How well does the money laundering control system work?
286 points
2 days ago
| 34 comments
| journals.uchicago.edu
| HN
imglorp
2 days ago
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I've come to realize that viewing the world through the simple lens of laundering causes dumb systems to suddenly make sense. Silly rabbit, you thought these industries were there for the normal public?

Gambling: https://www.cbc.ca/news/politics/online-gambling-sites-money...

Casinos themselves: https://www.ibtimes.com/political-capital/trumps-businesses-...

Commerce: https://www.wired.com/story/wired-awake-180518

Crypto: https://financialcrimeacademy.org/cryptocurrency-money-laund...

Shell companies: https://newrepublic.com/post/192244/trump-celebrates-destroy...

Real estate: https://www.firstaml.com/resources/5-ways-criminals-launder-...

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K0balt
1 day ago
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Out in the developing world you’ll see all kinds of things that make no sense commercially, because they were really just a way to park a few million dollars in a way that slowly trickles out under the guise of legitimacy. Buildings with rent ROI> 100 years. A motorcycle dealership with 3000 motorcycles in stock, slowly selling them off , many > 10 years old and zero miles…. Etc.
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salomonk_mur
1 day ago
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Here in Colombia it's almost a staple to find perpetually-empty restaurants that never go broke. We call them "lavaderos" - kinda like "laundering-stations".
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fzeindl
1 day ago
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Have that here in Austria from time to time as well.

Funniest case I visited was a Chinese restaurant where the waitress always wore a winter jacket, because they couldn’t be bothered heating the place.

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jerrysievert
1 day ago
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I've always wondered if Baskin Robbins is a front, I used to see them everywhere in Oregon, where they were always empty even during the summer made me wonder how they stayed in business. as a kid I always thought it was a mob front.
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jasonwatkinspdx
1 day ago
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Heya Jerry! Hope you're well!

I think Baskin Robbins was just increasingly bad.

Growing up in Wichita it was definitely around and I remember going to it a lot when young. But then we started going to Braun's more, and I think it was a combo of location, liking the ice cream better, and getting burgers if we wanted.

I think they just didn't adapt over the decades and sort of coast as a zombie now.

I can't think of why I'd go to one vs so many other options now. Even supermarket stuff is gonna be better.

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mjevans
1 day ago
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I remember as a kid they were really good. Like some of the best ice cream I ever ate. Wide selection too.

Can't help but feel like they got the private-equity squeeze deal to turn them into a zombie.

Some MBA comes in and cuts all the corners, all the costs that made them a first class market leader. Turning them from the best out there into just another ice cream shop with nothing distinctive that Washington and Lincolns everyone for all their money. (We're long past nickles and dimes these days)

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philwelch
1 day ago
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This is interesting to me and I see why it would work in a place with lower state capacity but in more developed countries it’s not a great strategy. You want your money laundering to operate through high volume cash businesses. When I lived in Seattle I used to sometimes go to a sketchy cash-only teriyaki joint. The food was great and they were always filled with paying customers. Sadly, they were later caught and shut down.
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cruffle_duffle
1 day ago
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The scaryaki joint on 3rd? Weren’t those guys also fencing stolen iPads or something?

That place had super good food though!

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philwelch
1 day ago
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They were fencing stolen iPads! I assume they were also laundering the stolen iPad money through their teriyaki cash flow, but it’s easier to get away with that if you actually have teriyaki cash flow.
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dboreham
1 day ago
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Laser tag.
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hosteur
1 day ago
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In Europe, we have: Phone repair shop. Pizzeria. Gambling cafe.
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j-krieger
1 day ago
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The seventh mid Döner Kebab on the block right in the middle of the city
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K0balt
1 day ago
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Car wash
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runjake
1 day ago
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In the US, the feds pay close attention to businesses like car washes, coffee stands, and taco trucks because these are often used for laundering.

There was a period where it seemed like they were doing some data crunching of IRS data and taking down domestic drug trafficking orgs (DTOs) this way, and a bunch of businesses were raided and shut down across the region I was in at the time.

Personally, I wouldn't do any of those and would launder through art and collectibles where the values are somewhat arbitrary. And "consulting".

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hackable_sand
1 day ago
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Banana stand
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K0balt
1 day ago
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To be fair, there’s always money in the banana stand.
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v5v3
1 day ago
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Bananas can't stand.
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DonHopkins
1 day ago
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You just can't stand bananas.
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jones89176
1 day ago
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Time flies like the wind. Fruit flies like banana.
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DonHopkins
1 day ago
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I'd like a banana hammock!
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reactordev
1 day ago
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Nail Salon
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sunrunner
1 day ago
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Basically every desert parlour in the UK, particular Treatz and Creams.
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HPsquared
1 day ago
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I wonder if anyone keeps stats on "number of obvious fronts on the high street over time". Between those and betting shops etc. it'd be interesting to see what proportion of businesses on the high street are truly "legitimate regular businesses for normal people" like cafés, shops etc.
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catsma21
1 day ago
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Fast-food restaurant chain
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salynchnew
2 days ago
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This is, unfortunately, a problem that many tech companies have made worse and more accessible as they have removed friction from these systems.

Most folks will remember the 2019 temination of lootbox key trading for CS:GO on Steam.

https://www.bbc.com/news/technology-50262447

https://www.gamesindustry.biz/research-identifies-suspicious...

https://www.sciencedirect.com/science/article/pii/S266628172...

I'm not sure what good ways there are to manage this generally, other than limiting the size or types of financial transactions that can occur within a system.

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j-krieger
1 day ago
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The same thing is happening right now with cases.
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reactordev
1 day ago
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You can thank Cryptic Studios for the loot box virus...
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ETH_start
1 day ago
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Trying to stop money laundering via mass surveillance of people's transactions is futile and creates far more losses than gains for society. It is what's responsible for the epidemic of debanking that has emerged over the last decade.

https://en.wikipedia.org/wiki/Debanking

"The Financial Conduct Authority reported that banks in the UK were closing nearly one thousand accounts daily, with just over 343,000 closed in 2022, compared to about 45,000 in 2017.[4]"

Money transfer is a basic utility and should not be rationed out and gatekept by government regulators.

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nine_k
2 days ago
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Lotteries, too: https://www.acamstoday.org/lottery-and-money-laundering-a-ma...

I remember reading about a case where criminals bought an entire issue of a local lottery, thus collecting all the prizes, and apparently saw that a reasonable cost to launder their cash.

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agos
1 day ago
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this works quite well even at small scale. In my country you can just go to any tobacconist, buy 1000 € worth of scratch cards with cash, and happily keep whatever comes out. And since they're heavily regulated, you can check winning probabilities in advance so you already know the expected return!
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abyssin
1 day ago
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A prominent Belgian political figure laundered cash for years using the lottery https://www.euronews.com/my-europe/2024/12/11/revealed-how-t...
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aeve890
2 days ago
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thelastgallon
1 day ago
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> Then there is the case of international terrorism, where bands like ISIS have been noted for their laundering of cultural antiquities.

Reminds me of True Lies.

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pnw
1 day ago
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Apparently in Vancouver BC (money laundering capital of North America), they use luxury watches and cars to launder funds as well, in addition to the obvious local casinos and real estate.
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sunrunner
1 day ago
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If something in the world doesn’t make sense, figure out who’s profiting from it.

That’s something that a friend mentioned to me a few years ago, haven’t forgotten it since, and now everything does make sense when viewed from the right context.

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HPsquared
1 day ago
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The expression goes back to the Roman Republic. Coined by former consul Lucius Cassius Longinus Ravilla, who 'gained fame for formulating the question "Cui bono?" ("Who benefits?") as a principle of criminal investigation.'

https://en.m.wikipedia.org/wiki/Cui_bono

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sunrunner
1 day ago
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So "Follow the Money" has a much earlier origin and wasn't just a catchy phrase from various TV drama series? Figures.
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sunrunner
1 day ago
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And for a specific example:

In my local neighbourhood there are a couple of commercial spaces that keep seeming to become new businesses, go through the expected few months of rebranding and outfitting, stay for a couple more months, then shut down. Only to become new businesses doing the same thing. Repeat ad nauseum.

Which would be fine, except it’s always the same owners. I’m not sure what the grift is, but I’m sure there’s one. Perhaps its simply taking advantage of business loans. Perhaps something more involved with contractors and business expenses charged differently on paper. I’m not sure, but I’m sure I’m curious.

In the same way that buying a company and taking out business loans for expenses isn’t itself fraudulent, but can be done for that purpose, I can’t help but feel like there’s something going on.

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wombatpm
1 day ago
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Crappy contractors change business names like hats. I had one that was on his third name by the time I finished with him.
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Eridrus
1 day ago
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This is a fairly common view, but it overstates people's rationality abd assumes you have perfect information, leading people to pretty conspiratorial views.

Often the actual answer to things not making sense is that most things in the world are done poorly and many things are some mish mash of various interests rather than a singular actor.

Incompetence is far more common than malice, and many observers are themselves incompetent.

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sunrunner
1 day ago
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So Occam's razor then? That's a fair point. I'm torn between how much my instinct is to ascribe things to incompetence, malice, or profiteering...
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nostrademons
1 day ago
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Hanlon's razor: "Never attribute to malice that which is adequately explained by stupidity." Occam's razor is "the simplest explanation is most likely to be true". Hanlon's razor is a special case of Occam's razor if you assume that stupidity is simpler than malice, which is a hard statement to prove in concrete terms, but intuitively seems to be true.
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sunrunner
22 hours ago
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Ah yes, the wrong razor. Or, like you say, a more general version of it that might still apply (but wasn't the one I was thinking of).
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BobaFloutist
1 day ago
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Stupidity is simpler than malice because a plan that seems dumb would need to be far more complex to be secretly smart and malicious than to just actually be dumb.
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cjbgkagh
1 day ago
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Overly expensive candy stores that only accept cash and have an excess of staff...
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alwa
1 day ago
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Is that laundering or just retail drug sales?
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cjbgkagh
1 day ago
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Money laundering, visa scams, and probably other criminal activity. The ones I noticed were in an airport so I doubt they were slinging drugs.
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russelg
1 day ago
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In Australia that's typically black market tobacco.
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PaulHoule
1 day ago
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If you read The Guardian or even The Economist or other UK sources you see there is a drumbeat of concern about "bad businesses" which range from

http://wormwoodiana.blogspot.com/2025/04/do-charity-bookshop...

which legally evade taxes and

https://www.londoncentric.media/p/asf-aziz-london-candy-shop...

which illegally evade taxes not to mention

https://www.theguardian.com/uk-news/2022/dec/26/more-than-90...

and

https://www.esquire.com/uk/style/grooming/a65829331/high-str...

and these are frequently accused of being involved in all sort of crime not least money laundering.

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robertlagrant
1 day ago
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> which legally evade taxes and

If it's legal I think it's "avoidance".

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close04
1 day ago
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Add to the list almost all high end (dance) clubs, the kind that sell you the $50 bottle of champagne for $5000, "cleaning" thousands for every easily justifiable and anonymous bottle sale with close to 0 effort.

Actually, any business that can just add an arbitrarily huge markup for what are otherwise cheap, run of the mill products and services is probably also laundering money. Usually exclusive/luxury places, the ones where in one go they can convert the lowest possible cost into the highest possible clean profit.

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ChuckMcM
18 hours ago
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You’re not wrong. Just enough “legit” to create reasonable doubt.
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Traubenfuchs
1 day ago
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In Austria we have an infinite amount of middle eastern barbershops and „phone shops“ with about zero customers.

Quick calculations on minimum wages, rent, other costs and the required amount of sales show that they can not be profitable.

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philwelch
1 day ago
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Art is another really good example.
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bradley13
2 days ago
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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.

