Australian Watchdog Frets Over BitCoin, MMOs' Money Laundering Potential 134
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)."
Easy target (Score:2)
What we need is a WOW Lobby (Score:2)
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Nah, for taxation, "WOODROW WILSON!!!1!11!"
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Yes, it seems the closer one looks, the more there is to find with dirty deeds in the banking industry. And it's not just what has been done, but the scale of it.
"In 2010, Wachovia, now owned by Wells Fargo, settled out of court for the largest violation of the Bank Secrecy Act in US history. They paid a fine of $160m for laundering a whopping $378.4bn from Mexican currency exchange houses between 2004 and 2007. Much of this cash is thought to have been drug money, moved without proper documentation from C
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" They paid a fine of $160m for laundering a whopping $378.4bn from Mexican currency exchange houses between 2004 and 2007. Much of this cash is thought to have been drug money, moved without proper documentation from Casa's de Cambio in Mexico to US banks.
And given the size of that fine, they're still doing it. Cost of doing business. No more than getting nailed by a red-light camera.
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BMO
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More like getting a single parking ticket in some small city for $7 when you make over $1m/year for over 10 years and consistently park, in the same spot, in violation of the rules. The scale of the fine is but pocket change. Or in Monty style "Tis but a scratch"
Re:Easy target (Score:5, Insightful)
http://www.cnn.com/2012/08/16/opinion/banks-too-big-to-prosecute/index.html [cnn.com]
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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.
I wonder what their profit margins were on those transactions... I'm guessing it was higher than 0.136%, in fact, given that they knew what they were doing was illegal (and therefore risky) I'm guessing it was probably well over 1%. So how is a piddly $340 million fine going to deter anyone?
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An equally good question, if the (incorporated) banks are being fined less than 1% of what they knowingly stole/laundered, wouldn't that mean that, under the 14th Amendment, [wikipedia.org] any individual who steals/launders money should be fined a similar amount?
If "corporations are people, too," then doesn't it also parse that people are corporations, or at least that corporations should be held to the same legal standard as people?
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Funny how nobody from those banks has gone to Gitmo like the terrorists they are
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Of course, the best way to launder money for the government, is to allow the banks to traffic dirty money, and then "fine them" thus producing "clean money".
Re:Easy target (Score:4, Insightful)
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Yes, we wouldn't want to accidentally come up with proof that a 1%er has ties to drug gangs and terrorists.
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Apparently you don't much about Marxism yourself - Marx didn't believe in taxes, and in fact, Marx was ultimately a anarchist. You know, like libertarians. Like the Tea Partiers pretend to be, except they're really just a cog in the Republican statist machine.
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Boy do you have some reading to do!
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The idea of adopting a "left wing", "right wing" or in fact any political group is fundamentally flawed. Perfectly good policy is regularly thrown out because "the other side" will not associate with anything proposed by their opponents, both left and right wing.
There is nothing wrong with Marxism, liberalism, republicanism or even national socialism, they're all perfectly good ways to run a society if implemented by decent people. I'll take a guess that
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Refusal to join any political party would be a good starting point.
More likely a good ending point, unless you are a billionaire who can afford to move mountains with his checking account. Most people don't have that kind of clout, and therefore only have any chance of significantly affecting politics by banding together with other like-minded people to pool their resources -- also known as forming (or joining) a political party.
So for most people, refusing to join any political party is the same as politically neutering themselves.
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Best money laundering vehicle (Score:3)
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Please enlighten me on how converting to/from USD would serve as a money laundering strategy. Note that I'm not agreeing with people who fret over the "threat" of Bitcoin - I just fail to see the point of your post.
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The federal reserve note is NOT legal tender and never has been a real form of money. The constitution states that gold and silver are the only legal tender. Just because Corp US says something is right doesn't mean it is.
Re:Best money laundering vehicle (Score:4, Informative)
Offtopic, but see the Legal Tender cases [wikipedia.org].
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(citation needed)
My copy of the Constitution doesn't seem to have that statement. Maybe I just don't have the double-secret probation edition.
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And to forestall the incoming ignorance, yes, I know about Article I, Section 10. It prohibits the *states* from issuing legal tender that is not gold or silver. The Federal government is under no such restriction.
