Hacker News Reader

Comment by caruana | Hacker News Reader

They are selling content through different payment services, this is not money laundering, stop being an alarmist.

"the concealment of the origins of illegally obtained money, typically by means of transfers involving foreign banks or legitimate businesses"

Illegally obtained money being they key term!

> literally what the feds took down Backpage for recently.

Also, incorrect. Backpage was taken down because they facilitated human trafficking https://www.google.com/amp/s/amp.usatoday.com/amp/501214002

View on HN

Your mistake is in thinking that the money laundering is achieved by, say, generating a credit card charge for FOO when the item sold was BAR. Not so - the money laundering is in opening many merchant accounts purporting to be for selling FOO, generating profit sanitized as "clean," moving those profits between banks, and essentially deceiving payment processors to generate a profit.

This was, in fact, one of the actual mechanisms brought to bear against Backpage. Certainly the indictment was motivated by, you know, underage sex trafficking, but the enforcement mechanism used to achieve a verdict was mostly money laundering. You can read the indictment yourself: https://www.justice.gov/file/1050276/download. How many counts of trafficking vs money laundering do you see?

And finally, no, they are not "selling different content through other processors." These processors' entire business model is to create "legitimate," totally unrelated transactions to the credit card authorities, to take a cut, and pass back the funds to the merchant. I believe Backpage was instructing people trying to purchase ad inventory to go to a portal to purchase dog food for a while.

My point is the issue is not as black and white as you are making it out to be (hence, don't be an alarmist). All things are subject to interpretation and your position attempts to definitively categorize this activity as fraudulent behavior based on a 1000 word essay by a developer.

Cascade billing was literally named by the Backpage prosecution as money laundering.

What if they just default to the last method? Is it then no longer 'cascade billing'?

Or are you saying the psuedo-crypto currency is money laundering?

I work on money laundering cases. What the poster admitted to doing, particularly in the comments section, reads like money laundering. I have used emails more vague than this write-up against defendants in money laundering cases. The underlying crime would be bank fraud, wire fraud, or mail fraud, or all three, depending on how a particular merchant account was opened, how transactions were processed, and who the parties to a contract are (if a financial institution, then bank fraud, and so on).

You created your account 3 hours ago, with a creative name and then annonymously post you work on money laundering cases ... As if that is supposed to add credit or show some sort of background. You are anonymous, don't try and take some high ground to reinforce an invalid argument.

> reinforce an invalid argument.

It's not about some logical argument. That's for a judge to decide.

Fair criticism regarding anonymity. You can disregard my comments if that is an issue, but I would prefer to engage on this topic on equal footing and put aside any claimed background, if that works for you. Can you explain what it is that you think is invalid regarding money laundering with fraud as the underlying crime? Or, if another point I made was invalid, what that was?

It's more complex than that. Sometimes people create throwaway accounts so they can share more information than they'd otherwise be able to, and really are experts or insiders on a topic. It's not always easy to tell such cases apart from fabricators or trolls, but it's important to try, and to give people the benefit of the doubt. I generally go by how substantive the comments are or seem (admittedly not an infallible test).

> essentially deceiving payment processors to generate a profit.

That's not an illegal act, unless you can cite relevant statutes being broken. It's a contract breach.

Your whole analogy to Backpage breaks down without the initial illegal action that produces the revenue stream and sets in motion the need to launder the money.

You are being silly - breach of contract to deceive payment processors IS wire fraud and bank fraud, which are specific named federal crimes which cover exactly this use case. If you like, here's an excerpt from the Backpage indictment:

"the People now allege that Defendants conspired to orchestrate a bank fraud by misrepresenting to credit payment processors that they were not processing transactions from Backpage, and this misrepresentation would trigger a release of funds from banks. The overt acts alleged clarify that Defendants created multiple classified websites, and when applying for (at least one) merchant account, Defendant Ferrer omitted any reference to Backpage, despite intending to process Backpage transactions through the account. The People allege that credit payment processors, along with American Express, would not have knowingly processed the payments for Backpage and the banks would not have released funds absent Defendants’ trickery."

I encourage you to look through the sections concerning money laundering in the California indictment: https://www.oag.ca.gov/system/files/attachments/press_releas...

I think you should carefully read your quote - it includes the word "Backpage" four times, as in the illegal source of funds that created the laundry opportunity. Breach of contract with payment processors is certainly NOT wire fraud by itself, that's an absurd statement.

You're weirdly stuck on this "breach of contract superseding federal crimes" thing but uh, I don't know what to tell you. This scheme is clearly wire fraud. Defrauding a payment processor out of money, over wires, is wire fraud. It's also bank fraud when you lie to your bank about what your merchant account is for, which is another prerequisite for these schemes usually.

He is correct. This is how I build my cases.

I would just be aware that any interaction with the financial system can quickly become criminal. Whether it does depends on a whole range of factors, but the option is always there. (Incidentally, the same goes for insurance companies. Can go criminal at any time.)

No, this is not what Backpage was prosecuted for. If you look at the indictment in your link, the money laundering counts for Backpage were:

Counts 53-62, Concealment Money Laundering "conduct ... a financial transaction which in fact involved the proceeds of ... unlawful activity knowing that the transaction was designed ... to conceal and disguise the nature ... of the specified unlawful activity"

Counts 63-68, International Promotional Money Laundering "transported ... funds .. with the intent to promote the carrying on of ... unlawful activity"

Counts 69-93, Transactional Money Laundering "engage in a monetary transaction in criminally derived property"

The point is that all of these require an underlying unlawful activity. Prostitution is illegal, and therefore it is also criminal to handle money in a way that hides that it's related to prostitution. But selling porn is legal, so the chain payments would not violate the same laws.

I wouldn't say that money needs to be "illegally obtained" to be classified as laundered. There are tax benefits to "laundering" legally obtained money, for example.

Although at this point we're just arguing semantics.

i.e., what Paul Manafort is currently standing trial for

Oversimplified version of most statutes:

It has to be transferred AND (1)illegally obtained, or (2)intended for an illegal purpose, or (3)disguised and international but not in any way illegal.

Reply on news.ycombinator.com