[ccity88]

I get that money laundering is always linked to criminal activity, but how have we always just accepted the lack of personal privacy when it comes to finance? Privacy is a feature, not a bug; and whilst crypto may not be the way forward, I hope one day we can reach a solution that has both privacy and also safety. The language used by law enforcement is quite alarming, it suggests that they should be privy to ALL transactions made, regardless of reasonable suspicion.

[mdavis6890]

It's important to realize that attribution - knowing which human got which money when - is actually very important in many contexts, particularly when a lot of money is involved. This allows for an un-do button in the case of mistakes, fraud, etc. If I'm wiring my down payment for a house for $200k, it's nice to know that if I fat-finger the receiving account I can get the money back. How would you feel paying your down-payment in cash or BTC? How about when Citi accidentally paid an extra $900M (or something like that). Normally they'd be able to get all the money back (actually in that case they couldn't, but that was a weird anomaly).

I'm all for privacy, anonymity, etc - which is one of the reasons I'm very excited about crypto - but you always have to look at things from multiple angles.

[ucha]

Attribution is important but you don't need the government to be able to do it without your authorization. You can very well have private unattributable transactions that you decide to disclose to the authorities only if you need and want to.

If you send your coins from wallet A to wallet B with CoinJoin, it's not possible for a third party to identify this transaction, but you can disclose the seed of wallet A and sign a transaction from wallet B thus proving ownership of both.

[karottenreibe]

AFAICS none of your points addresses the problem posed by your parent commentor: someone accidentally sent a lot of money to the wrong account/wallet and wants it back, even if the receiver is uncooperative.

[ucha]

I'm not sure we understood the parent comment the same way but you're right, you can't get your money back if sent to someone uncooperative. However, you can call the authorities and prove that you sent funds to that person and let them recover it if possible. I only addressed the question of attribution.

[celticninja]

In the Citi case though it could have been paid in BTC and the result would be the same. The law decided then and the law would decide in bitcoin. Yes the ability for the court to force the return(or not) would depend in some part on the party being willing to do it, but ultimately if they are going to abide by the law it would happen regardless of the medium used.

[pliny]

Voluntary attribution is a solved problem in cryptography, so you can stay private if everything goes well and prove you are the sender or receiver for a given transaction if you need it reversed.

[loceng]

I believe the $900M was merely paid earlier than it needed to be, but was still owed, so why the transaction wasn't reversed.

[mdavis6890]

Yes, but still normally this mistake would be unwound. The recipients would just send the money back, or a court would tell them to send it back, even though the money was owed. But there were a number of confounding factors - for example that the money wasn't owed by Citi - it was owed by someone else and Citi was just paying on their behalf.

[ectopod]

> but how have we always just accepted the lack of personal privacy when it comes to finance?

We didn't. This is something that has changed in the UK in my lifetime. Unless you were the subject of an investigation you didn't have to provide much detail to the tax authorities, and what you did provide was kept strictly separate from other areas of government.

There was an attempt to strike a balance with the emphasis on privacy. Nowadays the government thinks it is entitled to all the data all the time.

[nly]

The UK is a more or less a cashless society, give or take a few regional variations and laggards.

I've lived in London for 3 years and don't think I've ever used cash for anything in that time. Trains, buses, taxis, bills (don't even need snail mail for those), restaurants, shops.

Outside of London it's a little different, but it's only a matter of a a few more years.

[celticninja]

That's not the case at all. HMRC is very proscriptive about what you can do with their data, that's if they let you near it all, even then client consent is absolutely required for each access.

[wpietri]

There's a difference between privacy and secrecy. If I'm involving my bank, what I'm doing is already not secret. My bank knows. But normally they keep those things private, because it's generally not anybody's business.

There are occasions where society's interest in preventing crime outweighs personal privacy, and one way to look at that is that when something (like, say, ransomware) has an effect on other people, it can no longer be reasonably called private. When that happens, as long as there are reasonable checks and balances, I'm fine with banks giving out information, especially when it's organizations that generally respect the privacy of the people involved.

[meowface]

I think this is a valid argument. I also think a corollary argument is that it's also valid to decide not to use a bank, though, and do a lot of things purely through cryptocurrency even if you're not doing anything shady or illegal, since, as another comment says, "as long as there are reasonable checks and balances" isn't necessarily a guarantee you can always rely on: https://news.ycombinator.com/item?id=27315773

>> but how have we always just accepted the lack of personal privacy when it comes to finance?

