Combating Money Laundering, Terrorist Financing, and Counterfeiting Act

And doesn't the war on drugs create violent criminals?

Doesn't an illegal market in drugs allow terrorists to profit from said market?

It seems to me Joe Schmo takes the brunt of these laws. All the while a bunch of cheap suits get to justify their jobs.

This is pedantry at its worst.

Someone who launders money for a hitman or human trafficker is enabling the hitman/trafficker's business.

If you help bury a body, you're guilty of something. If you help clean a violent criminal's money, you're guilty of something.

The launderer's guilt is only "made up" in-so-far as murder or human trafficking are "made up".

(Re: Drugs, sure. The correct solution here is to legalize drugs.)

What the parent is trying to argue is that the entire idea of money laundering should be forgotten and there should be no negative public perception of money laundering. What I'm arguing is sure, maybe people shouldn't go to jail for money laundering by itself, but there are zero legitimate reasons to launder money. The very fact that someone has gone to any length to hide the source of their income means they've committed a crime. Not the crime of money laundering, but the crime of whatever they did to earn the money. Because if they didn't commit a crime to earn it, they wouldn't go through the trouble of hiding it. Money laundering is probable cause for further investigation.

His argument sounds to me like people who argue that since the Constitution doesn't say the government can collect taxes, that means taxation is theft and we shouldn't pay them. It's the libertarian ideal that money is private property, humans are inherently good (unless they've won an election), and laws don't apply to you if you just believe it hard enough. Unfortunately that's not the way the world works. In reality, where there is smoke there is fire, and where there is money laundering there is someone concealing a crime.

“Crime” is not a thing that exists aside from laws defining them; all crimes defined in law are equally “made up” (and, for the same reason, equally “real crimes”.)

This particular money laundering debate is very unlike the encryption debate. Actually, you could argue that money laundering is a very specific type of encryption, you're just encrypting the source of your income by adding noise instead of encrypting digital data.

Let's see just some of the reasons you'd use encryption:

So bad people can't find your passwords

So bad people can't get into your bank account

So bad people can't see what websites you've been visiting

So bad people can't see your pictures

So bad people can't steal your intellectual property

And why would you need this type of privacy?

So criminals and bad people can't injure you using your private information

So corrupt governments can't see what information you've been reading/writing/sharing

So you can have some assurance that your email/social media/etc accounts are fully controlled by you, and likewise for those you're interacting with

Now let's see some of the reasons you'd launder money:

So the government can't see where you got the money.

That's it.

And why would you need this type of privacy?

So the government doesn't know you committed a crime to get that money.

That's it.

People don't launder money because they're ashamed to admit they work at Microsoft. People don't launder money to hide their employer from criminals who want to hurt them. People don't launder money to hide it from other citizens. People don't launder money from legitimate businesses. People launder money so the government doesn't know that they got the money illegally. That's it.

There's a lot of legitimate reasons to encrypt various things, and no one has ever argued that encryption is only ever used for legal and good purposes. The argument is that while encryption is sometimes used for crimes, the good things it enables outweigh the bad things. But there's only one reason to launder money, and that's because you earned it illegally.

I mean, by your own argument fleeing the scene of a crime isn't hurting anyone. I mean, I didn't run anyone over while I was fleeing. Sure, I may have shot that guy, but the simple act of running away after I shot him didn't hurt anyone. Because apparently it doesn't matter that the act of running away from the scene is directly linked to the crime I just committed, and it doesn't matter that the only way you can prove I shot him is by catching me running away and then comparing my gun to the bullet inside the victim. Fleeing the scene of a crime is just a made up law. There's no victim.

Go after the real crimes! Like the one I just committed that you found out about because you saw me running away with a gun in my hand...

So... If someone does (perhaps completely legal) contract work, accepts payment in BTC and makes their purchases with BTC, how are you going to know what they owe in taxes?

So you have to consider how rare it is to deposit $9,500 week after week after week, versus depositing between $500, and $12,500 in a reasonable spectrum of values over the weeks. And even if you have a business that pays exactly $9,500 a week, then when someone asks you "How is it that you always have $9,500 to deposit each week in cash." and you give an explanation of your local ice cream van which buys $5,000 in ice cream each week and generally sells out, which at the prices on your van comes to $9,500. Then that investigator says "Ah, ok, thank you very much." and leaves you alone because you haven't done anything wrong. They might pass along that information to the IRS which would expect to see a K-1 or a Schedule C for an owner operator business that was doing $9,500 a week in gross revenue. And if for some reason they had gone that far and found that the person dutifully reported their income and paid such taxes that were due. Then again, there would be nothing to say or do.

If you look at the text of the bill you will see that the definitions are pretty clear:

   “(B) knowing that the transaction—

   “(i) conceals or disguises, or is intended to conceal or disguise, the
     nature, source, location, ownership, or control of the proceeds of some form of unlawful activity; or

   “(ii) avoids, or is intended to avoid, a transaction reporting requirement under State or Federal law,”;
       and

   (2) in paragraph (2)(B), by striking “knowing that” and all that follows through “Federal law,” 
       and inserting the following:

   “(B) knowing that—

   “(i) the monetary instrument or funds involved in the transportation, transmission, or transfer 
     represent the proceeds of some form of unlawful activity; and

   “(ii) the transportation, transmission, or transfer—

   “(I) conceals or disguises, or is intended to conceal or disguise, the nature, source, location, 
    ownership, or control of the proceeds of some form of unlawful activity; or

   “(II) avoids, or is intended to avoid, a transaction reporting requirement under State or Federal law,”.

 Basically you can use cash, bitcoin, and gift cards all you want for *legitimate* purposes, it is only when you use them to conceal or transact illegal activities do they become 'money laundering'.

You could say the same thing if you'd live in Sweden and with "normal" money: "Taking out money from the ATM should be automatic red flag, since no one uses fiat except criminals to buy drugs."

In the US, there is also this thing called Suspicious Activity Reports. They are triggered with any transaction >$3,000 (typically cash-equivalents; but that can be wide reaching). There are some requirements where banks must report but there is also the discretionary part. This is where banks can be held liable for not reporting suspicious activity. Because of that, it is safe to assume most banks report every transaction above $3,000 of any type.

But let's face it, most bank databases probably have something like this going on; GRANT SELECT ON Transactions TO USGOVT