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In the future, it might be best to just lead with your interpretation instead of snark about "double-secret probation editions" of the constitution. It would be more conducive to productive conversation that way.
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Any alternative "interpretation" would be pretty stupid unless the person who held it also believed that the federal government was also disallowed from entering into Treaties and Alliances
any snark is fully justified.
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Its not an interpretation. It literally says "States". And since the constitution is very speciic in language about states vs the fed, there isn't any scope for "alternative" interpretations.
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Here is my interpretation. First you have to realize the US was created by the states and the states wrote and passed the Constitution to try to balance powers. It also enumerated the powers of Congress. If the power isn't written there they don't have it.
So as you wrote the Federal Congress has the power to coin money, and regulate the value of it and foreign coins.
OK that is pretty simple. Congress is granted the power to coin money and regulate it's value and foreign coins. This doesn't prohibit the stat
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Actually, it is, by virtue of the 10th Amendment, which just about everyone in the US Federal Government ignores these days.
The reasoning, which you will no doubt find specious, is as follows: The 10th Amendment explicitly states that if a right isn't *granted* to the US Federal government by
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A believe he's referring to Article 1, Section 10:
You bolded the wrong section. It should looks like this:
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Reread the constitution, and double check to see if that's referring to the federal government or the states.
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Because cash has no history, simple as that. You have no way of knowing if the last person to spend that $20 bill the ATM just gave you bought diapers, or heroin, or bullets for the Taliban with it.
Now, the converting to/from part may present something of a problem in itself - But once you start dealing in bills instead of bits, the IRS/Treasury/DoJ lose any ability whatsoever to track that $100k from question
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Don't take my comment the wrong way, I love BitCoin, and sincerely hope it succeeds to the point of driving every fiat currency on the planet into nothing more than an obscure quirk only used for paying taxes in legacy-currency-holdout nations. I won't hold my breath on that one, though.
But yeah, I agree, the transaction history doesn't seriously jeopardize anonymity, which most of the haters don't see
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You do realize that BitCoin will become and new fiat currency right? And since it has some severe flaws in it (notably, it's ripe for deflation), you're just going to end up with a currency that speculators are going to g
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And considering people "roll back" bitcoin transactions every time there's a hack that "devalues" the value of it versus current fiat currency (like how NYSE rolled back stock trades). All those hacks that steal bitcoins cause the price of it to crash, those transactions get rolled back because if you own a lot, suddenly they're worth less, etc.
To my knowledge, nobody has ever "rolled back" a bitcoin transaction, because it is not possible to roll back a BitCoin transaction. Not unless you've gained control over more than half of the computers on the BitCoin p2p network, anyway.
What you're probably thinking of is various BitCoin-related trading sites getting hacked, and rolling back the state of their databases -- which is indeed troubling, for users of those sites, but it's a problem specific to those sites and not to the BitCoin protocol itself
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Sorry, I lost that phone number we need to call every single time someone pays us in cash to report the serial numbers and transaction date. Could you remind me, please?
Wait, you mean to say that not every transaction either comes from or goes to a bank?
I am simple and believe...
That every monetary transaction either comes from or goes to a bank?
That the FBI can pick "my" $20 out of the $4
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Bayesian inference
I don't think most of what everyone does day to day would interest the authorities. What you detailed *is* possible with Object Character Recognition. serial numbers on currency, license plates, faces, photos, geospatial location, computers are very agile and a camera is just another input device.
Re:Best money laundering vehicle (Score:5, Insightful)
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.
Getting involved in cash-heavy businesses? (Score:5, Interesting)
Isn't this the "old school" way of laundering money?
Either through outright purchase or, more commonly, strongarm, gain control of a business that does a lot of cash transactions -- bars, restuarants (cheap ones now), vending companies, taxis, anyplace people spend cash. Also gain control or create a business that acts as a vendor to that business on a regular basis (food wholesaler or other supplier).
The dirty money goes in as revenue to the cash-heavy business as bogus sales. Some money comes out "clean" as the business profits, but probably more of it comes out "clean" as payments to the suppliers. This allows you to offset your fake sales revenue (which is dirty cash input) with fake supplier sales so you don't have to account for, say, a million cans of coca cola or a couple of tons a beef a week.
