
The peculiarities of the US financial system make it ideal for money laundering - chmaynard
https://qz.com/1230037/the-peculiarities-of-us-financial-system-make-it-ideal-for-money-laundering/
======
roywiggins
The Manafort/Gates indictments, I think, demonstrate how easy it is to launder
money into the US and how unlikely it is to get caught. These guys were pretty
blatant about it and nothing happened to them, for years, laundering millions
of dollars into the US. It's pretty clear that they would have gotten away
with it if a precise sequence of events in the last couple of years hadn't
happened.

~~~
valuearb
Money laundering is a vague term used to justify intrusive government
overreach. If you have $16,000 in cash and deposit $9,000 in your bank account
one day and $7,000 the next, you are a criminal guilty of structuring.

~~~
ncallaway
That's completely false. That situation you just described is absolutely not
structuring.

Here's the fact pattern that _would_ make you a criminal guilty of
structuring:

"You have $16,000 in cash. Knowing that there are reporting events that
trigger some additional scrutiny of transactions about $10,000 you
deliberately break the deposit into two separate transactions with the purpose
of avoiding that scrutiny. As such, you deposit $9,000 in your bank account
one day and $7,000 the next".

That's structuring. It requires the intent of avoiding the scrutiny. If you
broke your deposits into two transactions for any other reason, it is not
against the law.

The definition of structuring is 31 USC § 5324.

> No person shall, __for the purpose of evading the reporting requirements of
> __section 5313(a) or 5325 or any regulation prescribed under any such
> section, the reporting or recordkeeping requirements imposed by any order
> issued under section 5326, or the recordkeeping requirements imposed by any
> regulation prescribed under section 21 of the Federal Deposit Insurance Act
> or section 123 of Public Law 91–508

[https://www.law.cornell.edu/uscode/text/31/5324](https://www.law.cornell.edu/uscode/text/31/5324)

~~~
valuearb
Good luck proving it was not intended to avoid reporting when the DA decides
to make an example of you.

~~~
ncallaway
Criminal charges require the DA to prove your intent, not the other way
around.

If you want to cry about the lack of due process in civil forfeiture, I will
be with you 100%.

Your complaint was about _criminal_ structuring, which puts a significant
burden of proof on the prosecutor and not on the defendant

~~~
valuearb
The Kwon case demonstrates that the government doesn’t have to prove squat.
They’ll keep your money and bleed you in court till you fold.

~~~
jmcmichael
According to an article in the Washington Post[1], the Kwon case resulted in
an outcry that caused Congress to change its guidelines, adding the additional
requirement that the IRS must show the money in question are the profits of
criminal activity. That Kwon hasn't yet received his money back appears to be
a bureaucratic problem, not statutory.

Even given all of this, the Kwon case has more to do with the tax court than
it does the Federal criminal courts.

I do believe that money laundering laws as currently written are often abused,
however I don't think the Kwon case demonstrates what you assert.

[1] [https://www.washingtonpost.com/local/the-irs-
seized-59000-fr...](https://www.washingtonpost.com/local/the-irs-
seized-59000-from-a-gas-station-owner-they-still-refuse-to-give-it-
back/2017/10/16/57828500-b296-11e7-be94-fabb0f1e9ffb_story.html)

------
olivermarks
The City of London's strange history is a precursor to the convenient Wall
Street offshoring and laundering arrangements

'The City of London’s strange history' Maurice Glasman, Labour peer and
academic
[https://www.ft.com/content/7c8f24fa-3aa5-11e4-bd08-00144feab...](https://www.ft.com/content/7c8f24fa-3aa5-11e4-bd08-00144feabdc0)

------
orf
> The international community usually looks to the US to be a leader in
> criminal justice, transparency, and the rule of law.

