This article got me thinking: is there anything intrinsically wrong with money-laundering? Or is it something we all decided was okay for a state to police without a clear moral basis, like prostitution? Is it only illegal because the money was gained by committing a crime? If so, wouldn't money laundering laws be an indirect solution to the problem? I'd love to hear some informed perspectives on this.
"Money laundering" is essentially the crime of "helping a criminal conceal their crime" with specific regard to the financial aspect. It's the cash equivalent of helping someone bury a body - you might not think that's a terrible crime in itself, after all, the victim is already dead, but if it wasn't a crime then it would definitely be easier to commit a murder. Making money laundering as hard as possible is a good deterrent to financially profitable crimes - people don't commit them if they can't get away with the money.
> "Money laundering" is essentially the crime of "helping a criminal conceal their crime"
I think what concerns me about defining a crime so generally as something you only do after committing another crime would be the presumption that the state was infallible when defining all other crimes. So it equally improves a states ability to enforce both legitimate and illegitimate laws, but does little to address the crimes that led to ill-gained capital in the first place.
Having known some criminals, their solution to money-laundering laws was simply not to file their taxes. It didn't stop them from committing crimes, so the "deterrence" angle seems as flimsy as ever here.
It didn't stop them from committing crimes, so the "deterrence" angle seems as flimsy as ever
It would be unreasonable to expect a deterrent to stop everyone - some people are arrogant/stupid enough to believe they might get away with their crimes, and some are actually clever enough to do so. The point is that it deters all the people who might be tempted but aren't (rightly or wrongly) sure they'd pull it off. I don't imagine there's a way to measure how many people that is, but if it's "some" then the deterrent has worked.
Also, specifically in the case of money laundering, the laws aren't vague catch-all things that try to cover every base. They're very specific about what reporting you need to do when you carry out financial transactions. If you're doing those transactions you have to complete certain reporting criteria, and if you fail to that properly you committed the crime. There's no need to assume the state was infallible and had to define every crime. They don't. They just needed to define every type of financial transaction, and what questions to ask when those transactions happen (they're things like "Ask the person where the money came from." and "Please attach confirmation, in the form of a bank statement, that this is really where the money came from."), and that's quite easy.
Depending on how you define it, money laundering could be seen as just the act of hiding the origin of some pool of funds. That, by itself, is morally pretty neutral.
For example, in the US campaign finance laws effectively allow money laundering by allowing legal PACs which can receive donations, spend those donations on political activities, and obscure the source of those funds. This is justified on the basis of protecting free speech.
Conversely, it can also be used to hide the source of funds generated in the commission of a crime, which impedes the work of law enforcement.
IANAL, but I think "money laundering" is a colloquial term used to describe the process of obscuring currency's provenance used for/acquired in criminal activities. Maybe I'm not having a very imaginative day, but I can't think of any other reason you'd do this.
That's if you're laundering money deliberately. There are many things which are legally classified as "money laundering" even when no actual (other) criminal activity is involved. It's a "prove your innocence" situation—if you don't file the required paperwork and prove to the government's satisfaction that no laundering is taking place they will call that "money laundering" on its own. Or even if you do file all the paperwork officially required but your transactions resemble "structuring", whether deliberately or accidentally.
The 4th Amendment should have been read as including all financial transactions among "papers, and effects". AML/KYC laws are completely incompatible with a free society.
In US law it is the practice of engaging in financial transactions to conceal the identity, source, or destination of illegally gained money. In UK law the common law definition is wider. The act is defined as "taking any action with property of any form which is either wholly or in part the proceeds of a crime that will disguise the fact that that property is the proceeds of a crime or obscure the beneficial ownership of said property".
> Is it only illegal because the money was gained by committing a crime? If so, wouldn't money laundering laws be an indirect solution to the problem?
You are correct on both counts. States use multiple means at their disposal to make it harder run an illegal business. Anti money laundering law is probably the last of those hurdles.
That said, fixing the real root cause is easier said than done. Take one of the biggest source of money laundering in/around the US, drugs. Fixing the root cause here calls for asking some tough questions. Why is drug use/abuse so pervasive? Why not make it legal? Can free, universal health care fix it? And so on.
You've kind of hit the nail on the head. Money laundering is illegal because the only time you need to launder money is when that money was obtained through illegal or fraudulent means. Because you launder money so the government is aware of the money, but not where it originated from. If you obtained the money legally, "laundering" it is just you willingly choosing to lose money.
It's kind of why there is also a way for you to claim illegally obtained income on your tax form as well.