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onetimeusename
2 days ago
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Ending anonymous banking like in Switzerland was a major objective for the US. They said it was because it allowed money laundering for terrorists. People will get upset when the government talks about ending encryption in order to stop terrorism but the same concept applied to money apparently doesn't matter.

In practice we have a system where money laundering has not ended and we have much more financial surveillance for average citizens. That was probably the purpose all along and it never had anything to do with finding tax evaders or stopping terrorism.

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pjc50
2 days ago
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> much more financial surveillance for average citizens

As with the TSA, any system designed to filter "bad guys" ends up being a huge imposition on average citizens, because there's a lot more of them.

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tzs
1 day ago
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I can see how TSA is an imposition on a large number of average citizens. The Internet is telling me that in recent years (except during COVID) about half of Americans flew in the past year [1], which would mean each year about half of Americans have to deal with the TSA.

But with money laundering and KYC I'm having trouble remembering ever having to deal with them. What are situations where the average citizen finds them an imposition?

I vaguely remember being asked what the sources were for the money in my IRAs, but don't remember who asked or what I was doing with them. Maybe it was during an application for a home equity line of credit? Anyway, whatever it was I just told them (rollover from a 401k, money from my salary, and earnings from investments held in the IRAs) and they didn't ask for any proof or anything.

[1] https://www.airlines.org/dataset/air-travelers-in-america-an...

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tastyfreeze
1 day ago
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> I vaguely remember being asked what the sources were for the money in my IRAs

That is the issue. Its none of their business where your money came from. The collected information will eventually be abused as evidenced most recently by Canada's trucker bank freezes.

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jgilias
1 day ago
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Not in the states, but. Just yesterday I went to a Toyota dealership to take a look at a Yaris with my retiree mom. During the usual sales talk, the rep casually dropped that there’s an AML form that needs filling in if the sales go through.

For a fucking Toyota Yaris. Bought by a retiree. Who’s going to be paying it through the banking system where they already have KYC, AML, and all of her financial history.

If that’s not overreach, I don’t know what is. And… who elected the people who came up with this? (That’s a rhetorical question)

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ic_fly2
23 hours ago
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The Yaris is more expensive than 10k.

Simple as that. Allow people to shift value in larger units without AML and the crooks will use that route.

The AML form will not be the most unpleasant part of buying a Yaris.

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jgilias
23 hours ago
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It’s a reliable car with a ten year warranty that doesn’t break the bank, and fits her use cases perfectly. What’s not to like!
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yourapostasy
1 day ago
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> ...an AML form that needs filling in if the sales go through...If that’s not overreach, I don’t know what is.

Absent a complete dismantling of AML oversight (and I do have empathy for those free market purists who want to wholesale toss out KYC and AML, but for now in practice we have to deal with what are on the books), these are difficult use cases to address. These kinds of edicts don’t usually say, “any retirees buying even economy cars must fill this out”, it is usually broadly applied like, “all car dealerships must do this for all transactions no exceptions”. And these laws are often a lagging reaction to various sham transactions uncovered as a result of crime busts.

Once you start weaving “reasonable” exceptions to address the overreach, the scammers start to come up with sham transactions that fit the exceptions filter. It’s a pretty fascinating problem.

There are many who would still object to a system where your mother doesn’t fill out a form. Instead her banking app pings her to confirm that she is purchasing a Yaris from the dealership (looking at the other comments here, it seems anonymous large transactions scattered through many people with otherwise clean records are a common laundering pattern, so metadata on the nature of the transactions might be one way to counter that kind of structuring, but alas that’s overreach for many), and uses her financial history in the background as the AML controls rails.

I’d love to see AML professionals participate in this thread to help us learn what they’re really facing. Assuming we have to put up with it for the time being, might as well design and make its implementation as low friction for lawful people as possible.

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jgilias
1 day ago
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I get what you’re saying. They probably only care about people coming in buying Lexuses paying cash. But to streamline things, as well as not discriminate Lexus buyers or cash, it applies wholesale.

I’m very critical of the system in general. It’s an extra-legal way to “fight” crime, that weaponizes private enterprises against their will, inverts the burden of proof, and at the end of the day just doesn’t work. Because, obviously the cash for buying the Lexus came from a completely legal casino payout.

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Der_Einzige
1 day ago
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We need far more of a willingness to "bite the bullet" and accept that sometimes bad things happen, and after a bad things happens we can simply go back to how we were doing things before.

We don't need to constantly change and often times collectively punish society for one bad terrorist attack.

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pjc50
1 day ago
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That's the American response to mass shootings: ignore them and change nothing.
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MarkusQ
1 day ago
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No, sadly the American response is to advertise the idea of mass shootings and run detailed how-tos for any potential copycats out there. We obsess over the shooter's motivation and shower more attention on him then he'd ever gotten in his whole life.

Ignoring them would actually be better than what we do.

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nine_k
2 days ago
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What's the point of surveilling the movements of average citizens' money? They usually don't hide anyway. I suppose tax evaders were the target all along, with a smattering of criminal operators, e.g. drug dealers. Terrorists were but a pretext to produce moral panic.
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lotyrin
2 days ago
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You justify surveillance in the wake of terrorist attacks, etc. and when public sentiment toward government is mostly good (the financial surveillance here is an example)

You make moves to constrict the available information and permitted behavior of residents and citizens in excess of what is defined by law through pressure on culture and public marketplaces, etc. and not legal action by government. (e.g. the stuff going on with erotic content on Steam recently, but not limited to stuff like that). You start with more questionable and controversial things like e.g. sexually explicit content, then progress to all content or ideas that are inconvenient to your regime.

You boil the frog of authority over the public at a rate where only a minority starts noticing problems and looking for solutions in educating themselves using politically inconvenient media (and flagging themselves as enemies in the surveillance tools) or taking action that is inconvenient to you

You start making court cases against these inconvenient people and start deporting them or incarcerating them. First with e.g. illegal immigrants or foreign national students that are saying things that are unpopular, but slowly escalate to all the people that disagree with you.

If you don't think all these things are well established, I'm not sure what to tell you.

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nine_k
2 days ago
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Yes. Sadly, 9/11 is the classic case of terrorists having won :(
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orochimaaru
1 day ago
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Is it though? I mean the US supported Bin Laden when he was fighting the Russians. Essentially we had a pet snake and complained when it bit us.

I think that the same case with Hamas which I believe was a mossad creation.

Most of these problems are self inflicted.

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kelnos
1 day ago
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It's not really that, though. The people who won are those in power, at home. They were handed a pretext to increase their control and surveillance of their citizens.
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AnthonyMouse
1 day ago
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"Letting the terrorists win" is an expression from not long after 9/11 using a combination of the following logic. First, the Bush administration said something along the lines of "they hate us for our freedom" about the 9/11 terrorists, and if the terrorists hate freedom then enacting freedom-reducing policies in response to an act of terrorism is playing into their hands. Second, a common definition of terrorism is using fear to achieve political ends, so anyone who uses an act of violence to justify oppressive policies is sadistically taking political advantage of a tragedy at best and even meets that definition of a terrorist. Therefore enacting oppressive policies in response to an act of terrorism is letting the terrorists win.
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matheusmoreira
1 day ago
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> Therefore enacting oppressive policies in response to an act of terrorism is letting the terrorists win.

Completely agree. Terrorists destroyed the USA by destroying all of its freedoms and values. They happily gave up freedom for security in spite of the warnings of their founders. All it took was two aircraft.

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lotyrin
1 day ago
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9/11 is nowhere near the beginning nor end of the process.
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wombatpm
1 day ago
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They had the Patriot Act ready to go prior to 9/11. Some minor text changes, and everyone is voting for it.
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lotyrin
1 day ago
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It's my favorite thing about "Inside Job" conspiracies. Whether authority has covertly orchestrated an event behind the scenes or if they were quietly and deliberately lax in preventing the event, if they were just incompetent, or simply failed through no fault of their own: the event has now happened, so the important bit is that they have overtly capitalized on it to create policies with harmful consequences.
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gambiting
1 day ago
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Well, no, not really - Bin Laden's stated goal was to commit attrocity so great against the American people that they will have to look into who those people are and why they did it, at which point hopefully they will discover their own government's work in the middle east and rise up against the government in protest.

Obviously, that didn't happen - I don't think your average American had any interest in looking into any of it, they just went "Arab people bad, let's invade", and of course accepted even greater invigilation and intrusion into their daily life and travel than ever before, all in the name of "safety". So yeah, terrorists made our lives miserable - but they failed to achieve their goals.

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xenotux
2 days ago
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> What's the point of surveilling the movements of average citizens' money?

The most important is taxation. People pay their babysitters or gardeners under the table, or transact with friends and family without reporting income, and this is a huge amount of lost tax revenue.

Another reason are policy options. For one, there are certain decidedly "non-terrorist" goods and services that the government might not want you to purchase. Heck, in the era of ZIRP, many economists were seriously talking about negative interest rates. You can't do that if a person has the option of taking out cash and hiding it under the mattress.

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AnthonyMouse
1 day ago
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> People pay their babysitters or gardeners under the table, or transact with friends and family without reporting income, and this is a huge amount of lost tax revenue.

Is it though? The entire bottom 50% of the population paid something like 3% of total federal income tax, by intentional design of the tax system. Babysitters don't owe any significant amount of taxes whether they report it or not and under some circumstances (e.g. EITC) their effective rate can even be negative. Forcing them to report the income can't seriously be the justification for all of this mass surveillance.

> Heck, in the era of ZIRP, many economists were seriously talking about negative interest rates. You can't do that if a person has the option of taking out cash and hiding it under the mattress.

That doesn't have anything to do with physical cash. You could do the same thing by borrowing at a negative rate and investing the money in any security/asset/commodity. Which is why negative interest rates are crazy and never really happened.

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alexey-salmin
1 day ago
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> People pay their babysitters or gardeners under the table, or transact with friends and family without reporting income, and this is a huge amount of lost tax revenue.

This money was already taxed when the individual who pays the babysitter received it. It's questionable whether the society as a whole benefits from taxing babysitters.

> Heck, in the era of ZIRP, many economists were seriously talking about negative interest rates. You can't do that if a person has the option of taking out cash and hiding it under the mattress.

I'm not sure you'll gain much support for bespoke policies like that. Just reading this passage made me feel an urge to hide some cash under the mattress.

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potato3732842
1 day ago
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>This money was already taxed when the individual who pays the babysitter received it. It's questionable whether the society as a whole benefits from taxing babysitters.

Replace babysitter with any government regulated and licensed profession and the motives become clearer. The government gets power by forcing things above the table because once above the table you can be forced to transact with who they want and how they want and those parties then become dependent upon government to a degree.

There's no such thing as cash under the table land surveying, for example.

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danaris
1 day ago
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> This money was already taxed when the individual who pays the babysitter received it.

And the money the retail clerk gets paid was already taxed when the customers spent it at the store. No, wait, it was already taxed when they got paid it! No, wait, it was already taxed when the customers of their employers spent it! No, wait——

...This whole idea of "money getting taxed multiple times" being a bad thing is absurd. Of course any given dollar going through the economy is going to get taxed many times. It's not about the dollars; it's about the transactions. And, ultimately, it's about funding the government so it can actually provide services, from sanitation all the way up to the military.

(Note that this is not an attempt to say that "the more taxation, the better"; that's obviously absurd, too. There are different levels of taxation that make sense for different people, different countries, different transactions, and different economic circumstances. There is no one simple magic rule you can follow that will always make things better when it comes to taxation, any more than there is with anything else economic or political.)

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ifyoubuildit
1 day ago
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You get less of what you disincentivize. Putting artificial friction on every single transaction is not free, and it's fucking obnoxious.

