New Anti Anti-Money Laundering Services for Crooks | Hacker News Reader

New Anti Anti-Money Laundering Services for Crooks

krebsonsecurity.com

93 pointspicture55 comments

As I understand it, the international "gold standard" for money laundering is still real estate. The reporting requirements the US pushed onto international banking specifically except real property transactions. Thus, property is the place embezzled money is parked.

Vancouver, BC seems to be the favored place to park Chinese money. Of course New York remains popular. American "midwest" farmland is another big sink.

I would welcome any updates to this situation; my information might be old.

I have no idea to what extent they actually get used for money laundering, but churches are still the only form of nonprofit in the US that automatically gets exempted from having to file a tax return. I'm sure the whole season five plot of The Wire where this was how drug lords were funneling money to the local politicians was not entirely fictional, given how everything else in the plot was based on the writers' real life experiences.

Of course, even on The Wire, this was small time compared to the money laundered through urban reclamation and seafront development projects.

Could this explain some architectural designs in the world that don't make too much sense like the skyscrapers next to a cargo cult of urban sprawl next to massive golf courses in Dubai?

Dubai has no income taxes. So this is irrelevant. Companies are not even required to hold records for tax purposes.

They are still required to hold records if they want any local bank to work with them.

But criminals do not need local banks.

They do need banks.

Actually saw this in depth linked article the other day about how Real Estate inadvertently become used for money laundering (Hint: Lobbying)

https://www.theatlantic.com/magazine/archive/2019/03/how-kle...

Well, there first has to be a process to get your money clean enough to buy real estate. You can't buy a house with bitcoins or a suitcase full of cash without raising a lot of suspicions.

about thirty percent of home purchases in the greater Bay Area were cash or equivalent in 2018, iir

Cash as opposed to mortgage not actual dollar bills right

You would be surprised.

I'm open to the opportunity, do you have the goods? Surprise us.

I would imagine this is not physical cash but funds in a bank account. You would need to launder the money first to get it into the financial system before making the real estate purchase.

That’s what Canadian banking is for, just have a lawyer set up a local account for a foreign entity, transfer money through a Canadian bank and just about everybody will take it next. Or so I hear… https://projects.thestar.com/panama-papers/canada-is-the-wor...

Who knows if that’ll change https://www.mccarthy.ca/en/insights/blogs/techlex/canadian-a... or more broadly, https://www.iisd.org/itn/en/2021/06/24/the-end-of-tax-incent...

Doesn’t “cash” usually just mean no financing contingency?

I talked to someone who made such a purchase - it’s not actual cash, it’s just showing sufficient assets to pay cash, then financing when you close.

You can buy a house in bitcoin, they don't even have to be that expensive.

Source: I just bought a home in Los Angeles. I expected I'd have to compete against all-cash offers; I did not think I would have to be competing for a home against all-bitcoin offers. Many brokerages from my anecdotal experience will gladly accept Bitcoin. (I have no stake in crypto in any capacity, just thought it's worth sharing, since it surprised me)

https://themillergroup-bcb.com/buy-with-bitcoin https://www.dirt.com/gallery/moguls/power-players/crypto-bil...

As far as I know, none of the major escrow agencies accept Bitcoin directly. The preferred method of deposit is still either a garden variety wire transfer or cashier’s check. That doesn’t mean that Bitcoin is impossible, but a boutique escrow agent such as one of these linked will have to be proposed by the buyer, and the seller will have to accept the risk of a relatively unknown agent being involved.

That makes complete sense. I will however say that the 3 homes I personally encountered where this happened (think $1-$2m range, not estates worth 10s of millions), the _selling_ agents were proudly proclaiming they accept Bitcoin, with one even saying their sellers preferred Bitcoin to all-cash.

Gee, that doesn't sound suspicious at all.

> As far as I know, none of the major escrow agencies accept Bitcoin directly.

In Washington State every attorney is automatically a licensed escrow agent. I believe this is the case in many/most states. [*] They certainly aren't the cheapest escrow agents, but there are enough attorneys that you simply need to work your way down the list until you find one that handles bitcoin. There are a lot of fish in this ocean, and they like getting paid.

This advice applies to pretty much any "$BIG_ESCROW_COMPANY won't do XYZ for irrational reasons" problem.

[*] in fact, technically it's the other way around: WA escrow agents are licensed as "limited practice attorneys" who are only allowed to practice one very narrowly-defined type of law: escrow arbitration.

https://www.wsba.org/for-legal-professionals/join-the-legal-...

In Australia we allow briefcases of cash for property purchases.

Lawyers, Accountants, Real Estate Agents are all exempt from having to report anything suspicious involving property.

