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Comment by isubkhankulov | Hacker News Reader

In all of these cases, the bitcoin vendors did not register on FinCEN's website. Registering is simple but by doing so the person/company is required to check ID's of their customers and make sure there is no money laundering involved. Including filing reports with the gov't for any suspicious activity and large cash transactions amongst other things.

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How would one launder money with bitcoin?

What would that look like?

Buy bitcoin using cash at local bitcoin atm. Put bitcoin in a mixer. Cash out bitcoin and declare the income.

The last step doesn't work. I mean, you might as well declare the cash as income. You'd be pressed to explain where either came from.

More useful would be to buy Bitcoin with cash, mix, and then invest assets somewhere anonymously. But it's a hard problem, because wherever assets appear in meatspace, there's typically the need to explain their origin. That's where many people get caught. Such as Tomáš Jiříkovský of Sheep Marketplace infamy.

The problem actually seems worse on the Bitcoin side to new than in meat space. Someone might have a Saas business that receives a lot of payments in BTC. Interestingly there isn't all that much traffic. You know like in mani pedi salons that make surprising amounts of money despite never being really packed. It's harder to notice that with a Saas business especially if the logs aren't kept for long. However, it would be strange to see that most of the customers BTC addresses only ever received money from a source other than an exchange and all just used it to pay for the Saas. It would be easier to launder money by just allowing "customers" to pay by mailinh cash to a PO box.

OK, so you just run your SaaS business as Nomen Nescio, using anonymously leased servers, managing them through VPNs and Tor, and so on. Then Bitcoin go somewhere.

The money still isn't laundered though which was the premise of the money laundering operation.

Oh, I get it. You were proposing the SaaS business as the front. I was thinking of it as the income source.

Well, it could be an all-too-typical small startup, losing money to build market share. You could pose as the major investor, living in some war zone, and funding through Bitcoin. But I doubt that it would pass an audit.

Actually laundering money through Bitcoin is nontrivial. You can replace networks of agents, moving cash around, with anonymous Bitcoin wallets. But you may still need to explain where the assets came from.

You can create credit cards on the fly and charge them with bitcoin. Another possible action is to use the money for advertising, product development, etc... and build a somewhat legitimate business. The business might not be quite profitable but that's the price you pay for laundering?

Yes. But spending lots of money in meatspace attracts attention.

Make yourself a Bitcoin "lottery" and win it.

That's good :)

But maybe too obvious. Anonymous lottery, right? Suspicious.

There's a lot of things about the Bitcoin ecosystem that are intrinsically suspicious starting at the very beginning where the creator is unknown.

Buy bitcoin, put in mixer, use it to pay for accounts from your "legitimate" SaaS product.

Through virtual credit card numbers you charged from crypto.

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