Meanwhile, the government you fund takes that money and uses it to surveil you, and commits crimes across the world in your name. And this giant machine that's supposed to stop the bad guys tells you there's nothing to see here when some big scandal comes up right in front of your face.

Yes, I think money being taxed multiple times is too much.

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danaris
1 day ago
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So you think each dollar should be tagged when it's minted, so that the first time it gets taxed—whether that's in sales tax, income tax, capital gains, or what have you—it gets marked "this one's done!" and it can never be taxed again?
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ifyoubuildit
1 day ago
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Probably not. What needs to happen is the government should be small enough that you can realistically fund it entirely via some minimally invasive tax scheme.

Government is essential, massive government is not. Yet the system we have now is probably the smallest it will ever be (before it collapses anyway).

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alexey-salmin
1 day ago
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> And the money the retail clerk gets paid was already taxed when the customers spent it at the store.

Your imaginary analogy chain breaks here. The store is taxed on what's left after the expenses, individuals are taxed on the total income.

If I, as an individual, could deduct my babysitter expenses from my income taxes, I would have no questions as to why babysitter has to pay them. This doesn't happen however. In some countries you can deduct 50% at best.

Therefore I don't see the point of taxing first the parent and then the babysitter again. You can as well tax the parent 2x, it would be the same from the economical standpoint.

> There are different levels of taxation that make sense for different people, different countries, different transactions, and different economic circumstances

You didn't make any effort to explain why taxing babysitters is the "level that makes sense" as you put it. You just write some generic words how taxes are good in general and help government to provide services. It's irrelevant to our conversation.

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Imustaskforhelp
1 day ago
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Yes lets tax these small transactions so that we can go back and give the tax cuts to the billionaire class.

I think that capitalism has strayed away from its original goal. We have basically parasites in the current ecosystem leeching off of either land rent or being billionaires imo.

But no it feels like we don't discuss it, we will all be ever so radicalized about something that happened on twitter etc. that we are forgetting the issue of classes.

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tomrod
1 day ago
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Once again, Georgism/land value tax is the superior tax policy. Simpler enforcement.
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Imustaskforhelp
1 day ago
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Man I wanted to write about georgism (see my comment on the parent's post where I talk about land parasites)

I am such a big georgist. Seriously, I might genuinely cry seeing how georgism isn't being implemented. it is one of the most superior policy systems but the parasites own so much that we don't even discuss about it

I was talking to my friend about georgism when he asked me if I was a capitalist/communist.. Basically in the end he just said, that he doesn't know about economics... so he doesn't know and they wanted to change the topic I feel like this might be a major hurdle where people think that economics is some huge mumbo jumbo when I feel like georgism and (index funds?) are two things that almost everyone should know given how simple they are.

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mothballed
1 day ago
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Georgism is land communism. The 'community' or whoever is collecting the taxes (LVT) owns all land and rents it out. Ideal LVT puts the market value of all land at $0 after tax liabilities, so even if you could 'own' land under Georgism it would largely be economically meaningless.

It's straight up marxism hidden as a capitalist market measure. Vacant land portion of property taxes are essentially georgism-light where the land capital is mostly under a capitalist model but with a % owned by the community (or more likely, a government that commonly works against community interests) and rented out in the form of property tax (in georgism the % is 100).

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nostrademons
1 day ago
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"Land communism" isn't a bad way to put it.

But I think you need to make a pretty clear distinction between "land" communism and, well, communism. Communism is based on public ownership of the means of production: if you own a steel factory, you don't really "own" a steel factory, the people own the factory and the state appoints a bureaucrat or manager to run it. You can receive no profit from it, you can't sell it, really you have no rights to it other than the state's promise to let you manage it (and whatever they pay you for that).

Georgism explicitly still admits private property: if you own a steel factory, you actually do own a steel factory, you can make decisions about the management of that factory, you can sell it, etc. In many ways it's more capitalist than today's capitalism, because single-tax Georgism also states that there should be no income or capital gains tax, and so you receive 100% of the profits from building that factory. You just have to pay a tax to the state for the land that the factory sits on, set in proportion to what others would be willing to rent the land for.

The distinction is pretty key, because it gets at the heart of human agency and incentives. Georgism does not admit private ownership of the land because the land was here before any humans were; no human suddenly built the land, and no human can destroy it, they can only manage its use. Likewise for other common goods (like pollution, the electromagnetic spectrum, natural resources, etc.) which Georgism seeks to manage. Georgism does admit private property, because when you construct a machine or a factory or invent a new process, that came out of your own efforts. It could be summed up as "private persons own what they build or buy, the public owns what was here before".

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tomrod
1 day ago
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Georgism explicitly rejects Marx's class-based analysis and Marx's narrative of zero-sum class conflict. What symptoms Marx attributes to class conflict, George attributes to rent-seeking, something which both Georgists and capitalists agree is a corruption of capitalism, rather than an inherent element. Whereas Marxists conflate economic rent and return on capital - an economically unjustifiable leap in logic.

Marxism explicitly rejects classical liberal principles such as the rule of law, limited government, free markets, and individual rights, Georgism not only functions within those principles, but requires them.

Marxism is incompatible with individual rights due to its hostile position on private property and its insistence that all means of production be collective property. The most fundamental means of production of them all is an individual's labor. Without which, no amount of land would produce a farm, a mine, a house, or a city. And then we wonder why Marxist regimes consistently run slave labor camps.

Henry George argues that society only has the right to lay claim to economic goods produced by society, rather than an individual. Marxism recognizes no such distinction.

Georgism is fully defensible using classical economics and has been repeatedly endorsed by both classical and modern economists. Marxism is at best heterodox economics and at worst, pseudoscience.

Georgism could be implemented tomorrow if sufficient political will existed. Marxism requires a violent overthrow of the state.

Henry George himself rejected Marxism, famously predicting that if it was ever tried, the inevitable result would be a dictatorship. Unlike Marx's predictions, that prediction of George's has a 100% validation rate. And he made that prediction while Marx was still alive.

Economists from Adam Smith and David Ricardo to Milton Friedman and Joseph Stiglitz have observed that a public levy on land value (Georgism/LVT) does not cause economic inefficiency, unlike other taxes.

Suffices to say, you are not sharing a grounded opinion on Georgism.

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mothballed
1 day ago
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The Trojan Horse of Georgism does all the things you disdain, for land, which is the most vile of all because land creatures can't escape it. The genius is Georgism pretends like it's not Marxist by using market principles, but zeroing them out so you don't actually own it and you end back in land communism.

>Economists from Adam Smith and David Ricardo to Milton Friedman and Joseph Stiglitz have observed that a public levy on land value (Georgism/LVT) does not cause economic inefficiency, unlike other taxes.

This is not an accurate portrayal, there is an extensive list of problems with Georgism that destroys much of the important methods of allocating and using land, even if you could tax it accurately.[]

[] https://cdn.mises.org/Single%20Tax%20Economic%20and%20Moral%...

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tomrod
1 day ago
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You're on a lonely island there, and despite the followup edit for a reference to the Mises Institute, your thoughts represents neither mainstream nor, especially recently, what their own Pete Boettke would declare, mainline economics. Thanks for your thoughts, I've reviewed them and found them inaccurate.

Smith, Adam (1776). "Chapter 2, Article 1: Taxes upon the Rent of Houses". The Wealth of Nations, Book V.

Tideman, Nicolaus; Gaffney, Mason (1994). Land and Taxation. Shepheard-Walwyn in association with Centre for Incentive Taxation. ISBN 978-0-85683-162-1.

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mothballed
1 day ago
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You're quoting how Adam Smith hated landlords/rent, yet you seek to enslave all of society by making the government the landlord of everyone. From Smith's citation you have here, you would seek to exacerbate the problem he identifies.
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tomrod
1 day ago
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Thank you again for your thoughts, this will be my last response to you since, based on our interaction, I believe you want the last word. You are substantively incorrect in assertions. You have yet move beyond an assertion that "Georgism is Marxism." I have provided both justification why you assertion is invalid, and pointed out that leading economists of all stripes (orthodox and heterodox) consider a land value tax to both be minimally distortive.

Thanks for the opportunity to present Georgism as a superior policy over the clamor in your prior comments.

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mothballed
1 day ago
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Alright, I stand corrected. Georgism is Marxism for everything it actually is called upon to operate on in practice, which is the land, which by your own omission goes uncontested.
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Imustaskforhelp
1 day ago
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Yes, this was such a wonderful read. I think I maybe mentioned in this post or some other how I was discussing georgism with my friends and I couldn't really articulate the difference b/w georgism and communism partially because I had gotten into in depth about georgism some time ago, and I will admit that I had forgotten quite a bit of details.

This was such a beautiful ,might I say article on georgism. I would genuinely prefer if you could write it as a standalone article that I might share with my friends or can refer to.

Its such a nice read. Thanks for giving me the pleasure to read it.

Edit: I went further into the post and it seemed that mothball isn't having this discussion in good faith and wants to have a last word and yes they feel so right, almost being stupid might I say. But your way of recognizing it and saying it up front really both surprised me and made me respect ya since you actually went through their sources when they sent some and are doing this discussion in good faith.

I am maybe georgist because I feel like it genuinely made the most sense to me and uh maybe it makes also sense because land price seems to have gone so high that I can't hold land so maybe that's a bias but still georgism is such a good take yet landlords have such a lobby that I wonder if we can break it.

We really need to get more georgist thoughts.

Might I say,though this isn't strictly georgism but taxing/patching billionaire loopholes since software businesses are built on open source and is almost like land in the sense that community owns it, plus I feel like that concentration of power into such people is wrongful but I also know that its a really really tough issue as to taxing billionaires, do we tax their stocks? do we do what exactly??

Yet georgism is a right step in that direction except it is more quantifiable and (almost universally?) agreed to be a good taxation strategy.

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tomrod
1 day ago
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In my understanding, the reason LVT/Georgism would work is because the base stock is fixed for the very long term (geologically, barring land reclamation projects from the ocean). Software has no similar basis, and thus would devolve to taxation like current stocks or bonds today, where growth of the capital stock can occur.
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mothballed
1 day ago
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And that is another weakness of Georgism: it causes the base stock to be fixed.

Land speculators play an important role by introducing unimproved land into the market at a delayed point in time, adjusting the stock of available land to market demands, preventing economically inefficient prior improvements from happening which then make it even more expensive to use the land productively in the future.

The incredibly vital task of land speculation that adjusts available stock to market conditions, is virtually impossible under a LVT.

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mothballed
1 day ago
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Please note George himself said his land scheme would "accomplish the same thing (as land nationalization) in a simpler, easier, and quieter way."[] It was well understood by George that what he was doing was communism.

[] Henry George, Progress and Poverty

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mothballed
1 day ago
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Tariffs also make sense, since all that stuff is going through and declared to customs anyway, although it might be an economically inferior mechanism.

Either way the income tax is one of the most dystopian ways to collect tax as it pretty much relies on mass surveillance of domestic activities to be implemented fairly or effectively.

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tomrod
1 day ago
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Neoclassical economics recognizes, under the standard macro model, that labor taxation is second best. The first-best is capital taxation, once and for all time, but due to time inconsistency (nothing prevents a government from taxing again in the future) it fails to be useful outside of theory. There is some squishiness once you consider overlapping generations model, arguably more realistic than infinitely lived agents (which I always felt represent companies or familial dynasties more than real people).

Land value taxation is different because there is no meaningful growth or loss of the capital stock.