>We didn't. This is something that has changed in the UK in my lifetime. Unless you were the subject of an investigation you didn't have to provide much detail to the tax authorities, and what you did provide was kept strictly separate from other areas of government.

>There was an attempt to strike a balance with the emphasis on privacy. Nowadays the government thinks it is entitled to all the data all the time.

[wpietri]

People definitely have differing views on what "reasonable checks and balances" mean; here in the US we have whole movements of people with... strong opinions on the topic: https://en.wikipedia.org/wiki/Sovereign_citizen_movement

I agree it's valid not to use a bank; one could try to conduct all one's business in cash. But in practice, people doing that are often doing something criminal, so people using cryptocurrency should not be surprised that they end up being treated with the same level of scrutiny as people running around with briefcases of cash. That is to say, their attempts at secrecy may result in a practical loss of privacy.

[meowface]

That's true. I personally don't mind using banks and don't mind them knowing what I do with my money and perhaps the government knowing as well. But I wouldn't necessarily judge someone who doesn't want to use one.

[CryptoPunk]

>>When that happens, as long as there are reasonable checks and balances, I'm fine with banks giving out information, especially when it's organizations that generally respect the privacy of the people involved.

A reasonable check and balance would be the requirement for the state to get a warrant, issued by a court when probable cause is found, not 'every transaction over $10,000 is reported to the state for its warrantless mass-surveillance system'.

The $10,000 threshold was set in 1970, when factoring in inflation, it was $70,000 of today's money, and when average income was lower, making its application more seldom still.

The dragnet steadily catches more and more transactions from the twin trends of rising real incomes and inflation reducing the real value of the threshold.

[wpietri]

Yes, different people have different ideas about what's reasonable. But if you want to make a case for a reasonable balance between your desire for secrecy versus the desire of other people to be free of crime, you'll have to talk about more than what you personally dislike.

[CryptoPunk]

I want to be free from the crimes of the state too, and the kind of suffocating repression [1] [2] and centralization of power [3] that highly controlled societies create.

We should oppose warrantless mass-surveillance of private financial transactions for the same reasons we oppose mass-surveillance of every one's private communications. The desire to live free from crime does not justify engaging in either.

I think most would agree, and that AML laws are only instituted due to:

1. the complexity of the subject matter obfuscating what these laws do

2. the euphemization of AML laws by the AML industry, like calling them anti-money laundering laws rather than the more descriptive 'financial surveillance laws', and

3. the stigmatization of money, as a result of the public relations efforts of the many who stand to gain from laws restricting people's ability to transact with it.

[1] https://www.reddit.com/r/MakerDAO/comments/de0sys/kyc_is_abs...

[2] https://www.coindesk.com/money-reimagined-ugly-side-kyc-aml-...

[3] https://twitter.com/SpencerKSchiff/status/125276128577685913...

[wpietri]

Again, that doesn't sound like balancing competing rights and concerns. It's sounds to me like a fundamentalist's stance.

[CryptoPunk]

Yes and I believe it is more morally correct to have a fundamental belief that innocent people shouldn't have their rights violated to achieve some larger social goal. The ends don't justify the means, and fundamental human rights shouldn't be voidable by majority vote.

[MikeDelta]

I understand your point. However, privacy cannot shield one from tax and legal obligations.

It is not just the proceeds from criminal activities, but also tax evasion (from the rich or companies) and terrorism financing.

[exo762]

You can use cryptocurrency which hides all of your transactions (like zcash) and pay your taxes as a law abiding citizen. There is no conflict here. Tax systems rely on citizens reporting anyway.

[ushakov]

> Tax systems rely on citizens reporting anyway

ever heard of CRS (Common Reporting Standard)?

https://en.wikipedia.org/wiki/Common_Reporting_Standard

[n_ary]

> You can use cryptocurrency which hides all of your transactions (like zcash)

Nit: only if you use zcash shielded wallets(very rare & resource hungry) are your assets private. Most wallets use transparent addresses, which is kind of similar to normal ones.

Given current landscape, only monero is defacto private.

[dougk16]

PirateChain and Aeon as well.

[3np]

And AZTEC on Ethereum.

[ip26]

Tax systems follow a “trust but verify” model.

[exo762]

Again, not a problem. ZCash allows one to cryptographically prove transactions.

[RcrdBrt]

Some are even "assume bad faith and verify"

[MikeDelta]

I really admire your faith in human kind.

I am fairly certain that many citizens would be tempted to become creative in their transparency (or activities) if they knew they would never get caught. Such is human nature.

