[mschuster91]

For corrupt officials BTC presents an easy way to hide black money. A banking account has official records which can be obtained by police (and seized by it!).

So, a criminal moves his funds into Bitcoin, either at a Chinese exchange or at a foreign one, and then hides the private key on paper somewhere. If he gets arrested/sentenced to death/whatever, family/friends can always recover the money.

Actually, I'm wondering why the Mafiya doesn't use Bitcoin for cross-border drug exchanging already...

[rdl]

Hawala or the equivalent makes MUCH more sense for moving money. BTC has neither the depth nor technical features to accomodate massive illegal flows.

The problem with cross-border drug exchange is that at the retail level, you end up with a fuckton of $5-20 bills. You could color up to $100s in some cases, but even that is hard at scale.

Dealing with bulk currency in the heavily surveilled customer nations (USA, EU) is hard. The gold standard seems to be shipping bulk currency out, since most drug people are already good at moving bulk products in. Trying to deposit it into

If you had a way to spend infinite $5 bills in the US to buy BTC, you'd be just as likely to have a way to spend infinite $5 bills in the US to buy bank deposits in Macau. It's the first stage which is the serious problem, not stages 2/3. Pretty much all 3 stages of money laundering now happen outside the US -- or you bring washed money back into the US to invest in some cases, the last stage.

Hawala works because you can net stuff out, thus reducing the need to move bulk currency. But you still need to move bulk currency eventually to settle up.

[mschuster91]

Well, the retail-level $5/10/20 bills can be exchanged anonymously at Bitcoin ATMs. If I were a dealer, I'd do this so that coptards can't seize the money at the place I store it.

Often in local news there are reports about small dealers getting busted, while they only have small quantities of drugs at home, if at all, most have shitloads of money in their homes - which breaks their neck in court.

[rdl]

The issue isn't street dealers dealing with shoeboxes of cash, it's levels up from that. You can pay for jewelry, guns, rent, stolen precursors, grow equipment, labor, rims, etc. in cash. You can't pay for cars or houses. You can generally pay the dealers 1-2 steps up from retail in bulk cash without problems, but at the point where they need to bring product in internationally, it becomes an issue.

It used to be meth worked a lot better (since you could produce it more locally/closer to consumption), but since Diane Feinstein severely restricted effective formulations of Sudafed (pseudoephedrine) in the Methamphetamine Control Act of 1996, most of the production moved to Mexico, along with most of the (ditchweed) marijuana production, and smuggling routes for both South American cocaine and heroin (also brought in from abroad).

The pharm market is probably more cash-based, since it seems to be just as much "buying pills off people who get them for ~free from pharmacies, for cash" as "bringing in bulk pills from India/China/Israel". This might vary per medication though, but there are definitely entirely-domestic pharm dealers.

I'm not really sure what's happened with the MJ market post-MMJ; I know a lot of the grow ops in the Triangle went from being local people to being Mexican gang grows, but I think there are plenty of 100-400 plant warehouse grows now. I'm not really sure about the outdoor market in places like Missouri (which I believe is one of the bigger domestic outdoor producers). I do know there's a huge pricing differential between Oakland and the East Coast, probably due to MMJ and quantity.