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AnthonyMouse
1 day ago
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> Neoclassical economics recognizes, under the standard macro model, that labor taxation is second best. The first-best is capital taxation, once and for all time

Tariffs (or, more generically, consumption taxes) are effectively both. If something is sold, the money is going to some combination of labor and capital, and then the tax is paid either way. Tariffs in particular also create a preference for domestic production, which increases domestic labor demand at the cost of lower economic efficiency and higher prices, which is the primary thing that makes them dumb if you're not a fan of taking that trade off.

In theory the primary disadvantage to consumption taxes is that unless you want to track all of everyone's consumption, it's hard to apply a progressive rate structure. But in practice there is a way to do that -- provide a universal tax credit in a fixed amount. Then everyone pays a uniform marginal rate, lower income people receive e.g. a $10,000 credit and pay $5000 in taxes (which also obviates the need for $5000 in social assistance programs), and middle and upper income people get the same $10,000 credit but pay more in tax.

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mothballed
1 day ago
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I'm talking about from a practical perspective including respecting domestic privacy, not theoretical bests.

It is difficult to determine the value of a particular piece of land, particularly if it hasn't been sold for a long time and won't anytime soon.

International trade can much easier be priced, and there is no (additional) privacy concern because it all has to be declared anyway.

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tomrod
1 day ago
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Tariffs, unless hyperfocused, are dumb.
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mothballed
1 day ago
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Indeed, but funding the level of government the constitution authorizes, which shouldn't cost more than a couple percent of GDP, their dumb-ness isn't enough to greatly distort the market and meanwhile there is very little additional overhead or intrusion vs other methods of taxation.
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tomrod
1 day ago
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Consumption taxes are very distortive.
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LocalH
2 days ago
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Control
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nine_k
2 days ago
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My point that authorities already exercised enough control over normal citizens anyway. Most Americans live paycheck to paycheck, and never cared to have a bank account in Switzerland, let alone an anonymous bank account.

But the few certain Americans, and especially non-Americans, who did apparently bothered the US administration enough.

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alexey-salmin
1 day ago
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Nah, it's always the middle class that gets screwed. Poor can't be squeezed for more, rich have resources to fight back, the middle class ends up paying for everyone.
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Imustaskforhelp
1 day ago
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Exactly! This is so so true that words can't explain it. The middle class gets extracted as much as they can. I think we middle class are treated as cash cows.
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kelnos
1 day ago
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I think you're missing the point. I honestly don't think the rich people with hidden bank accounts really bothered those in power that much. Why would they; those people are their friends, in many cases.

People in power want more power. They want more control, even over average, law-abiding people. They want to moralize and tell you what you should be buying and consuming. Power over others is the goal; it's not incidental. The random Swiss bank account holder is the pretext, not the reason.

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sneak
2 days ago
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If you can make private and uncensorable payments, you can pay an army.

The “only one army” concept is how governments remain governments.

If you could raise and pay a competing army, the state’s monopoly on “legitimate” violence becomes threatened.

This is why most states also heavily restrict private access to arms. Interestingly enough, it is also why the United States explicitly protected it: to specifically prepare for (and protect the right to) violent revolution.

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mothballed
2 days ago
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17% of the USA smokes weed (makes them a prohibited possessor), 8+% are felons, DV convictions are harder to find but incredibly common, 4+% of USA are immigrants who have no right to bear arms (illegal or non-immigrant visa).

So maybe 1/4 or more of the adult USA is explicitly barred from the right to bear arms. When you consider those same people would have been much of the ~3% that had high enough risk tolerance to fight the American revolution, basically the USA has barred a very large proportion of those with the risk taking temperament that would enable them to become part of the ~3%.

They've effectively made it illegal for revolution type of risk taker to have arms unless those risk takers used the police/military as that outlet. Note this is a relatively new development -- the M1 carbine was invented by a prisoner inside a prison!

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novok
1 day ago
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If you knew the attitude those people had towards having "illegal small arms", you'd realize that isn't much of a barrier. It's kind of like the equivalent of bit torrent for them. Often it's easier to buy an illegal gun even if they are legally allowed to than to buy it legally used or new. They only avoid it because it's a conviction escalator if caught.

Also you can own guns on a non-immigrant visa as a resident if you have a local hunting license that are pretty easy to get and maintain. Even non residents can with hunting trips.

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nxobject
1 day ago
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> it is also why the United States explicitly protected it: to specifically prepare for (and protect the right to) violent revolution.

How is the right to violent revolution prepared for and protected in the US?

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matheusmoreira
1 day ago
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> If you can make private and uncensorable payments, you can pay an army.

Just in case people thinks this is far fetched...

Several countries in latin america are actually narcostates disguised as democracies. The drug cartels make so much money they can afford to have their own military forces, not rarely trained by actual soldiers who deserted for better pay.

I live in one such country: Brazil. We have a couple massive organized crime gangs which dominate huge amounts of territory. They have their own governments, their own laws, their own tribunals, they even collect taxes from their subjects. They essentially pulled off a stealthy, undeclared secession.

I gotta admit I have a certain respect for these drug gangs... They are an example of the power afforded by real freedom. Instead of waiting for the government to solve their problems, they had the balls to arm themselves to the teeth and seize what they wanted, like it or not. They exercised the freedom to build a new system that benefits themselves to the detriment of the society that shunned them. That's the freedom governments cannot tolerate. The freedom to replace them.

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jcul
1 day ago
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Would love to read more about these shadow states, these undeclared secessions. I've often wondered about cartels in countries like Colombia and Mexico and how they interact with the Government. I never thought about places like Brazil. Would welcome any recommendations on the subject.
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matheusmoreira
1 day ago
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It's difficult for me to provide sources because almost everything I've read about these gangs is in portuguese.

English Wikipedia has surprisingly detailed and well referenced articles on these organizations:

https://en.wikipedia.org/wiki/Primeiro_Comando_da_Capital

https://en.wikipedia.org/wiki/Comando_Vermelho

> Individuals that fail to comply with the group's "discipline" are judged by the "crime courts", with sentences that can range from beatings to summary executions.

> Rather than expanding by territorial conquest alone, the PCC is able to develop its illicit activities more efficiently by focusing on the regulation and control of markets combined with a monopoly on violence and discipline.

Pretty much a parallel state.

Just yesterday I was reading about how the drug gangs killed some electricians tasked with shutting off the electricty of a gang member for lack of payment. Another gang launched their own ISP which they forced their subjects to pay for and use, our FCC equivalent ANATEL was trying to disconnect them.

"Undeclared secession" is just my interpretation of the situation. They dominate territories to the point brazilian police cannot freely operate without significant risk of death. Without police, nobody can guarantee brazilian rights and enforce brazilian laws. Without rule of law, is it really brazilian territory? I think not.

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bawolff
1 day ago
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This is kind of how all gangs work. The narco gangs were just so profitable they were able to take it to the next level, but even if you look at organized crime in the usa in the 40s, its still kind of a shadow state, just on a smaller scale.
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wslh
1 day ago
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You are forgetting the vast quantity of mercenaries that exists around the world. It is possible to build an army nowadays, drug dealers, and other groups can. They will not directly confront a country. Don't forget cybersecurity where relatively few people can attain a lot of power.
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csomar
1 day ago
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Unless you have a regular 9-5 job (bonus point if it's government), most small businesses and sole traders are evading taxes (not just optimizing). Also, your ability to increase taxes is tightly linked to your ability to collect it. So by surveying transactions, you are able to increase taxes.
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deepsun
2 days ago
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To be fair Switzerland really did (does?) help to launder a lot of money for terrorism.
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jajko
2 days ago
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very strong claims, any facts to back them up?
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deepsun
1 day ago
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alexey-salmin
1 day ago
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I checked your links and the word "terrorism" isn't mentioned once. There a single mention of some Al Qaeda members having accounts but it's pretty far from "proof of financing terrorism".
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deepsun
1 day ago
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Good point, my bad, I got the impression that they serve "all kinds of crooks", so naturally thought of terror groups as well.
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bawolff
1 day ago
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I mean, they talk about arms dealers. Who exactly do you think is buying arms on the black market?
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alexey-salmin
1 day ago
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The very same link sheds some light on that question too:

"Time magazine reported that throughout 1981 and 1982, the Israelis reportedly set up Swiss bank accounts to handle the financial end of the annual multi-million dollars arms deals between Iran and Israel during the Iran–Iraq War."

The vast majority of arms dealing is state-controlled, all terrorist groups combined aren't big enough to make a dent.

And in any case, the original claim was "money laundering for terrorism" not the other way round.

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yreew
1 day ago
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How about terrorist states?
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alexey-salmin
1 day ago
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Notice how original claim was "launder a lot of money for terrorism" as if it was something well-known, widespread and repeated. However the evidence so far is "how about this" and "how about that". I would appreciate something more specific like "the investigation found X billions laundered for Hezbollah".

Regarding your question: the whole concept of "terrorist states" is made up if you ask me, and UN agrees. States wage wars and commit war crimes (or "collateral damage" if you win the war), other states retaliate. This has little to do with the asymmetric confrontation with terrorist groups which inflict violence but then evade retaliation due to their secretive and decentralized nature. States can't do that: they are centralized and not secretive, you can find them on the map.

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Henchman21
2 days ago
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They funded the Nazis with the help of the Catholic Church, did they not? Isn’t that a widely known fact? Or am I simply wrong?
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ljlolel
1 day ago
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Catholics were targeted by the Nazis so seems unlikely
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sincerely
1 day ago
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The catholic church also helped Nazis escape germany after WWII: https://en.m.wikipedia.org/wiki/Ratlines_(World_War_II)
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ljlolel
1 day ago
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That says it was some individuals of a giant organization not policy of any subset of it
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sleepybrett
1 day ago
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Don't forget tax cheats.
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pjc50
2 days ago
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> 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.

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BeFlatXIII
1 day ago
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> killer argument for midwits

It's a real shame that kind is allowed to vote. IMO, they're more destructive than the 90 IQ and below crowd.

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themafia
1 day ago
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If you pay income taxes you get a vote. Anything else is criminal and exceedingly destructive.
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chronia739
1 day ago
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> If you pay income taxes you get a vote.

Why?

I’m not allowed to vote medicine FDA approvals because I’m not a doctor.

Why are some topics “restricted” to the experts? But voting for president is not?

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themafia
1 day ago
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> I’m not allowed to vote medicine FDA approvals because I’m not a doctor.

Seriously? That's probably because the FDA does not have the power to declare war, annex territories, or sign treaties on your behalf.

> Why are some topics “restricted” to the experts?

You're still allowed to go across borders and get medication that the FDA has not approved for your own personal use. This "restriction" isn't nearly as complete as you pretend it is.

It actually only binds what professionals can do not what citizens can do.

> But voting for president is not?

It's actually /any/ representative. Does that make it clearer for you?

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SpicyLemonZest
1 day ago
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The fundamental goal of voting isn't to pick the best candidate, but to pick a consensus candidate in such a way that everyone feels their voice was or at least could have been heard. The distinction gets obscured because a lot of people describe their decision about who to vote for in terms of candidate quality, but if you scratch the surface, you'll find that most have cultural and ideological expectations in mind, and because those expectations are often incompatible we have to find a way to balance them that everyone will agree is fair.
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fuoqi
2 days ago
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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.
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efitz
2 days ago
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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.
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pjc50
2 days ago
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Everyone else telling you about civil forfeiture; I'm going to mention the original James Bond novel Goldfinger, in which part of the early plot is exactly Auric Goldfinger hiding gold in the panels of his Rolls-Royce in order to smuggle it out of the UK, which was illegal at the time. Even for gold legitimately owned.

(historical background: https://www.chards.co.uk/guides/exchange-control-act/785 )

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K0balt
1 day ago
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Actually, yes they can. No warrant, no charges, nothing. It’s basically up to the discretion of the officer present.