Anyway, I've always been told that this is why the mob has been big in vending.
Increased Book Value of the Business (Score:4, Interesting)
So you put an extra 10 bucks of 'dirty' money into a business each month. Since all the operating costs are already paid, this money goes right to the bottom line. This extra 10 dollars a month increases the bottom line by 120/year. Now it is time to sell the business. It sells at a multiple of earnings. Let us say 5 times.
So $10 x 12 months x 5 P/E = $600
That 10 bucks a month has increased the sale value of the business 60 times.
Pretty cool, eh?
And IF the 'dirty' money is what pushes the business from loss to profit, ouch, that new owner has got some real problems. Buyer Beware.
The numbers might be a bit off, but it illustrates the concept.
Moral of the story is that you need a good accountant. He will find stuff like this. He knows all the tricks. He has too. He would not be a good accountant if he did not. They don't put these tricks in books or on the internet. Find a really old guy that has done audits on Governments and Megacorps. If he has a non-assuming ten year old car that goes really really fast, you have your guy.
If you have ever seen Yodi the Beancounter do an audit on some amateur bookcooker, the most terrifying thing is how fast he finds the frauds. He will walk right up to exact one of the myriad of filing cabinets, and pull out the exact file, and poof, you're busted. It is indistinguishable from magic.
The Government has some really scary good auditors. Some of the best.
Guns, God and GAAP. The three pillars of civilization. Laugh if you like. But when you reach a certain point in the game, when you violate GAAP with a crooked set of books, in many people's minds, you have violated one of the 3 holy of holies. Expect wrath and retribution of biblical proportions. You have been fairly warned.
Oh, and don't do drug deals over the phone. Ever.
Don't do drug deals over the internet.
You are doing something illegal and then the police do something illegal to catch you, you get all holy with the righteous indignation? What is that? That is unclear thinking. If you chose to break the law, do not whine. Be a man about it. There are no safety nets.
When you break the law, you are a 'Bad Guy'. This means the 'Good Guys' can do 'whatever it takes' to bring you to justice. The good guys are holy, doing God's work. You are evil scum slime, with no rights at all. You deserve to be punished. Cast into a lake of fire. Zero Tolerance. The means justifies the end. This is how they think. GOT IT?
Seems obvious, but here we are discussing it. Maybe their parents did not teach them. The police are not your friends. The government is not your friend. The Establishment and the Man are out to get you and fuck you up. The media is out to deceive you. The law is there to keep you in your place, to exploit you, to steal the fruits of your labors. It always has been, It always will be.
None of this is on the internet because it is illegal stuff. There is no 'How to Launder Money' site. There is no 'Making a safe dope deal' site. There is no 'Dial A Doper App' with encryption and good data retention laws. The dope vendor is a felon and you cannot call the cops or take him court.
When you break the law, you are going past the point on the map where it says "There be Dragons". There is no app. Jail sucks. You friends will rat on you faster than you can say "Mark Zuckerberg"
Maybe dope should be legal. Maybe tax rates should be low enough that nobody needs to launder money. Or put it offshore so a greedy debt ridden governments do not seize it. Maybe if there were enough good paying jobs people would not need to do so many crimes. These are the real issues.
So to close, there is a whole dark world of knowledge on how to survive and prosper when the system gets corrupt from top to bottom. The price of failure in this world however is Jail and Death.
But I would rather spend my time pushing back the darkness, and focus on saving this civilization. I would rather the system worked, that is stays honest. That stupi
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ÎÏÎÎÎÏZξÎÎ ÏfÎÏÎα in the modern world of commerce this translates
"To infinity and beyond!"
Re:Getting involved in cash-heavy businesses? (Score:4, Interesting)
launderer legitimately own a casino.
launderer or a hired hand shows up with a suitcase full of 100 bills.
bet it all on black and double down until lose.
profit
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Check your churches first. Biggest tax evasion/money laundering loop hole in existence.
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The best money laundering vehicle remains the USD denominated in good old $100 greenbacks.
Right, because when you show up with a briefcase full of $100 bills and say you want to buy a house, no one will have any problem with it.