They do?

~~~
IAmEveryone
In some areas, the US was indeed the driving force for changes that I believe
anyone would describe as positive.

One example is the legality of bribing foreign officials: these bribes were
outlawed with the Foreign Corrupt Practices Act in _1977_. In my home country
of Germany, foreign bribes were not just legal, but actually tax-deductible
until the late 1990s.

------
elvirs
not sure if starting to require a physical human being as a beneficiary for a
company will do much. in post Soviet countries its a requirement and most of
the shell companies are registered to some homeless guy or a shepherd who was
told sign these papers here is $100. criminal enterprises wont have difficulty
finding some poor guy to sign the papers for anything

------
huy-nguyen
This piece is gold:

> One report uncovered an Afghan company that was contracted to supply our
> troops but was secretly owned by the Taliban.

------
pessimizer
They make it ideal for the wealthy to launder money, rather. It's just a
symptom of US general lack of regulation of corporations, other than
regulation meant to cripple small corporations that are threatening larger
corporations. Just a product of total regulatory capture, as developed in the
US from the mid-1890s, secured at the end of the 1910s, and lasted until FDR
fixed the economy in the 1930s. The resurgence in the late 1970s which was
secured by the late 90s is still operating at peak now, but if you judge by
the last time, hopefully this will come to an end soon.

------
CryptoPunk
The principle behind money laundering laws is exactly like the one behind
legislation like FOSTA.

It makes people legally responsible for others using the services they provide
in connection with a crime.

It legally mandates that third party intermediaries act as deputies for
regulatory agencies, and disallow private use of the services they provide.

Laws like this effectively criminalize privacy in entire categories of human
activity, in the name of preempting crime.

It's an absolutely terrible way to try to manage risk, and concentrates power
in the hands of governing institutions to extremely dangerous proportions.

------
mindslight
"Money laundering" is an oxymoron - the entire essence of money is that _it is
fungible_. When you tie the value of some dollars to their supposed history,
what you are left with is subjective points that vary based on the political
connections required to redeem them. At that point, why not just stop
pretending that an individual can have means independent of their standing
with the bureaucracy?

Like every new regulation, the outrage driving this will be stoked using the
egregious examples of powerful criminals, but the actual effects will only
ever be felt by the little guy.

~~~
Terr_
You honestly don't believe anybody should ever _care_ if the gold-nugget they
are being handed came from a person just murdered outside their store?

Like many abstractions, that concept of a fungible, anonymous, history-less,
and wholly judgement-free "value" is just a _useful fantasy._

What bothers me about your post is that it seems you think the fantasy is the
true original state of the world... and that the flawed reality is "new" and
artificially created by a sinister cabal.

~~~
mindslight
The fundamental problem here is like your question - conflating two completely
separate concepts. A shopkeeper, being a person, should care if someone just
murdered someone else outside of their shop. A shopkeeper that has just
completed a sale, and then found out the customer is a murdering thief, should
feel no compunction about considering the cash in the drawer theirs. They
should of course help bring the murderer to justice.

Abstractions are only useful if we can rely on them. Under the regime of
separate ambient titles (which the concept of money laundering is intertwined
with), you can never be sure _anything_ that you have is actually _yours_! So
this creates a whole lot of _ambiguity_. As I alluded to, this ambiguity
erodes the rule of law because it can't not lead to selective enforcement
based around the gut feelings of whomever decides if a claim to reverse has
merit.

And yes, lack of an ambient title most certainly is the base state of the
world - it's modern communications technology that has enabled us to even
fathom tracking the history of everything. But you're the one strawmanning
this "sinister cabal". I would describe it as power tending to coalesce, and
emergently promulgating a paradigm that relies on (and thus further
necessitates) said power.

~~~
erikpukinskis
I think what you’re trying to say is that ALL property can be traced back to
theft. So either sale cleans all of it or sale cleans none of it. We can’t
have it both ways.

------
FabHK
My impression (and I'm not an accountant or lawyer) is that the US make it
very hard for their own citizens (and anyone else) to evade US taxes, but are
otherwise happy to host other people's dirty money.