The “crime” is alleged to the objects in question, and since they aren’t people they don’t have rights.

Civil Asset Forfeiture. It’s clearly unconstitutional, but it’s too profitable to stop.

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benmmurphy
2 days ago
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My understanding was the police were able to do this in the US using civil forfeiture.
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bdangubic
1 day ago
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in some other country - maybe. in america - nope :)
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kiratp
2 days ago
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lol look up Civil Asset Forfeiture.
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multjoy
2 days ago
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lol, you absolutely can.
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slv77
1 day ago
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Money is a call option on the labor of its citizens. When money accumulates to people who operate against the best interests of its citizens more and more of a countries labor and future is traded for less societal value. There exists some tipping point where no societal value is created and money exists just to drain the vitality of its citizens. In other words, no matter how hard you work things only get worse.

A great article on this dynamics that is worth a read (https://www.propublica.org/article/china-cartels-xizhi-li-mo...)

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AnthonyMouse
1 day ago
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This doesn't really have anything to do with "money laundering". For example, you get the same set of problems if the money is accumulating to monopolies or industries with artificial scarcity as a result of regulatory capture even though the law doesn't require them to "launder" the money they're accumulating.

Meanwhile in the case of classical criminal enterprises, the laws against money laundering don't actually work because in practice there are ten thousand ways to exchange value other than with official currency. And then the systems to prevent "money laundering" cause more problems for honest people who get trapped up in them out of ignorance, or become victims of corrupt government officials who use financial surveillance systems for oppression, whereas professional criminal organizations just restructure their activities to bypass the rules.

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slv77
1 day ago
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All of the other items you mentioned are things that society attempts to regulate against as well. And while there are an infinite number of ways to exchange value it stays between those involved. If the drug dealer is happy to trade heroin for house painting the damage is self limiting.

Once it’s converted to money it’s everyone’s problem. I can’t avoid my mortgage interest helping supporting the dealer who is supplying the addicts who are stealing my stuff. The harder I work, the worse it gets.

The controls may not be effective but I think they are necessary. I wouldn’t want to live in most countries where money laundering dominates financial activity.

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AnthonyMouse
1 day ago
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> All of the other items you mentioned are things that society attempts to regulate against as well.

Which is exactly the point. The proceeds from both market monopolization and contract killings are the proceeds of a crime, but the proper way to address this is to impose penalties for the antitrust violation or murder rather than tracking the finances of millions of innocent people only to fail to prevent the criminals from successfully laundering the money of the un-prosecuted original crime regardless.

If you're prosecuting the original crime, you don't need laws against money laundering. If you're not prosecuting the original crime you're already screwed and need to fix that.

> If the drug dealer is happy to trade heroin for house painting the damage is self limiting.

It's quite the opposite. The drug dealer doesn't want their house painted by a heroin addict, they want money. But by definition money is fungible. Anybody can buy or sell whatever.

Now let's suppose the heroin addict has a choice between taking a job to buy heroin and stealing the copper pipes out of your house to buy heroin, and these things are equally annoying. It's hard to hold a job as an addict but it's also hard to steal things because it's dangerous and illegal, so to begin with it's six of one, half a dozen of the other. But the drug dealer wants money, not copper pipes, so the first one has an edge.

Then you pass a law against money laundering. Well, now the drug dealer wants copper pipes, or wire, or anything else that can be pawned, because he can take them to the scrap yard or pawn shop himself, claim he found them in an old shed or had them left over after a renovation etc., or even set up a fake construction company in order to do that at scale, and then get a receipt from the scrap yard legitimizing the cash he gets from selling your pipes that the addict stole to get drugs. Is this new arrangement helping you or hurting you?

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slv77
1 day ago
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If all the drug cartels in the world were limited to pawning copper scrap it would make me very happy indeed. I am also sure that it would benefit a large number of people who live in countries where cartel money dominates the economy.
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AnthonyMouse
1 day ago
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> If all the drug cartels in the world were limited to pawning copper scrap it would make me very happy indeed.

That isn't one of the alternatives. Notice that the laws against "money laundering" are the status quo and the cartels continue to get enough money to buy entire countries.

> I am also sure that it would benefit a large number of people who live in countries where cartel money dominates the economy.

I feel like I must not be explaining this well enough.

The cartels are going to end up with money, not assorted junk. When they launder money through a car wash, they're not doing it because they want to have their cars washed. They're doing it so they can claim their drug profits are car wash profits and then deposit them into a bank.

The problem with trying to prohibit "money laundering" is that nobody except for the criminals knows that it's happening. If you deposit money into a bank, the bank has no way to know what you were actually paid for, they only know what you tell them, and then criminals just lie to them.

Anyone can convert an arbitrarily large amount of money to stuff and then back to money again. You simply buy something fungible and then sell it again. That prevents anyone observing financial transactions from tracing the money because they have no way to know that the stuff Alice bought and the stuff Bob sold was the same stuff. The cartels know this which is why the laws against money laundering are completely ineffective.

And when you have a law that causes a ton of collateral damage to innocent people while being highly ineffective at producing value to the public, you should get rid of it.

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flatb
1 day ago
[-]
Cite on “ton of collateral damage”? That’s the disputed point in my mind. I just see obstacles that are like speed bumps in parking lots. I don’t find speed bumps do a ton of collateral damage. They also don’t really “work.” But they are needed, and better to keep in place at this point, maybe they could be made slightly less common at the margins. Why not treat AML regulations similarly?
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Imustaskforhelp
1 day ago
[-]
Money laundering is just illegal.

There are definitely legal ways too that screws you over in this financial world.

You say that you wouldn't want to live in a world where money laundering dominates financial activity? Well how about a world where cryptocoins/multi level marketing/ai stickers/private equity parasites/land owners (almost parasites?) /billionaires dominates the financial activity??

I guess you or many others live in such a system. I am not even talking about United states, I feel like to a lot of countries, the same thing is true.

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slv77
1 day ago
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I wouldn’t want to live in a world where the equivalent of the life’s work of its average citizen are traded causally like chips on a poker table and the only option to opt-out is to barter or starve. It would be hard to see the difference between that and feudalism.
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thecupisblue
1 day ago
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It being a crime depends on who you are.

I'm in an EU country where banks go through all the necessary checks.

As someone who worked for a bank, I got hit by the AML check on a larger transaction, delaying it for over 3 months in the end, causing me to have to spend from my companies war chest instead.

Once, I mistakenly sent a large amount of money from my own account to my own account, which I had to spend multiple emails and phonecalls explaining the mistake to the tax authority.

But, we had cases where people illegaly transferred hundreds of thousands/millions of dollars to accounts without anyone reacting.

We have a large amount of real estate that is "bought in cash". It is especially popular among politicians who declare getting a large "loan in cash from their mother" or "their parents collected money for years". When you compare the salaries to the amount of cash earned, it is obviously impossible unless they were genius investors too.

We have corruption cases in which money was transferred from government companies into personal accounts without anyone's knowledge or anyone triggering a check.

These transactions are somehow legitimate and not investigated.

The AML system as it is is not just inefficient, it is suspect to corruption, human error and vindictiveness.

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miohtama
1 day ago
[-]
One of the most common abuse is to call political opposition money launderers to freeze their assets

https://www.amnesty.org/en/latest/news/2024/09/india-fatf-ra...

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ic_fly2
1 day ago
[-]
As someone who sees the outcome of people losing everything to sophisticated scammers/ fraudsters and thieves and how little authorities are able to do, nah, the overreach is not in sight.

There are more criminals than abusive IRS agents. And usually when people tell me stories like that, there is more to it..

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vajrabum
1 day ago
[-]
C'mon, moving money is not a crime but moving money that has been illegally obtained is a crime (drugs, prostitution, illegal sports book,...) as is concealing the source or target of money sent to terrorist organizations and yes it makes certain things harder than they used to be for the rest of us.
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EVa5I7bHFq9mnYK
23 hours ago
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Only one of 1000 money laundering alerts ends in prosecution of a criminal. 999 are innocent people suffering.
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jcz_nz
1 day ago
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Most of the commenters here have zero connection to reality eh.

For the uninformed: if you cannot complete KYC or proof of wealth checks, you do not lose your money.

The institution you're trying to transact will just will not work with you. They might not for any number of other reasons: adverse media, dodgy transaction history, etc. etc. etc.

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alexey-salmin
1 day ago
[-]
Well, no? You can lose your money or access to your money which is very close by the practical means.

A friend of mine wired his money across the border following his relocation, transaction got blocked on KYC for several weeks, rollback became impossible because the source bank got sanctioned in the meanwhile. Money was forfeited with very little chance of recovery.

My personal account was frozen once due to KYC which made it impossible to pay the rent. Luckily I've had some reserves to live but paying for an appartement in cash isn't legal in my country of residence.

Saying "it's just the institution won't work for you" is extremely deceptive, on purpose or not. There are complementary laws that make sure you HAVE to deal with these institutions so when they close the door you're screwed.

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csomar
1 day ago
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> For the uninformed: if you cannot complete KYC or proof of wealth checks, you do not lose your money.

Your money indefinitely frozen without a clear process that requires lawyers, courts, money?, and time is essentially you losing your money.

That is the problem with this approach if you are a small guy. A big guy/corporation can pull other resources to fight this. You can't as it is probably your only bank account.

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gnerd00
1 day ago
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June 23, 2025 - US Federal Reserve Board announces that reputational risk will no longer be a component of examination programs in its supervision of banks
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BMc2020
2 days ago
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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.

edit: I guess I can't argue with the holy writ of wikipedia, but it's how they got Al Capone.

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LatteLazy
2 days ago
[-]
That’s tax evasion.

Money laundering is disguising the source or use of funds (making illegally sourced cash look legally sourced).

Plenty of people would (do) happily pay some tax on cash as part of avoiding difficult questions about the source.

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bluGill
2 days ago
[-]
They are often related though as if you have illegal money you also didn't pap taxes on it and in turn they can get you because they may not know where the money is from they know you spent more than your taxes indicate is possible.
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XorNot
2 days ago
[-]
Related but entirely different purposes. Paying taxes on illegally sourced money is basically the goal, because it makes it legal - it gives you a declared income and means future transactions look within your means.

Tax evasion conversely makes legally earned money somewhat illegal to the evader (though generally fine for anyone else to handle accidentally).

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bluGill
2 days ago
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Paying taxes doesn't make illegal things legal. However it hides evidence. Al Capon was got on tax evasion because exidence of that was easier to prove. Everyone knew is other crimes - but there wasn't enough evidence to convict.
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mothballed
2 days ago
[-]
Just using an unlicensed hawaladar to transmit legally earned and taxed money is money laundering (whether that is the actual statute that would be charged, idk, but it falls under the stuff AML compliance is supposed to catch). The whole system is absolutely insane.
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potato3732842
1 day ago
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>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.

Because Karen is salty her teenage son's weed dealer isn't paying taxes, basically.

And then there's all the people who see these broad invasive things as a way to get at people who can't otherwise easily be caught, Al Capone and the like.

And don't forget all the idiots who see it as a means for "their guy" in government to exert control over people they don't like such as brown people without papers, uppity truckers with horns, etc.

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throwpoaster
2 days ago
[-]
In Canada any transactions over a certain limit require the regulated counterparty to file a Suspicious Transaction Report with FINTRAC.

FINTRAC is unable to establish a pattern in those reports and prosecute. Instead, when someone is charged with an indictable offence, their name and related entities are searched for STRs. Any financial crimes are then used to create additional charges.

The net result of this, because of lack of digitization and various privacy guarantees, is that it is almost impossible to be charged with financial crimes as a primary offence in Canada.

Source: former RCMP financial crimes consultant.