Untraceable funds is exactly the problem that money laundering is intended to solve. In order to be able to spend your ill-gotten income, you need to be able to somehow make it traceable to some sort of legitimate origin. Greenbacks are no help at all. Oh, sure, you can buy groceries and beer and stuff with them easily enough, but trying to buy large-ticket items wit
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Exactly, because operating a terrorist organization or selling drugs to kids is one thing, but evading the 'bank tax' is unconscionable and must be stopped at all costs!
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Exactly, because operating a terrorist organization or selling drugs to kids is one thing, but evading the 'bank tax' is unconscionable and must be stopped at all costs!
What bank tax? I don't pay any money for my use of banks. The reason for the monitoring of bank transactions is to catch people who are operating illegal businesses.
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You've never heard of bank fees?
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You've never heard of bank fees?
Of course I've heard of bank fees. I very carefully avoid banks that charge them! The only bank fees I've in my life have been loan-related and wire transfer fees. I do buy checks occasionally, but I don't buy them from the bank.
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If you had less money OR you needed the money you have laundered, you would face much more significant bank fees.
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If you had less money OR you needed the money you have laundered, you would face much more significant bank fees.
Actually, if you have lots of money it's even easier to avoid bank fees. There are lots of banks that offer not only zero fees but pretty decent interest, as long as you promise to keep at least $25K in your account at all times.
And for people getting their money laundered, bank fees are an irrelevancy anyway. The launderers typically take a large percentage of the money they clean.
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Actually, if you have lots of money it's even easier to avoid bank fees. There are lots of banks that offer not only zero fees but pretty decent interest, as long as you promise to keep at least $25K in your account at all times.
Exactly what I said, if you had LESS money, you'd have more fees.
The launderers typically take a large percentage of the money they clean.
And when the launderer is a bank, it's called bank fees.
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Actually, if you have lots of money it's even easier to avoid bank fees. There are lots of banks that offer not only zero fees but pretty decent interest, as long as you promise to keep at least $25K in your account at all times.
Exactly what I said, if you had LESS money, you'd have more fees.
Ah, sorry, I didn't read carefully. However, I disagree. I never paid any fees when I was a starving student, or when I was working my first low-paying jobs and struggling to make ends meet. It's not hard to avoid them, you just have to pay attention. Oh, and I don't qualify for any of the high-balance account types.
The launderers typically take a large percentage of the money they clean.
And when the launderer is a bank, it's called bank fees.
How do you launder money through a bank? That makes no sense.
I realize you have some sort of deep-seated anger at banks and their fees, and you're trying to find a way to connect that out
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Apparently you haven't kept up with the news. The latest is Standard Chartered but HSBC and several others have been involved in the laundering of Mexican cartel money and shuttling money into and out of Iran despite economic sanctions forbidding it.. Essentially they have been looking the other way when large transfers take place without the legally required documentation of where it came from and where it's going in exchange for collecting some nice fees.
That's how you launder through a bank. While they h
Massive Yawn time (Score:2)
This is an old and dead issue since any reputable MMO will have locks in place to prevent large scale money laundering. Also i would put odds that The Treasury Department has folks "in world" just so they can monitor things.
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from the home of a Treasury Department agent:
"Hi Honey, how was your day?"
"ah, Tough day, first the WOW servers crashed, then LOTRO's Draigoch bugged on us twice, then I couldn't find anyone to group with in SWTOR."
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This is an old and dead issue since any reputable MMO will have locks in place to prevent large scale money laundering. Also i would put odds that The Treasury Department has folks "in world" just so they can monitor things.
I can see the Fox News headlines now: "Federal Government Hires People to Play Video Games."
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I can see the Fox News headlines now: "Obama Administration Hires People to Play Video Games."
ftfy
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seems like an ongoing thing (Score:2)
They track conduits that could possibly carry large amounts of money from questionable sources, and Australian police seem like they've been particularly interested in MMOs for a while. Here's a /. article [slashdot.org] on a 2011 investigation.
Previous weakest-links have included cell phones [slashdot.org] and gullible humans [slashdot.org].
