Australian Watchdog Frets Over BitCoin, MMOs' Money Laundering Potential

angry tapir writes "Australia's anti-money laundering watchdog AUSTRAC believes that money laundering using digital currencies such as Bitcoin and virtual worlds (such as MMOs) are possible 'emerging threats'. The organisation's latest 'typologies' report earmarked virtual worlds and Bitcoin as two areas that the agency would be monitoring, although at this stage no-one seems sure to what extent they are being used (and some of the issues with Bitcoin, such as the fluctuating exchange rate and limited options for transferring value to real-world currencies through conversion to non-digital currencies or using it to pay for goods or services, mean that it's unlikely it's being used for money laundering on a significant scale)."

Re:Best money laundering vehicle

[girlintraining]

The best money laundering vehicle remains the USD denominated in good old $100 greenbacks.

Not really, no. The biggest problem with drug cartels is what to do with all those damn physical dollars. They take up a lot of space and complicate logistics considerably, even fatally. So they use bank accounts, credit cards, etc., to purchase supplies and cut checks to their employees, just like any other business. But to do that, their financial records have to look just like any other business too, or the money will be seized.

Money laundering is not a simple process like people believe it is, especially when the sums become non-trivial. It's actually very complicated, since every financial transaction is recorded electronically. Nobody shows up with a fist full of hundred dollar bills to buy a house, or a car -- those that do immediately get added to a dozen different watchlists. You pay with a guaranteed check, a credit card, or other financial instrument. Nowhere is the old adage "When in Rome..." more true than in money laundering. Your records have to look the same as any other legitimate business. Even the smallest discrepancy, the most benign mistake in your record keeping, and a forensic accountant could flag you -- and then the government comes and throws you in a black van and you're never seen from again.

Most drug dealers are busted on money laundering charges, not drugs. And for good reason -- it's a lot easier to hide drugs than money.

Re:Easy target

[CanHasDIY]

Standard Chartered Bank (SCB) has agreed to pay the New York State Department of Financial Services (DFS) $340 million to settle charges that the British bank concealed over $250 billion in transactions with Iranian clients and deliberately lied to New York banking regulators.
But SCB is not an isolated case. In 2009, Lloyds Bank and Credit Suisse were fined $350 million and $536 million, respectively, for allegedly removing or altering information to conceal prohibited transactions with Iranian clients and customers from other sanctioned countries.
In 2010, ABN Amro and Barclays were docked $500 million and $298 million, respectively, for allegedly committing similar crimes. Then, this June, ING Bank paid the largest ever fine -- $619 million -- against a bank for allegedly moving billions illegally through the U.S. financial system on behalf of Iranian and Cuban clients...

While five banks have entered into deferred prosecution agreements with the DOJ and agreed to pay fines in the hundreds of millions of dollars, no bank official has been criminally prosecuted and punished.

http://www.cnn.com/2012/08/16/opinion/banks-too-big-to-prosecute/index.html [cnn.com]

Re:Easy target

[Reverand Dave]

If you give a man a gun he can rob a bank, if you give a man a bank, he can rob the world.

"Threat"

[J'raxis]

Yeah, it's a "threat" all right. It's a threat to their control over people. But then again, privacy and the freedom it brings is always a threat to governments, isn't it?