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tadfisher
2 days ago
[-]
It is similar in the US, except we call it a currency transaction report [0]. Because the amount — $10,000 — is not indexed to inflation, these reports are extremely numerous, mostly automated, and are almost entirely useless — beyond conveying the ability to charge ordinary people with structuring [1].

[0]: https://en.wikipedia.org/wiki/Currency_transaction_report

[1]: https://en.wikipedia.org/wiki/Structuring

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labcomputer
19 hours ago
[-]
> beyond conveying the ability to charge ordinary people with structuring [1].

It doesn't, lol. Structuring is when you make several smaller transactions to avoid a CTR. If a CTR was created, you aren't structuring. And if you are structuring, a CTR isn't created.

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goalieca
2 days ago
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What did you think about the bc government report on money laundering?
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throwpoaster
1 day ago
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The Cullen Commission Report [0] was damning. Canada is “willfully blind” to the issue and is, at this point, knowingly funding international crime and terrorism.

0: https://cullencommission.ca/

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throawaywpg
1 day ago
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Canada's financial & political system are due for a reckoning in the next 10-20 years
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olalonde
2 days ago
[-]
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.
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sixhobbits
1 day ago
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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...

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bjornsing
2 days ago
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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.
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jcz_nz
1 day ago
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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.

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nickff
1 day ago
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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

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Dilettante_
1 day ago
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I believe he wasn't just emphasizing, he was yelling specifically.
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alexey-salmin
1 day ago
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"If you have nothing to hide you have nothing to fear."
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XorNot
2 days ago
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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.

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rangestransform
2 days ago
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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"
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olalonde
2 days 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.
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yogorenapan
1 day 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.
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XorNot
2 days 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.

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mothballed
2 days 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?
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ajross
2 days ago
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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.

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lcnPylGDnU4H9OF
2 days 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.

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ajross
1 day 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.
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lcnPylGDnU4H9OF
1 day ago
[-]
> That doesn't seem to be a point made upthread in the chain to which I was responding.

That is fair. I've noticed that these things often go unsaid. I was just offering clarification. (And I'm glad I was close enough since I don't like misrepresenting others.)

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mothballed
1 day 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.
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EVa5I7bHFq9mnYK
23 hours ago
[-]
cash the check at Walmart?
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ajross
1 day ago
[-]
Seems like that would be a good anecdote to cite and not "I read it once on some forum", no? I mean... come on. Yes, it's possible it went down like that in a way that confirms all your libertarian priors about government overreach or whatnot.

But given the sourcing, my money is on "Some rube got roped into taking 'payment' as part of a laundering scheme and was left holding the bag". Real fraud is rampant and pervasive. Libertarian fantasies are usually just that.

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mothballed
1 day ago
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There's a poster on here called 'rabite' more commonly known as 'weev' who claims he was cut off entirely from the banking system despite being nominally innocent in the USA (he also claims he hates libertarians so I presume it's not part of a libertarian conspiracy). IIRC he moved to Transnistria (which has very loose money controls and basically controlled by the mob) and then bought apartments in Ukraine via cryptocurrency. Getting your account shut down and then receiving a check is definitely a real thing, if you're someone like 'weev' idk what you would do next, but it seems like he found one of the few ways around it.

He has no valid serious convictions that I'm aware of, the only one he has was reversed because it was prosecuted in the wrong jurisdiction (and aside, had some other serious appellate arguments to consider if they hadn't chosen jurisdiction as the reason to vacate).

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mothballed
2 days 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.

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olalonde
2 days 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.
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vkou
2 days ago
[-]
What if you tried your best to do everything that a money launderer does without actually doing any money laundering?

If you and your friends are just innocently idling in a your car wearing a ski mask in the middle of summer with a shotgun and a large duffel bag, in front of a bank that was robbed in this manner four times last month, you're highly unlikely to, at minimum, beat the ride.

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olalonde
2 days ago
[-]
What I described is actually extremely mundane. Maybe you started with Bitcoin Core and later switched to a lighter SPV wallet like Electrum when the blockchain got too big. Maybe you bought a hardware wallet and moved your BTC offline. Maybe you sent some to Binance to invest in Ethereum at some point. There are countless reasons to shuffle BTC around - and countless reasons why you couldn't prove your full transaction history dating back to 2012 - none of which involve any crimes.
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vkou
2 days ago
[-]
Has anyone ever been convicted for doing a few on-exchange trades and conversions? You should be keeping your receipts for tax purposes, it's on you to provide them up to a statue of limitations.

Or is this just a theoretical concern for anyone who isn't laundering Bitcoin stolen through ransomware or from exchanges?

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olalonde
2 days ago
[-]
You missed the point. The point was that there are many ordinary and mundane reasons why you wouldn't be able to prove the full chain of custody for the BTC you acquired in 2012. It would be a real practical concern if you are a law-abiding person. If you're a criminal, it's not much of a concern since laundering money is relatively easy.
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XorNot
1 day ago
[-]
Yes but the claim is those are hard to track details, and then what's described is a timeline of consistent interaction with the money which you're now planning to claim you have no knowledge of.

And some of those interactions are taxable events - e.g. if you are exchanging out of cryptocurrency denominations, then by US tax law as a US citizen that was a taxable event.

[1] https://www.blockpit.io/tax-guides/crypto-tax-usa

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fragmede
1 day ago
[-]
Chris Borden went to prison for Bitcoin related financial malfeasance.

https://youtu.be/cuIRvn89988

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vkou
1 day ago
[-]
Was he actively involved in money laundering, theft, fraud, or tax evasion?

Did the jury have reasonable grounds for voting to convict?

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fragmede
1 day ago
[-]
He sold Bitcoin without doing KYC and went to prison for operating an exchange. He sold Bitcoin to someone he knew was somehow involved with cocaine. I don't know how morally wrong what he did was, but legally it sent him to prison.
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vkou
4 hours ago
[-]
This seems to be... WAI. And not just a guy getting punished for doing a few perfectly legal trades. It's hard to do all of the above by accident.
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mothballed
2 days ago
[-]
Sounds like that criteria would match about 50% of people with child support or alimony orders.
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multjoy
2 days 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.

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olalonde
2 days 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?
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Imustaskforhelp
1 day ago
[-]
I genuinely don't understand why mixing plus swapping into monero doesn't make sense.

Simply swap into monero and then send it to anybody else.. Maybe lets say you have 100$ in btc, you convert it to 100$ in monero and just spend 10$ 10 times in a span of a week and I am sure that nobody can keep track of it.

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XorNot
1 day 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.

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pests
2 days ago
[-]
Forget on-chain, how do you prove you had control of the wallet IRL off-chain at the time of the trasnactions?
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EVa5I7bHFq9mnYK
23 hours ago
[-]
Suppose you deposited btc into an exchange, traded it back and forth for a while, and then withdrew. The withdrawn coins come from a communal exchange wallet, so the chain of evidence on the blockchain is lost.
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Imustaskforhelp
1 day ago
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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??)
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ajross
2 days 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.
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olalonde
2 days ago
[-]
See my other replies for why that doesn't work.
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ajross
2 days ago
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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.

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nroets
2 days 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.

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tim333
2 days 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.
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gruez
2 days 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.

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tim333
2 days ago
[-]
It wasn't in cash. It was in equities to a large extent. But they still ask for the source. Even if it's from selling shares they want to know where the shares came from. At least sort of. The whole thing is a box ticking exercise for compliance to cover their own arses.

In fact it's worse than that in some ways as I had an investment advisor who bought and sold stuff and I don't know if I have records of what exactly.

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gruez
2 days ago
[-]
>It wasn't in cash. It was in equities to a large extent. But they still ask for the source.

And saying "gift from dead parents" wasn't enough to placate them? They wanted receipts? I get asked about source of funds all the time, but I don't think I've ever been asked to provide proof.

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tim333
1 day ago
[-]
How it works, I'm in the UK, is the government passed a law saying lawyers are responsible for knowing the source of fund and can be fined if they don't do it. It isn't really spelled out how you are supposed to prove the source. In the end I found some paperwork from a more recent source of funds and used that. It's not very organised - they just want some bit of paper in their files saying source was x in case the government has a go at them.

The proof I did use - a more recent inheritance, I could probably use multiple times as there doesn't seem any check on you doing that. The system is not very organized.

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olalonde
1 day ago
[-]
I've had to provide proof for relatively small amounts. AML regulations are intentionally vague, so different reporting entities tend to interpret them in their own ways.
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mothballed
2 days ago
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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.
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gruez
2 days 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.

You can make the same argument about literally any crime deterrence measure though? For instance having drug search dogs at airports probably makes it harder for the indie drug trafficker to get drugs through, but probably isn't going to do much against organized crime networks with insiders working at the airports and/or bribed officials.

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mothballed
2 days ago
[-]
Ignoring the obvious problems with drug dogs, which I have a very personal extremely degrading and humiliating tale about involving a fraudulent search warrant that turned up nothing, a key difference here is the thing being monitored here is primae facie legal and involving forcing private parties to be the drug dog handler on behalf of the government on private property in a private transaction. In such case there is a presumption of innocence and government should need a warrant before requiring client to satisfy AML or KYC documentation.

I can't just walk up to your doorstep, make your sister take my drug dog, and force her to walk it around your bedroom and then punish her if she doesn't do it.

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thwarted
2 days ago
[-]
> In such case there is a presumption of innocence and government should need a warrant before requiring client to satisfy AML or KYC documentation.

But since you don't know when the government is going to ask for it, you need to collect it from everyone all the time, otherwise you won't have it to satisfy the request. "What do you mean you don't know who your customers are?" is not a question you want to have to answer in the face of a warrant.

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kelnos
1 day ago
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> The better question is why are you were sitting on cash for 40 years.

That's not a better question; that's just ignoring reality. Who cares why they were sitting on cash for 40 years? People should be able to do whatever they want with their money, even if it's not the most financially advantageous thing.

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bee_rider
2 days 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.
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jacquesm
2 days 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.

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mothballed
2 days 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.
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jacquesm
2 days ago
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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.

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mothballed
2 days ago
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50K cash is under the real value of the $10k CTR cutoff when congress passed the bank secrecy act (around 85k in current USD), so you can see how this slippery slope of the erosion of the 'up to a certain amount' has only gotten worse.
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jacquesm
2 days ago
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The amount was just an example. Any kind of transaction using large amounts of cash is going to trigger flags all over the system and you can be expected to be quizzed on the origin of the funds. The only time I've seen someone that legitimately came by a suitcase full of cash it was when a waitress left her daughter said suitcase, which contained decades of tip money that she never spent. It was insanely heavy and it caused quite a few problems when she tried to do a deposit with her local bank.
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potato3732842
2 days ago
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The fact that society has normalized a silly burden upon the law abiding doesn't make it right or good or justifiable.
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jacquesm
2 days ago
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Well, if you are law abiding then you really should abide by the law and this particular thing has the force of law in many countries. Not doing it is by definition not being law abiding!

I've been in business for 42 years now. In all that time I have never seen more than 1000 Euros cash in any kind of business transaction, and I have never been offered to be paid in cash. It's always bank transfers on invoice. I've never bought a vehicle cash, I can't even begin to understand why or how someone would want to buy real estate cash. Besides the obvious risks of being robbed the whole idea of keeping that much money or more around in physical form feels strange to me.

Even in the 1980s when I would buy a vehicle it would be through a bank transfer. The only people that sometimes insist they want to do some transaction in cash are usually marketplace sellers that I suspect are professional sellers that are keeping their income out of sight of the taxman and restaurants where the POS machine 'just broke' that are doing the same. And when I say I do not have any cash and it's ok they can send me an invoice or give me their bank account number suddenly their machine starts working again. Ditto with cab drivers.