They may not have proof you committed the crime, but they have proof you tried to hide the crime. So if you make that a crime as well, you get them anyway. The goal isn't to be accurate, the goal is to stop criminals.
Also, by knowingly helping someone launder money, you are kind of aiding them in their crimes. So it's a way to get accomplices as well.
Let me clarify: the goal isn't to charge a criminal with the exact crime they've committed, the goal is to make everything necessary to committing crimes also illegal so they can get the criminal on something.
Same thing. You're punishing people whom you haven't convicted of doing anything harmful just to make the police's job easier, without regard for justice or proportionality. That is how a police state operates.
It's entirely with regard for justice. That's the goal.
You're looking for ways to evade justice. It's evident in your choice of words. You're concerned with conviction of something harmful. The harm they committed was in the other crimes. They should evade punishment for that because they managed to hide it well?
> It's entirely with regard for justice. That's the goal.
Your ends may be laudable but your means are immoral. The ends do not justify the means.
> You're concerned with conviction of something harmful. The harm they committed was in the other crimes. They should evade punishment for that because they managed to hide it well?
You say they're evading punishment "because they managed to hide it well" but the fact remains that you were never able to prove they actually did anything worthy of being punished for in the first place. Don't you see the obvious error in that? The only thing you actually know is that their financial transactions were not documented to your satisfaction. In effect you're demanding that they prove their innocence, whereas in a just system one is innocent until proven guilty.
Easy money-laundering enables other types of crimes. If it's easy to move money embezzled from the Russian state into legitimate London properties, then presumably that makes embezzling a bit easier. (It's good to question these assumptions, I agree).
But in the case of London properties, the actual laundering happens in Russia. The money is “clean” when it arrives in the UK, with extensive documentation to demonstrate it’s provenance.
Both the UK media and government like to apply the term in super creative ways. When they speak of Russian money laundering in London, it’s usually a complete fabrication.
E: Throttled, so can’t reply directly to rwmj.
Why would you risk bringing dirty money from Russia to the UK when Russia is so deeply corrupt that it’ll be trivial to come up with extensive documentation demonstrating legitimate sources of funds?
The mere fact the money comes from Russia makes it somewhat dirty. The cleanliness of money isn’t determined purely by your ability to produce documentation, otherwise it would be trivial to clean money.
Anti-money laundering experts will look a number of factors to determine how risky that money is. Large sums of money from Russia turning up in personal accounts is incredibly risky, and the knowledge that high levels of corruption exist in Russia means that forged documents are expected, so documentation will be viewed with high levels of scepticism.
Moving that money into property quickly starts to obfuscate the source of the money. Additionally property ownership laws in the UK make it very difficult to differentiate between property bought with dirty money vs clean money, but there’s are strong cultural expectation that property can be bought and sold quickly and easily. As a result it’s much easier to find banks and lawyers that are happy to overlook slightly dodgy aspects of your property trade, because they’re common in property deals and may exist for large number of legitimate reasons.
Additionally you can take advantage of the fact that the UK is seen as high trust country with low levels of corruption. So it’s much easier to sell property to people in rest of the west without much detailed scrutiny.
London has a whole infrastructure of lawyers and accountants for laundering money so I somehow doubt that much of this money is legitimate when it arrives.
> The money is “clean” when it arrives in the UK, with extensive documentation to demonstrate it’s provenance.
Actually most of the World's money laundering happens in tax heavens, of which like half is Uk/US/EU islands and territories. Money from known dictators flows through them, and shell companies "invest" in london properties, inflating realestate prices and robbing locals of the chanse to ever own a home.
Even when money is coming directly from Russia, no documentation regarding its origin was needed to buy a house.
There is a string of never ending money laundering scandals at deutche bank, HSBC, abd credit Suisse.
None of this is secret, this is all in official court documents.
I would argue that it is illegal because it hides criminal activity and is a mean to gain from crime even if caught. When laundering money you are trying to hide that the gains are from illegal activity.
Normally if you gain something from illegal activity, the justice system could confiscate it and no gains would be made. But if you are allowed to launder the money, we would basically say that it is OK to gain from illegal activity as long as you hide it or that it is OK to help people to gain resources from criminal activity.
It’s illegal because it’s common for criminals to use other parties to make their money clean. This allows governments to go after those that assist in committing crimes that otherwise would have not be considered to be breaking the law.
It’s similar to knowingly trading in stolen goods. If there are no laws against that then black market trading is far less risky and far more lucrative.