Since year 2006 the govt keeps promising (but failing to actually implement) AML legislation therefore continue allowing these 3 gatekeeper professions to facilitate laundering of untold illegal $billions into property which helped us continue to break annual house price sales records for 20+ years and achieve eye watering house prices (currently over 10x the average annual gross wage to purchase an average house and yet prices still rising rapidly)

[2021] https://mlexmarketinsight.com/news-hub/editors-picks/area-of...

[2020] https://www.michaelwest.com.au/money-laundering-bill-finally...

[2016] https://youtu.be/otWm4yh7Rh4

[2015] http://www.fatf-gafi.org/media/fatf/documents/reports/mer4/M...

I'm not sure of current statistics, but IIRC around year 2015 foreign property purchases in the state of Victoria were approaching 20% of all sales.

Of course not all that was using laundered money, but it would have been nice to remove the market distortion of 22-year olds rocking up late to an auction in their Merc and bidding $100k or more over the current bid to easi!y win (waaay more than needed to actually win)

I've always assumed that when illicit things are well-known enough that I've read about them in the mainstream press that probably means criminals have moved on to something else long ago.

It's a bit like "top secret" military tech. If you're reading about it that means it's old news that no one can be bothered to keep a secret any more.

Maybe, but if it's not broke, don't fix it. There seems to be very little political will to do much about money laundering.

They do require your average Joe to report the source of the funds upon bank deposit, declare cash in excess of $10k at airports and bank transfers in excess of that are the object of increased scrutinity, all in the name of "preventing money laundering". Big time crooks are using shell companies, cryptocurrencies, AirBnb and other means to launder money.

>Vancouver, BC seems to be the favored place to park Chinese money.

Not familiar enough to say, but as I hazily understand it people with Chinese money often want to get it out from under party control.

In the most common understanding money laundering is used to make 'dirty' illegal money into 'clean' legal money.

Are there situations where laundering money from any particular country is more of a gray area than this common understanding? The Chinese example above springs to my mind as being potentially one, but that is because I don't know enough to know why my hypothetical is wrong.

That is money laundering, for the Chinese Communist party of course. Of course, you can consider it legitimate. But then a small island in the middle of no-where will consider drug money "legitimate" after all there is no harm in selling white powder, to their eyes.

There is no easy answer to this. If you are escaping China financial authoritarianism, somebody else might consider France taxes to be authoritarian given that they are too high. Is is legitimate that they evade taxes, and launder them to Dubai[1]?

[1]: Not hinting that Dubai is a popular spot for the French.

It seems like this conflates money laundering and tax avoidance, I thought money laundering didn't happen because people wanted to avoid taxes on the money, but rather they wanted people to not know the money was gotten illegally.

As I understand it money laundering, when it works, ends up making previously acquired illegal and hidden money available for taxation - at which point of course people start trying to avoid paying those taxes.

This isn’t an anti anti-money laundering. It’s providing the same information as an anti-money laundering service, the only difference is that its access isn’t limited to large exchanges and banks. I, for one, am happy to see this kind of technology available for the masses. If I were legally accepting bitcoin as payment for my small business or whatever I’d like to be able to check that the bitcoins weren’t involved in criminal activity before accepting them rather than dealing with trouble when trying to deposit them to an exchange.

Potential twist: it’s operated by the FBI/Secret Service/IRS/NSA. Would be a great way to compile a list of “addresses of interest.”

Not far-fetched at all. The FBI has set up at least one carder forum to catch entire networks of credit card thieves, and in the past they set up a whole fake bank to entice money laundering operations from drug cartels: https://www.npr.org/sections/money/2019/02/13/694549634/epis...

Also the recent ANOM sting [1].

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

What about the recently launched privacy focused photo app called Stingle - https://arstechnica.com/gadgets/2021/08/foss-mobile-app-stin...

If that isn’t an FBI sting I don’t know what is lol

So, how does it work? Can I submit any address for checking? If so, I know some addresses I don’t like.

Or do they require you to sign a message with your wallet? If so, you’ve gotta be really dumb to show your hand like that. But I could still see users trying for funzies.

How much does it cost to check? (If anything?)

There is definitely noise and false positives as with any honeypot, but there is probably enough signal among the noise to correlate with other datasets and contribute to crime detection models.

> The problem is, cashing out in Monero raises eyebrows on exchanges and mail by cash method is sometimes risky as well.

Yeah, Monero doesn't raise eyebrows. This adds another point to FBI/The SS/IRS/NSA.

Exchanges only track fund sources because they can see it. Banks don't even do that, so this is a separate higher standard for crypto exchanges that accept surveillance coins. And when exchanges can't see it because the funds came from Monero or Tornado.cash they just revert to bank standards.