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potato3732842
2 days ago
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The fact that you think some small timers dodging paltry amounts of taxes is somehow justification is laughable. You can trot out any kind of criminal you want and it will not change my answer. People deserve the right to be able to transact, for any size transaction, without being forced under threat of violence to leave a paper trail. Now, many times they will leave a paper trail out of connivence, but that does not change the fact that they ought to have the option not to without threat of violence.
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ethanwillis
1 day ago
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Somehow you completely missed the point that it's not even about being law abiding. It's about the redefinition of what "law abiding" is without any consideration at all about whether that redefinition is "right, good, or justifiable."

Just because there isn't more than 1000 Euros cash in people's hands is simply an indictment of the Euro as a currency and the culture around it.

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kelnos
1 day ago
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I have this idea in my head that I would rather 100 criminals get away with "all kinds of crazy inheritances" than even 1 regular person get screwed over by these sorts of financial controls.
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jacquesm
2 days ago
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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.
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stouset
2 days ago
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Nobody is questioning the source of funds for the balance in a bank account that’s been there for forty years.

OP could literally just put it in the bank, sit on it for a year, and there’d be zero questions. They are mostly only interested in knowing that you didn’t get this money from a different loan that they aren’t aware of (like a personal loan, or one you got two days ago that hasn’t yet been reported).

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haskellshill
1 day ago
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"Sorry, you didn't invest your money optimally, so we confiscated it all"

Okay...

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bluGill
2 days ago
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I know a number of people who don't trust banks and so have their cash in a mattris or similer things. Most are dead - they remembered banks failing in the 1930s and said never again.
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stouset
1 day ago
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> 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.

This makes zero sense.

I have bought a house, and they want bank records going back like a few months or maybe a year at most. If that money has been sitting in an account for that long, nobody gives a shit where it originally came from. Like, if you had $100,000 for a down payment, they’re not checking the last twenty years of your paystubs to make sure the math checks out.

The only thing they really are interested in is knowing this money didn’t just appear out of nowhere because you got a personal loan from someone or because you got a conventional loan from a lender that hasn’t reported it to a credit reporting agency yet, and which would affect the decision to underwrite your loan.

If you’ve just been holding on to large sums of literal cash dollar bills for the last 40 years, that is such a comically ridiculous financial decision I don’t even know what to tell you.

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moduspol
1 day ago
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> I have bought a house, and they want bank records going back like a few months or maybe a year at most.

I had to juggle with this a little bit because I had sold some crypto for the down payment, but it's crypto that I had been keeping in a hardware wallet for years. As a result, I could certainly generate records showing how long I'd had it, but they'd be my own records based on the blockchain--not from any bank.

They ended up accepting transaction records from Coinbase, though even those mostly just showed some Bitcoin being received into the account and then being sold before transferred to the bank. But I guess that was enough for them.

In any case: I did ask about it and they told me it wasn't actually for KYC laws or money laundering. The reason they want a paper trail is to make sure you didn't actually just borrow the money from someone else. And that makes sense, since they're super picky about you not opening any new lines of credit while trying to close the mortgage.

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cortesoft
2 days ago
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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.

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jerf
2 days ago
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You shouldn't really need to prove where you got them from; what the system cares about is that you're not laundering it, and it's obvious that nobody launders money on a multi-decade timescale. All you should need to satisfy them is just to show that you've been in possession of it for so long the bank can't even show where it came from anymore. That is itself proof that it's not laundering. You may have good success just pushing back a bit with this point.
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bob1029
2 days ago
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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.
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mothballed
2 days ago
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I bought a cheap property (vacant land with no utilities) then built the house literally $20 or $1000 at a time buying blocks/wood/pipes etc as I was building. All the money was legally earned and taxed, but the point is even the title company was sidestepped in this case beyond an amount pretty trivial in comparison to the value of the property and very little of it would have had to of went through the traditional financial system in order to make it possible.
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pkaodev
2 days ago
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"just be rich bro"
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FireBeyond
2 days ago
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> but you try buying a house and they want proof of the origin of the funds

Fannie Mae's assessment criteria for origin of funds has a time limitation. If that money has been in an account you control, for forty years, "origin of funds" is not a question. I want to say the cut off is something like 36 months, but it may be even less.

Helpfully, all this information is public: https://selling-guide.fanniemae.com/sel/b3-4.3/verification-...

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tim333
2 days ago
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I'm in the UK. You can kind of get around the regulations but they are still a pain.
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gnopgnip
2 days ago
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The lender only needs you to show proof of the origin of funds if they were transferred in the last 60 days
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jacquesm
2 days ago
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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'.
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jcz_nz
1 day ago
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Your problem isn't AML, it's chain of title. Different things. And yes, you have to show they aren't stolen. Get an indemnity bond if possible.
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spydum
2 days ago
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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.
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alexey-salmin
1 day ago
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Wait until the wise people explain to you that generational wealth is inherently evil and this money should be forfeited anyway.
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e40
2 days ago
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Well, sometimes they really gum up the works. I have developers in Ukraine and several times in the last year a wire transfer to them to pay them their monthly salary was held up for more than a month in transit. It was stuck at a bank in NYC and no amount of me pushing on my rep at Wells Fargo could get it unstuck OR returned. Last one ended up taking almost 2 months to get there! And, they told us it was going to be returned, so we paid the person via other means (BTC). Very frustrating.
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nekitamo
1 day ago
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I had the exact same experience paying developers in Serbia. It was pretty eye opening to how unreliable something fundamentally important like wire transfers can be, and made me appreciate crypto in a new light.
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phkahler
2 days ago
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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?
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throw101010
2 days ago
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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).

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adiabatichottub
2 days ago
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I worked in the legal cannabis industry in California before the pandemic. The business I worked for had to jump through a lot of hoops, including dividing itself into multiple LLCs, in order to deal with the disparity between state and federal laws, and the business policies of banks and even some of our equipment vendors (I remember specifically that McMaster-Carr would not do business with you if you were a cannabis company). Most cannabis businesses were forced to work in cash, which made a lot of financial transactions difficult, but also made it easier to do business with those still in the "traditional market". In the end, the stricter regulations had the effect of greater concentration of ownership, but questionable efficacy in stopping illegal exports.
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mothballed
2 days ago
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It's my understanding that cannabis is still federally illegal virtually without exception, therefore changing AML law might not do much for your industry since it was always an illegal conspiracy to knowingly aid and abet the commission of a felony.
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adiabatichottub
2 days ago
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It hasn't been my industry for years, and the legality of intrastate cannabis is still being fought in the courts, see the Canna Provisions case which has been ongoing since 2023 and is currently on the Supreme Court docket.
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mothballed
2 days ago
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I'd like to see intrastate commerce of plants not be interstate commerce, but until the supreme court decides otherwise most of the legal finding in Wickard v Filburn are still intact that it is interstate commerce to even grow a crop (in this case weed) on your own property and consume it even if you don't sell or transfer it.

Finding intrastate regulation of cannabis as outside of interstate commerce would basically implode most the government at this point, which I'm doubtful they would allow. The Civil Rights Act, ADA, FDA, EPA, OSHA and a myriad of other stuff all squarely rely on the same precedent that makes federal intrastate marijuana regulation legal.

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adiabatichottub
2 days ago
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Thanks for the reference to Wickard v Filburn, definitely an interesting read. On it's face it looks like a questionable decision and politically motivated, but I see your point about how it helped to create the current regulatory environment, for better or worse.
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Notch123
2 days ago
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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.
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Stagnant
2 days ago
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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.
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PaulHoule
2 days ago
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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.

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paulgerhardt
2 days ago
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> Most crypto coins (not Monero) are pseudonymous.

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.

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akimbostrawman
1 day ago
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It's not Russian roulette. It's a guess you still don't know if you are right. There is still plausible deniability.

Hopefully FMCP will get implement soon to mitigate these issues.

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whatsupdog
2 days ago
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> tell exchanges not to redeem cash

Try telling it to Chinese, Russian, Indian exchanges.

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PaulHoule
1 day ago
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Also... I dunno about India (I think of it as a dysfunctional democracy) but China and Russia are notorious authoritarian economies that people want to take money out of and that's a big part of the global money laundering problem. You might have a problem that your money is in Bitcoin but turn it into Rubles or Yuan and now you have another problem.
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PaulHoule
2 days ago
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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.
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pavlov
2 days ago
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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.

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salynchnew
2 days ago
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"This isn't a problem yet" is the argument, but... if you do enough money laundering for long enough and grow the share of crypto as a share of the economy....
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kalaksi
2 days ago
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> Crypto advocates love this “drop in the bucket” excuse.

Or so you think.

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multjoy
2 days ago
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It is absolutely not a drop in the bucket.

USDT is the money launderer’s dream. If they can get it into crypto (and there are a number of firms who are barely disguised criminal finance portals), the world is very much their oyster.

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Notch123
2 days ago
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No clue, but likely
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miohtama
1 day ago
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Here is a good book on the topic of pre-crime society. Not just AML, but censorship, surveillance industry (think Palantir) and so on:

https://www.amazon.com/Compliance-Industrial-Complex-Operati...

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Simon_O_Rourke
1 day ago
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Not very is the answer. When I worked in finance in the UK a few years back, the credit control team had a few ex-commercial bankers. Those guys had wild stories, the best ones were usually how much money they'd find being added to children's accounts for "birthday gift money". Usually with certain groups who have traditionally large families, the children would all have regular four and five figure cash lodgements.
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peterfirefly
1 day ago
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Mormons.
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Simon_O_Rourke
1 hour ago
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Close, travellers mostly.
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w10-1
1 day ago
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It's nice to observe in detail this system's behavior, but asking how _well_ it works might be asking an unanswerable question.

This system is the result of compromise among the biggest financial and governance systems. It's basically a melange of the possible and desirable (for many reasons), in service of multiple goals.

It's not its own thing. It's not owned, no one controls it, it's not subject to market forces, it's pretty much required for those who agree and avoided by others, and its benefits are almost exclusively hidden outside the justice and security services.

Even the simplest measures of accuracy seem inapt. False positives are clearly wrong (but so numerous now they are ignored and thus harmless?), but it's not clear that false negatives aren't intentional as a matter of investigational and prosecutorial discretion.

To me it's like asking the EPA to prove health benefits: since it's largely impossible, you end up with a reason to disable the regulatory system as ineffective.

Targeting these controls while the Genius act loads up trillions in stablecoin for a run on treasuries is fomenting a financial crisis.

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OutOfHere
2 days ago
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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.

One thing that consumers can do right now is to petition their favorite online vendors to start accepting cryptocurrency, at least a stablecoin that you can swap to.

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fuoqi
2 days ago
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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.

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TrackerFF
1 day ago
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I've worked in a regulatory agency, albeit for a brief time. I worked with analyzing data, usually in cooperation with law enforcement, as part of some case or operation.

I don't know what to tell you - but my experience was that it is the most careless and obvious criminals that get caught. Some even being very rich, rich enough to afford solid defense teams, and rich enough to stay in court for a long time. These were also the very same type of people that would cry to the media about unfair treatment, witch hunts, etc.

But, as for why these agencies go after the money: It is much easier to prove money laundering, rather than the actual crime itself. Many of cases I worked on focused on companies that illegally harvested regulated natural resources, used unreported employees, and did not report their sales / trades. Off the market, under the table.

We co-operated with other regulatory agencies around the world, and I can tell you - in the more corrupt parts of the world, the effects can be devastating on the community: No honest companies can compete against the ones that operate illegally, dire working conditions, less tax funding to the local community. What happens is that these actors eventually become local monopolies, and start operate semi-legally, but that's what the community is stuck with. If you report those companies, you end up losing your own job - should the company go down. And since these players don't care about regulations anyway, whatever natural resources they harvest, can risk being wiped out.