[ska]

> Tax systems rely on citizens reporting anyway.

It relies on reporting and the right to audit, so they may end up with all of the information anyway; it's more that you are making them ask for it rather than providing it proactively.

[CryptoPunk]

If a tax requires the entire citizenry surrendering all of their financial privacy, it should be abolished.

[iSloth]

And shortly after all countries would collapse...

[decafninja]

To some, that is probably a desired feature, not a bug.

[imtringued]

The new rulers?

[svaha1728]

Feudal lords

[MikeDelta]

What system would be fair and acceptable to you?

[CryptoPunk]

A land tax: doesn't violate private property or privacy rights, counter-acts wealth disparity, impossible to evade, and considered the perfect tax by economists due to doing zero harm to economic efficiency.

https://en.wikipedia.org/wiki/Land_value_tax

[swader999]

A miniscule tax on every transaction. Automatically deducted. That's it! No other tax allowed.

[gamblor956]

By definition, financial transactions are not private, because they necessarily involve a counterparty.

[jackfoxy]

> how have we always just accepted the lack of personal privacy when it comes to finance?

It was very easy. The American public was hoodwinked into accepting the 16th Amendment (levying an income tax) as a tax the rich scheme. And like all tax the rich schemes it was a cover to tax everyone, especially the middle class. You can't have an income tax without the government prying into everyone's finances.

Before this financial privacy was the norm.

[CryptoPunk]

The income tax was first introduced in the UK, in 1799, to fund a war against France, and the rate was only 10%, and only levied on the rich.

The first American income tax was also introduced in a war - the Civil War.

[jackfoxy]

IIRC the US Supreme Court declared the Civil War era income tax unconstitutional, which is why it required a constitutional amendment.

[bluGill]

No, they said the tax on capital gains was unconstitutional. An income tax itself was allowed, they only tossed out the whole law because it was obvious that the tax code they ruled unconstitutional wouldn't make sense without the capital gains tax parts.

[StanislavPetrov]

>The language used by law enforcement is quite alarming, it suggests that they should be privy to ALL transactions made, regardless of reasonable suspicion.

Unfortunately this is exactly their position, which they have made quite clear - and it isn't limited to financial transactions. Its the same line of "reasoning" they use to decry the use of encryption. They want to eliminate the concept of privacy all together and be privy to all of your transactions, communications and behavior to ensure nobody is "breaking the law". This was the whole idea behind the Orwellian "Total Information Awareness" program that was so obviously antithetical to freedom that the government was forced to change the name (while continuing to develop the program). In my opinion its far better to live in a free society where we are legally entitled to privacy and a few bad actors get away with crimes than the alternative.

https://en.wikipedia.org/wiki/Total_Information_Awareness

[vmception]

> I get that money laundering is always linked to criminal activity

Its not. Well, by definition it is but it is paradoxical. Money obfuscation is not illegal, but when the source of the money is illicit then money obfuscation is money laundering, but successful money laundering means nobody can ever distinguish between a licit or illicit source, and it is up the accuser to prove the source was illicit, which should be impossible. (Whether there are records or not, there should be no probable cause to receive or act on those records at the standard needed for a criminal investigation)

So, only unsuccessful money laundering is linked to criminal activity, and deterrence relies on stigmatizing all money obfuscation.

[tluyben2]

I don't think the public cares. And, of course, there are many news articles, like this but also about fiat, that show why 'privacy is bad, ok'; criminals will run rampant if we cannot track everything you do.

[JKCalhoun]

It seems as though large movements of cash is actually a pretty good way to find criminals.

Someone saying "the privacy of someone moving $100M is bad" sounds reasonable to my public ears.

[atatatat]

Right, because the art trade is so hard to notice.

[auntienomen]

If you don't interfere with money laundering, the criminals eventually acquire enormous wealth, and with it power. They eventually acquire enough power to take over the government. At that point, you're at their mercy, and theorizing about privacy laws becomes a bit pointless.

[crispyambulance]

> eventually acquire enough power to take over the government

I wonder, recalling the Panama Papers incident, if this has effectively happened already!

[rusabd]

So you are saying that before money laundering laws those criminals took over the government. It is almost like said criminals just don't want any competition now

[auntienomen]

Money laundering laws emerged after criminals started getting organized about managing their wealth. Before Prohibition and Meyer Lansky, they were all small timers.

[jb775]

This has already happened.