Even if your funds are 100% clean, AML flagging can lead to weeks of funds being frozen. People also regularly get refused bank accounts not because they were convicted of any crime, but because these AML risk assessment systems mark them as suspicious. To convince the bank you're not suspicious, you have to give their employees extremely intimate information about your personal business, and even that doesn't guarantee approval.

The asymmetries this creates in possession of private financial information, between the general population, and those who work in the banking sector, undoubtedly leads to the latter attaining a major unfair market advantage in finding investment opportunities, which will contribute to the growth of incomes of those in the financial sector outpacing the growth of income in the economy at large.

And we do see those working in the financial sector receiving a significant pay premium:

https://www.brookings.edu/research/make-elites-compete-why-t...

And seeing rapid growth in compensation between 1979 and 2005:

https://www.epi.org/publication/ib331-ceo-pay-top-1-percent/

>>Those in the financial sector were associated with nearly a fourth (23 percent) of the expansion of the income shares of both the top 1.0 and top 0.1 percent.

Beyond the inequality AML gatekeeping fosters, the global AML compliance industry costs trillions, and by at least one account, does almost nothing to stop crime:

https://www.effectiveaml.org/aml-compliance-oxymoron/

Which is obvious from common sense, considering cartels are not only successfully laundering billions of dollars in illicit drug sales every, but actually distributing billions of dollars worth of highly restricted Schedule I drugs to every city in North America, which is a much more difficult feat than laundering the proceeds of those sales.

The special interests that have emerged to provide these enormously illiberal and costly, and dubiously useful AML compliance services, like Elliptic mentioned in the article, will continue pushing for more mass-surveillance of financial transactions and criminalization of privacy.

If you did a crime and made money in Bitcoin, deposited at an exchange, traded it for Monero, cashed out, sent it to a different exchange, traded back for BTC, cashed out, and went to a different exchange to turn it to dollars, how would anyone trace that? Someone would need to link internal data from the second and third exchanges in order to even know you ever owned Monero.

Every time I have tried to "cash out" there has been a significant restriction on the amount of the transaction, or the exchange rate has not been favorable. Isn't quantity a problem, given that many crypto cyber-crimes involve a lot of money?

I think my limit is $50K/day which seems like plenty. Maybe shady accounts have lower limits.

your transfers would simply be flagged by exchanges and then then any relevant info possibly sent to authorities

You could look for regularity of transactions and build a pattern. It would be like a Tor timing attack. You also can look and probably get intel that the BTC is coming from large Monero transactions and get AML heat on you.

The problem is in laundering this money, i.e entering it into the legal system such that the IRS or whatever approves. You can't just deposit huge sums of unexplained money.

You can't just deposit large amounts of Monero to an exchange without a REALLY good reason. Monero is a red flag these days.

Money laundering laws are a fiction perpetrated by authoritarian leaning leaders. It equates to "monetary transactions I don't like for idealogical reasons". In the US for example, there is no monetary transaction that occurs at all that cannot be selectively prosecuted as money laundering. Breaking a $20 dollar bill into smaller bills to use as a tip in a restaurant is a plain violation of 18 U.S.C. § 1956 .

I do not know why you are so against persecuting money-laundering, considering it's definition according to Wikipedia:

> Money laundering is the process of changing large amounts of money obtained from crimes, such as drug trafficking, into origination from a legitimate source. [...] It is a key operation of the underground economy. In US law it is the practice of engaging in financial transactions to conceal the identity, source, or destination of illegally gained money.

In practice presumes guilt without any evidence to justify suspicion, requiring everyone to report the purpose of every transaction, deputizing all financial services to enforce it, and prohibiting anyone from holding any significant asset, such as cash, in their own custody.

The centralization of power is, in my opinion, far worse than the crime it is alleged to prevent.

How is it impacting you personally?

Didn't see this until now. It has impacted me personally, I've had business accounts closed twice without any reasonable explanation, which is a huge crisis when you suddenly lose your ability to receive payments from customers and pay your employees and suppliers. The AML regime is the only reasonable explanation I can think of for a bank to close out a fee paying customer in good standing. I'm certainly not alone in having this happen to me, there's a lot of other people I've talked to who have been swept up in this.

Intent plays a significant part of the law. Nobody is going to convict you of money laundering solely for breaking a $20 bill.

"We"re sorry" <-- Why does Google get to decide whether i can access this site or not?!

Isn't "Anti Anti-Money Laundering" just "Money Laundering"? Or am I missing something in English (not a native speaker)?

It’s about money laundering which is resistant to anti-money laundering tactics.

Sounds like a money laundering criminal that stays in touch with times. You wouldn't call a hitman that drops a fragmentation grenade on his victims soaking in the sun, using a drone, a anti anti-hitman, do you?

Reply on news.ycombinator.com