And to re-iterate: It is easier to follow the money. Usually in these cases, where there's smoke, there's fire.

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OutOfHere
1 day ago
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It sounds like an utterly lazy government that cannot go after actual crime. I would never vote for such a government.

Meanwhile, the same corrupt government gives a free pass to its buddies devastating the planet with digging for oil and gas, destroying sea life with major leaks, and stops renewables from succeeding. See the current administration. The government permanently destroys farmland by using PFAS mulch as fertilizer, making the soil poison.

The difference between this country and others is only that corruption is legalized here.

Thr problem with people at such regulatory agencies is they drink their own koolaid a bit much.

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alphazard
2 days ago
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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.

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mothballed
2 days ago
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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 (and most of all on homeless / people with no address to pass KYC) with pretty vague data on whether there is much payback.
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rdm_blackhole
1 day ago
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I agree with you as well. I am sick and tired of being put in position where governments are turning the tables and ask people to justify their innocence without any recourse as if everyone is de facto a criminal.
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marenkay
1 day ago
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Systems against money laundering only work against average Joe/Jane. Really wealthy people just make a deal with a bank of their choice and launder money legally.
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giantg2
2 days ago
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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.
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gruez
2 days ago
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>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?

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throw101010
2 days ago
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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.

[1] https://www.theguardian.com/business/2012/dec/11/hsbc-fine-p...

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butlike
2 days ago
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not well, evidently.
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kazinator
2 days ago
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It's mainly about tax evation, under the pretense of fighting crime.

Also, people who can't easily move large amounts of money are weaker in organizing against a corrupt government.

It partners well with disarming the populace.

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oldjim798
1 day ago
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Isn't tax evasion a crime?

Also on what basis do you make the second assertion. I struggle to think of historical examples that validate that idea

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kazinator
22 hours ago
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Not always. There are ways to move your money around the globe that are not criminal. Governments don't like it when people get up and take their wealth elsewhere due to the shit conditions they allowed to come about.
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BrenBarn
1 day ago
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> First, disentangling individual accountability within a vast corporate structure is difficult, particularly in determining whether any executives had the requisite knowledge and intent to be held liable.

We just need lower standards of proof. Something like:

1) you had some level of responsibility within the organization (no specific knowledge of wrongdoing required) 2) some kind of violation occurred within the organization 3) your wealth increased over some time period in which such violations were later found to have occurred

If those things happened, you are liable. People who profit should be on the hook for everything a company does, not in proportion to their specific knowledge of or involvement in any particular illegal activities, but in proportion to their nominal or "global" level of responsibility and the magnitude of their profit.

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bawolff
1 day ago
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New blackmail scheme:

Get some sort of job in the company, do something illegal, threaten your manager with going to the feds, since at this point they are criminally liable for your act.

More generally, i get where you are coming from - its frustrating when the ceos are like, i just work here, totally wasn't me, excuse me while i cash my bonus cheque. But i still think morally its important that we punish people for things they actually did (or failed to do), not just by mere association.

Although perhaps something like an enhanced version of how supervisory responsibility in war crimes works would make sense - basically the way that works is if you are aware or ought to have been aware that someone under you is commiting a crime, and you don't investigate/take measures to punish/take measures to stop them, you are on the hook for the crime.

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alexey-salmin
1 day ago
[-]
> Get some sort of job in the company, do something illegal, threaten your manager with going to the feds, since at this point they are criminally liable for your act.

Not if the manager goes to the feds himself.

> But i still think morally its important that we punish people for things they actually did (or failed to do), not just by mere association.

Well imagine you're a CEO and you not only didn't setup protections against wrongdoing but rather created a system of incentives that makes it beneficial to close your eyes to things.

In the Dieselgate the engineer went to jail, in Skyguide the air traffic controller got stabbed, the executives walk free.

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BrenBarn
1 day ago
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> Get some sort of job in the company, do something illegal, threaten your manager with going to the feds, since at this point they are criminally liable for your act.

I guess I left out a key word in my conclusion there: "You are presumptively liable." The point is to shift the burden of proof. If it can be proven that someone else willfully did the violation (especially in order to screw you), that might be a defense. But the point is that the default assumption should be that greater responsibility/authority equals greater liability, and the burden should be on those with that responsibility/authority to prove that they are not liable.

> But i still think morally its important that we punish people for things they actually did (or failed to do), not just by mere association.

But that's it exactly. What they failed to do was ensure that bad things didn't happen while they were in charge.

> Although perhaps something like an enhanced version of how supervisory responsibility in war crimes works would make sense - basically the way that works is if you are aware or ought to have been aware that someone under you is commiting a crime, and you don't investigate/take measures to punish/take measures to stop them, you are on the hook for the crime.

Yes, something like that. The key phrase being "or ought to have been".

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dgs_sgd
1 day ago
[-]
I want to agree with the standard “it happened under your watch and it doesn’t matter if it happened without your knowledge”, but wouldn’t it get really messy in practice?

Let’s say one particular org at a company engaged in the activity in question, generating increased profits for the whole company. Taking this approach to the extreme, literally every shareholder could be liable because they benefited from those profits.

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BrenBarn
1 day ago
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I could be persuaded it's worth having a lower standard of liability for "sibling" orgs within a company, so that if, e.g., the billing department does something shady then the HR department doesn't necessarily bear liability for that (but execs above both still would).

But I'm kind of okay with shareholders being liable to a certain extent, as long as their liability is proportional to their benefit. Someone who had a few shares in their 401k and made a couple thousand dollars, okay, no big deal. But the prospect of having gains clawed back could make shareholders more vigilant in ensuring the company is fully aboveboard. It doesn't make sense for me to someone to rake in, say, $50 million in unrealized gains and then say "oh, I had no idea, oh well, I'll just enjoy my $50 million". It's sort of like how if a drug kingpin gets arrested, it may well be that assets of their family members are seized as ill-gotten gains.

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pbrum
15 hours ago
[-]
I've always wondered about those grimy palm reading or fortune telling shops you'll find across major streets in Manhattan or New York. How are they making rent, even during the retail apocalypse?
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impostervt
1 day ago
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"major Western banks frequently pay large fines for AML violations, yet bank executives rarely face criminal convictions"

Seems like changing this would fix a lot of the problems.

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chaz6
2 days ago
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In the UK one of the best ways to launder money is to open a barber shop. Most people pay cash and unless they are going to watch every shop to see how many customers go through there's simply no way to police it effectively. I have heard that the shop owner will get a commission on any laundered money.
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aeve890
2 days ago
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Same in Chile. A while ago our version of FBI closed 12000 barber shops along the country under an investigation on money laundering. It's so obvious it's ridiculous. 20 barber shops in the same street (we don't have a barber district btw), many of them working 24/7.
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jcz_nz
1 day ago
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This is if you want to launder 50k. If you want to launder 500k, not so much, and if you have 50M, not at all.
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jaccola
1 day ago
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It's horizontally scalable
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agos
1 day ago
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to a point. How many barbershops can you open in a single city without raising suspicion? In my city eyebrows started raising at the fourth candy shop
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EVa5I7bHFq9mnYK
23 hours ago
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I thought about this and decided if I needed to launder some money, I would paint some pictures and sell them to myself on ebay. Nowadays, that theme got easier with NFTs.
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v5v3
1 day ago
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Money laundering at the high level works as unless you are on the USA watchlist, it's the USA and it's allies that are the vehicle which facilitates it.

Offshore vehicles? Most are British islands.

Onshore vehicles? Delaware and similar

Unless the west puts you on a list, it's professionals will happily help anyone in the world.

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bob1029
2 days ago
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> 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:

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.

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eep_social
2 days ago
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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.

[1] https://www.fincen.gov/boi

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privatelypublic
2 days ago
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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)
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DennisP
2 days ago
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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.
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bob1029
2 days ago
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Not all entities count. There are 23 types that are conveniently exempt from this regulation.

https://www.fincen.gov/boi-faqs#C_2

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fires10
2 days ago
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I generally like having these systems in place, because I find when dealing with certain vendors and businesses that following these helps me weed out many scammers when dealing with large amounts of money. Every transfer required a discussion with the teller asking questions about transfers and if the transaction is suspicious. Yes, criminals will find a way, but I find it provides me an easier screening to ensure some businesses are more likely legit.
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lokar
1 day ago
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At least in the US, there is a lot of overlap between anti-money-laundering and tax enforcement.

I support it on that basis alone

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thelastgallon
1 day ago
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Crypto replaces all other money laundering schemes. This is the only use case for crypto. Easiest to hold anywhere, move across borders, don't even need freeports or anything physical.

Crypto is also the currency of corruption. Easiest way to pay/accept bribes by creating $myshitcoin.

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afsafsasaf
1 day ago
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Not really.

Most cryptocurrencies are open ledgers, quite easy to trace and track the movement of funds.

Pretty much every exchange for on/off ramping funds must comply with KYC and anti money laundering regulations. They use tools such as Chainanalysis (which analyses such addresses) and also reports back to governments.

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K0balt
1 day ago
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It works well enough so that little people have a hard time dodging taxes. It creates some friction for criminals, but only in ludicrous concentrations of wealth like pablo Escobar managed.

Other than that it is largely ineffectual, it’s just not that hard to work around, for a percentage of course.

Its main function is to protect existing power structures from usurpment by potential up and comers. Oligarchs have no significant issues if they hire the right people, but small organizations can face cash crisis and limited maneuvering room.

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charlieyu1
1 day ago
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It is just an excuse for more survillence
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Hnrobert42
1 day ago
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Usually I am a big fan of HN comments. But this thread... So much cynical speculation. So little factual information.

Go ahead and downvote. I've got karma to burn.

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shkkmo
1 day ago
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The actual article is really interesting and informative.

I've yet to see a single comment here that referrences any of the facts or ideas presented in the article. It is entirely composed of people responding to the headline.

I found the section on MERS particularly interesting. Minimal training on how to asses inconsistent assements between countries, complete failure to mention massive laundering scandals at banks in the asses countries... And this is the primary method of international oversight to see if these systems work and are implemented consistently.

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PeterStuer
1 day ago
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No, that was not money laundering, I was just realy smart/lucky on the stock market when someone else was realy dumb.
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stivatron
2 days ago
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I wholeheartedly hope it fails and continues to fail forever.
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SangLucci
2 days ago
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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.
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resters
2 days ago
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It works as intended, it allows the US to pay bribes around the world while also allowing law enforcement to prevent criminal enterprises from competing with the regulated financial services industry.
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cluckindan
2 days ago
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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.

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RankingMember
2 days ago
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The proceeds of crime propping up some aspect of our economy seems like a bad reason to let it continue unabated.
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cluckindan
2 days ago
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You’re absolutely right, but the people holding millions or billions in illiquid assets are going to disagree.

Lucrum ante valores.

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fugazithehaxoar
2 days ago
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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.
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Telemakhos
2 days ago
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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.
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wazoox
2 days ago
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And that would be excellent news, because it would be a "great equalizer". And a more egalitarian world would be much happier.
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shrubby
2 days ago
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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.

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immibis
1 day ago
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> Left vs. right doesn't work to solve it, but the true dichotomy of people vs. billionaires with their sycophants.

Also known as... left vs. right. Left: people. Right: billionaires with their sycophants. (Democrats are not left)

It continuously boggles my mind how the American political education is so bad. You're not the first to say something like this.

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dec0dedab0de
2 days ago
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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.
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jollyllama
2 days ago
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It depends on the degree to which the continued flow of ill-gotten gains into the system is priced into current valuations.
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