ago. No one really has records going back that far but you try buying a house and they want proof of the origin of the funds.
The better question is why are you were sitting on cash for 40 years. In that time inflation already ate 66% of the value, and if you factor in the opportunity cost of not investing the money in stocks/bonds, the loss is even greater.
I've handled a couple of these for family members and the amount of paperwork around even a minor inheritance can be pretty impressive.
If I showed up with 50K in cash at the tellers window or a local notary to pay in part for a house tomorrow morning though I would expect the conversation would be an entirely different one.
The point of a down payment is to make it so the borrower has an incentive to not default on the loan, because the borrower would lose the down payment.
If the down payment is actually borrowed money as well (like suppose you get a credit card advance for the money), then the borrower won’t lose anything if they stop paying the loan, and there is increased risk that the loan defaults.
My main issue is that all the AML/KYC/KYB barriers we have to deal with never seem to be subject to efficiency tests, all the studies I read and the few audits of these system seem content with it's likely better than doing nothing... but never measure the lost opportunities in trade/business they cause.
In a way it's the same hopless fight against so-called piracy for movies/games. The motivated actors who want to break the law find ways to do it at a large scale, mostly without consequences... and the honest people are just hindered when they want to use their content (even lose access to it when DRMs rely on the existence of the developer/publisher and their goodwill to maintain it way past the time when that media was able to generate revenues).
How does that even work? You think that without an AML system, el chapo is going to be opening a wells fargo account with his real name?
HSBC's cash deposit tellers in Mexico were even reported to be wider to accommodate the larger cash deposits from the cartels [1]
The same people we put in charge of watching their own activites are the ones breaking the law, repeatedly... and the governments enable it by arguing that fines are "preferable" to real prosecutions and firm/long prison time for complicit bankers.
They are just taking their share on the illegal traffic revenues, like mob bosses do. No intent to stop them. And in the mean time all these AML hurdles hinder legal activites.
[1] https://www.theguardian.com/business/2012/dec/11/hsbc-fine-p...
Thing is these tactics aren't just available to the authorities but also to anyone like intelligence agencies, the mafia, etc. so the confidentiality problems are much much worse with crypto.
It's worth reading the OSPEAD report from the Monero Community: https://www.getmonero.org/2025/04/05/ospead-optimal-ring-sig...
> Monero users with extreme threat models should be aware that anti-privacy adversaries can leverage timing information to increase the probability of guessing the real spend in a ring signature to approximately 1-in-4.2 instead of 1-in-16.
So slightly worse odds than Russian Roulette. Cool. Cool.
Try telling it to Chinese, Russian, Indian exchanges.
Crypto advocates love this “drop in the bucket” excuse. By the same logic, it’s not a problem if I manufacture extra strong alpha-PVP and hand it to school children, because my drug distribution is just a drop in the bucket compared to the global cocaine trade.
Or so you think.
I worked on a front line product for US banks and built a process to verify beneficial ownership for business account openings. I found the current expectations to be laughable:
https://www.federalregister.gov/documents/2022/09/30/2022-21...
> An individual may be a beneficial owner of a reporting company by indirectly holding 25 percent or more of the ownership interests of the reporting company through multiple exempt entities.
Getting around this is not very difficult if you are clever and wealthy.
The overall takeaway I had was that these kinds of rules don't really work in the cases where they need to the most. I don't know how much of a deterrent this could ever hope to be. We even developed an override process for this based on a request from one of our clients.
> ALERT [Updated March 26, 2025]: All entities created in the United States — including those previously known as “domestic reporting companies” — and their beneficial owners are now exempt from the requirement to report beneficial ownership information (BOI) to FinCEN.
[1] https://www.fincen.gov/boi
https://www.fincen.gov/boi-faqs#C_2
Ideally, access to the financial system and secrecy of financial transactions should be protected by constitutions in the same way as secrecy of correspondence and right to privacy. Unfortunately, most constitutions were written in the age when it was a given, since most people relied on physical cash and were was no need to explicitly protect this right.
It's strange to see otherwise smart people correctly identify the "think of the children" fallacy in E2E encryption or net neutrality issues, but fail to identify the same exact fallacy when network traffic is measured in dollars and not bits.
If we stopped money laundering totally and completely, and managed to track down and confiscate all that money, the stock market would crash, hard. So would real estate.
And we're in the last minute to do that, if it's not too late already.
World seems to be headed to a short dystopian fascist phase before the collapse. A metacrisis caused by these tax-free metahumans with the tax fee multinational abstraction of individual power called corporations.
Left vs. right doesn't work to solve it, but the true dichotomy of people vs. billionaires with their sycophants.