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Actually the point of AML is to track all "intermediations of value", to use the American regulators turn of phrase. The communications equivalent would be requiring everyone to present multiple forms of ID to get an internet connection, banning/requiring strict regulation of proxy providers and imprisoning people whose computers were involved in proxying (regardless of whether a crime was committed using the proxi
Sauce for the goose... (Score:1)
Other people's power is always a "threat" (Score:1)
Of course alternative currencies are an emerging threat. Anything which gives people more power, whether it's owning their own computers, tech advances in solar energy, having the right to vote, (let's throw in some "darker" examples), owning weapons, having access to crypto, etc, is going to be an "emerging threat" to someone.
Fortunately, this is the good kind of threat, from the point of view of citizenry. All "money laundering" means, is that transactions are harder for central authorities to track.
And in other news... (Score:3)
... grass is green, the sky is blue, and the sun will come up tomorrow.
The entire Silk Road operation is dependent upon bitcoin being used as a method of money laundering.
Any transaction obfuscating the exchange of value for illegal goods is ipso-facto money laundering.
US law: http://www.law.cornell.edu/uscode/text/18/1956 [cornell.edu]
Australian law: http://www.aic.gov.au/publications/current%20series/tcb/1-20/tcb004.aspx [aic.gov.au]
And both laws encompass "known or should have known" concepts - that if it's obvious and you wilfully or negligently turned a blind eye, you're in trouble anyway.
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BMO
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Even paladins kill things and take their stuff. (Score:1)
Just wait until they find out MMO fortunes are built on more corpses than WWII.
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Sounds like an interesting premise for a novel. Stereotypical gamer geek raids and loots another group in his MMORPG, and is surprised by the size of the haul. Then he finds out he's pissed off some very bad people in the real world...
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REAMDE? Should read... (Score:3)
Aussie watchdog starts reading Neal Stephenson novels in hopes that he'll find more things to fret about.
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And bans delivery vehicles with large contact patches.
interesting timing, reading it right now actually (Score:2)
This was my first thought as well..."someone just read REAMDE". :)
"Threat" (Score:5, Insightful)
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?
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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?
Too much privacy is a real threat to law enforcement and the quality of life of law abiding citizens. As much as you don't want to believe it, the govt is net good for those of us who aren't psychopaths. There is an easy demonstration of this, go visit Ivory Coast or Columbia and see how you get on with very little govt "control".
Seems simple to me (Score:2)
Take your ill-gotten monetary gains and anonymously deposit money into a bitcoin wallet
(If you have a lot, pay a team of people to just go to Walmarts and banks and deposit money, yes anonymously, for now)
Tumble/fog your bitcoins a bit. Never use the same address twice and make sure your wallet has the "Use TOR network" checked.
Buy gold and silver with them (there's a website that takes bitcoins for gold/silver and they are not that much over spot. Comprable to gettting them off Ebay.)
If you really are cha
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threat to inflation (Score:1)
Those are a threat alright, they are a threat to the government's ability to steal money, and when I say money, I mean purchasing power. These are the threat to the ability of the governments of the world to steal from you via currency printing and interest rate manipulation.
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Ummm, why don't we worry about cleaning up the real sources of excessive money laundering first?
Of course, I'm talking about BANKS, which are far more of a problem than BitCoin or MMOs...for evidence, just look at the headlines of oh, the last 10 years?
The BANKS already gave the mob, er, government, their cut, so they get a free pass.
No offense meant toward my Sicilian friends.
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Banks engage in vast schemes of money laundering, but in order to access them for this purpose you have to have a large amount of money to start, because the process of institutional money laundering is expensive.
Bitcoins and MMOs aren't expensive. You just send an email and voila.
The concern isn't the volume of currency being laundered. What does concern them is that these new technologies democratize and disrupt money laundering in the same way the Napster disrupted copyright infringement. Suddenly, in
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It'd be more effective if we just put everyone in jail with forced labour and didn't give them any money to begin with.
I believe money laundering laws are at least one step beyond what most people regard a free society.
If the police can't deal with crime in an ethical way, why did we need them again?
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Does this also apply to stocks? When high freq traders make deals, do they have to file a report for every one of them?
the issue is not how they spend it (Score:2)
but how they obtain it in the first place
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Exactly my point.
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The sixteenth amendment makes the government's business.
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Don't you hate when you a word out of a sentence.
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But who gives anyone the right to tell me who i want to spend my money.