They typically launder money via "foundations" or "charities". They acquire power by purchasing media companies. They use the media companies to control public narratives to shift the Overton window of public policies. They also use it to manipulate the truth as it suits them[1]. Their target population for controlling thought narratives are yuppies and the lower classes.

[1] https://mobile.twitter.com/DrewHolden360/status/139733532441...

[camgunz]

I think in the US, it's a war on drugs thing--though it could also be a Cold War thing. Just musing though, but yeah it's wild that we don't think this is a right.

[URSpider94]

It goes back further than that, at least to the prosecution of organized crime syndicates in the early part of the 20th century. Al Capone went to jail for tax evasion, after all.

[camgunz]

Yeah for sure, famously. I think the evolution of like, KYC and the global financial surveillance system probably came about for Cold War or War on Drugs reasons though.

[matheusmoreira]

Nobody accepted this. Governments just imposed it on us.

[Empf]

Tax fraud.

You would not benefit from it you would loose money

[kd913]

Data can be stored, transparent but open for legitimate purposes. I don't think it's a good idea to go to the other extreme for complete anonymity in a case like this whether the consequences result in massive criminal activities.

E.G. I trust my medical data to my doctor with some reasonable confidence they are using it responsibly.

Same thing here, I can trust my financial institutions with my data, but I want it to be open to authorities to look for criminal activity. I would ideally like that data to be placed under some legislation a la the GDPR to ensure it's used responsibly.

To be clear, I would much rather my data be sold to some advertisers than for corruption/criminal activity to exist.

[psychlops]

I prefer the innocent until proven guilty model.

[NateEag]

In the US legal system, that refers to whether you can be punished for a crime, not investigated for one.

[psychlops]

An investigation that would require a warrant. My point being that all activities should not be considered criminal by default thereby available for perusal without a legally provided reason. And only then if very narrow in scope.

[NateEag]

The OP didn't say he wanted all financial activities to be considered criminal - just available for investigation.

I get that's not what you want, but it is what OP wants and I can see why.

All part of the eternal struggle between individual freedom and societal good.

[rmah]

Money laundering is not always linked to criminal activity except in so far as money laundering it itself illegal. Many nations (and not just "third world" nations) have some pretty onerous restrictions of flow of capital. A lot of money laundering activity is simply people moving money between jurisdictions. Admittedly, sometimes (usually?) with illegal goals such as tax evasion, but not always.

[seanhunter]

Money laundering is linked to criminal activity by definition. It literally means introducing the proceeds of criminal activity into the legitimate financial system.

https://www.investopedia.com/terms/m/moneylaundering.asp

[wpietri]

I think that's a good general definition. But sometimes people want to move capital unlinked to crime across borders. They then use exactly the same mechanisms money launderers use. If you have a term for that you like better, I'd be interested to hear it.

[seanhunter]

If it's not the proceeds of crime, but just money leaving because of unfavourable domestic policies, it's normally called "capital flight" rather than money laundering.

[irtigor]

That's only true if they are trying to avoid taxation, which is also ilegal (even if you think it is justified). Moving capital from a place to another doesn't use the same mechanisms of money laundering if done legally.

[wpietri]

That's not the case. As mentioned elsewhere in thread, some places have limits on capital movement.

[irtigor]

That's a good example that proves my point and the reason why I said "even if think it is justified", it doesn't matter if it is a cap/tax/whatever, it only uses the same mechanisms of money laundering because it is money laundering (they are trying to hide that that money is not clean/legal, that the reason it is illegal is because it was not supossed to legally leave the origin country instead of being drug money, makes no difference to the law, but morally could be ok to some).

[malka]

Then moving the capital is not legal.

[vmception]

Obfuscation.

One of my other comments might be useful for you in articulating this in the future:

https://news.ycombinator.com/item?id=27317593

[wpietri]

Just so people downvoting this have an example, India has strong restrictions on capital movement. So much so that once when I was leaving India the outgoing customs inspector had me open my wallet, noticed excess rupees, and helpfully relieved me of some of them before I got on the plane. And less colorfully, I know somebody whose parents would like to move to the US to spend more time with their kids, but they can't legally transfer enough money to buy a house near those kids.

I honestly get why some countries have capital controls; rapid shifts in capital can be truly devastating to a small economy. And criminals are some of the people most eager to move large sums of money to other legal jurisdictions. But there are definitely cases where money laundering isn't linked to what most people would consider crime.

[swader999]

Cyprus' capital controls around 2013 was a catalyst that brought bitcoin into the broader discourse and pushed it to 1k shortly after.