------
drawkbox
Luxury real-estate was looked into in 2016 and up to 30% of deals they looked
into were suspicious as money laundering conduits [1]. Who knows how much this
inflates real estate values or diminishes needed supply.

With Citizen's United vs FEC it is now a massive target for money laundering
as well [2]. Tons of foreign money is involved with it and can get in easily
with Citizens United [3]. Our politics is going to get much more crazy with
not only the foreign money involved but the dark money being cleaned.

Russian oligarchs or any group under sanctions also have ways to get money
laundered besides the old school ways of casinos, black market products, etc
[4].

> _According to James Henry, a former chief economist at McKinsey & Company
> who consulted on the Panama Papers, some $1.3 trillion in illicit capital
> has poured out of Russia since the 1990s._ [4]

> _In 1998, Russia defaulted on $40 billion in debt, causing the ruble to
> plummet and Russian banks to close. The ensuing financial panic sent the
> country’s oligarchs and mobsters scrambling to find a safe place to put
> their money._ [4]

> _Among the new tenants was Eduard Nektalov, a diamond dealer from
> Uzbekistan. Nektalov, who was being investigated by a Treasury Department
> task force for mob-connected money laundering, bought a condo on the
> seventy-ninth floor, directly below Trump’s future campaign manager,
> Kellyanne Conway. A month later he sold his unit for a $500,000 profit. The
> following year, after rumors circulated that Nektalov was cooperating with
> federal investigators, he was shot down on Sixth Avenue._ [4]

> _In 2013, police burst into Unit 63A of Trump Tower and rounded up 29
> suspects in a $100 million money-laundering scheme_ [4].

[1] [https://cnbc.com/2017/08/24/a-third-of-luxe-real-estate-
deal...](https://cnbc.com/2017/08/24/a-third-of-luxe-real-estate-deals-
involve-suspicious-activity.html)

[2]
[https://www.theatlantic.com/politics/archive/2013/12/theres-...](https://www.theatlantic.com/politics/archive/2013/12/theres-
no-way-to-follow-the-money/282394/)

[3] [https://theintercept.com/2016/08/03/citizens-united-
foreign-...](https://theintercept.com/2016/08/03/citizens-united-foreign-
money-us-elections/)

[4] [https://newrepublic.com/article/143586/trumps-russian-
laundr...](https://newrepublic.com/article/143586/trumps-russian-laundromat-
trump-tower-luxury-high-rises-dirty-money-international-crime-syndicate)

~~~
Consultant32452
Art also.

[https://www.nytimes.com/2013/05/13/arts/design/art-proves-
at...](https://www.nytimes.com/2013/05/13/arts/design/art-proves-attractive-
refuge-for-money-launderers.html)

------
Bizarro
I don't want the government having its greedy mitts on every financial
transaction under the sun.

~~~
RhodesianHunter
It's not black and white. There has to be some middle ground between "big
brother sees all" and "the proceeds of illegal activities and rampant
corruption flow freely into the pockets of wrongdoers".

~~~
AnthonyMouse
That middle ground should be for the government to seize the proceeds of
illegal activities after proving the illegal activities themselves in a court
beyond a reasonable doubt.

The government shouldn't be allowed to take shortcuts.

~~~
CryptoPunk
And what you described is basically the principle of due process, which the
creation of money laundering as a category of crime totally undermines in
spirit.

------
valuearb
The lifeblood of criminal enterprises is revenues that are primarily driven by
prohibition. I think I see a better solution.

~~~
eli
Legalize extortion rackets and kickbacks?

~~~
valuearb
I clearly said primarily. An end to Prohibition leaves organized crime with a
tiny fraction of its current revenues. And frees law enforcement to give
extortion and kickbacks (along with actual crimes with actual victims) lots
more attention.

~~~
pjc50
Not all this money is drug money; a lot of the international money is the
result of corruption or theft from the state.

~~~
valuearb
That’s clearly not a problem for the US justice system. I’d kind of like it
focused on the all of the crimes with US victims that are currently too low
priority to investigate, including millions of untested rape kits.

