close to? sounds exactly like money laundering, since people who can move money legitimately wouldn’t do so through a relatively risky instrument like bitcoin. tax evasion is a likely entry-level reason, but often coupled with other sketchy illegalities.
The pseudo-anonymous nature of Bitcoin makes it easier to hide transactions. It’s for example why online games that let you cash money out (or have rampant RMT) have issues with money laundering and credit card fraud.
If you bought your bitcoin with legit money, and then you exchanged the bicoin for a house, and you're doing your taxes correctly, how could that be money laundering?
Why shouldn't I buy the house directly with legit money then? Why add one more layer and pay some amount in commission and also deal with volatility in BTC prices?
There are all kinds of limitations in how exactly you are allowed to use your money. And settlement of such a large amount of funds between two parties is not simple and fraught with danger if you "do it alone".
Bitcoin or your blockchain of choice has no such issues though! You can prove to your seller that you have the funds, as well as even pre-commit the money in a smart contract, or a multi-sig transaction. Doing so would completely remove the need to wait on the slow and inefficient banks to do their thing.
> There are all kinds of limitations in how exactly you are allowed to use your money.
Where are you getting that from? If the money has been earned in a legit manner and you want to spend it on a legitimate thing, who's stopping you from spending it?
Yes if your source of money isn't legal or you want to spend on something illegal, that's a different story.
My money is completely legal, but it was a protracted process to:
A.) Transfer a part of it (for this particular bank, anything more than $5000) to pay a deposit for a house;
B.) Make a final settlement on a house, again with money I had available in my account.
There are limitations on how much you can transfer easily at once, and different kinds of approval and parties have to be involved to pay for something large.
Those per transaction limits are for YOUR protection so in case someone hacks into your account they won't empty it and you can ask the bank to raise the limits.
Banks ask you the reason for transactions beyond a certain amount because they have to report it to authorities.
Large transactions like paying for a property don't happen at the drop of the hat. You won't just wake up in the middle of the night and decide to buy a property immediately right then.
You asked who is stopping you from spending your money as you want. I listed who and provided some examples. The reason why they make it difficult is beside the point.
It took me the better part of a morning I would have ideally spent on more productive tasks.
I spent an hour on the phone to get my limit temporarily raised, then another hour or so later in the day when the payment was flagged as suspicious and my account was locked. There was then an arbitrary waiting period of one day where the transfer sat in limbo before getting processed (more security theatre), and finally an additional two days for the funds to clear.
There really isn't.. I can pay 1 million EUR with my debit card if there's enough money in the account. That's the default limit, and can be raised anytime if needed.
If I have the money and they are legal, I can spend them without anyone getting in the way.
If I am in a country from where I can legally send money to Dubai to buy property, should I still convert money to BTC for buying property? Common sense says no. It may be legal but I don't need to add another layer of complexity.
If I am in a country from where I cannot legally buy a property in Dubai, would buying a property via BTC route be legal? Definitely not.
The only scenario in which it makes sense to buy property directly in BTC is if I had bought BTC years ago when it was cheap, it would be better to convert it into a real asset like an apartment in Burj Khalifa and convert my on paper wealth into real wealth.
The core scenario in which it makes sense to buy property in bitcoin is if you already hold a ton of bitcoin. Then, selling the bitcoin in order to pay fiat for a house is the more cumbersome route to take.
A few years ago I was earning a fair chunk of loyalty points (and hence air miles) by buying gift cards in supermarkets, then immediately depositing the full value of the gift cards into a savings account of mine.
This was entirely legal, and I was Making My Own Financial Decisions™, but the route got shut down pretty quickly anyway.
How easy is it to actually buy 5M USD of bitcoin? Assuming you have legit money?
And why would you move legit money out of the banking system? Assume you have 5M USD in bitcoin, can you sell it and deposit that in your bank without lots of money laundering questions that are hard to answer?
My two cents is that if you have legit money, you will want to keep in the banking system, and avoid risks of being accused of money laundering.
That would be a stupid thing to do, as Bitcoin transaction chains are public and permanent, and the use of mixers[1] close to a deal will set off alarm bells.
Cash is an infinitely better money laundering vehicle.
[1]: tools that blur the transaction chain, masking the origin of one's coins.
Cash is not so easy to move internationally. It is not so easy to move around internationally at all with flight-delays and cancellations and what have you covidis
You have cash (like a ton of cash in bank notes). The cash has unsavory origins. You go to a shady local dealer who will take your cash and give you crypto in an offshore exchange. That is cross border money laundering. You then use that crypto to buy property or NFT "art". Some months later you sell the asset, either for money in bank or crypto which you convert to money on a KYC exchange like Coinbase. Voila, you have washed your dirty money into perfectly clean money in bank. Best, you do it in a jurisdiction which doesn't have personal income tax. Like Dubai.
Yeah it's difficult to see how this facilitates money laundering. Say you're a drug kingpin who has a billion in literal paper cash that you need to make appear legitimate.
Somehow, you've got to do a billion dollars in cash to bitcoin transactions, but what's the point of buying middle eastern real estate with the bitcoin after that? Why not just rinse the bitcoin through a tumbler and sell it on an exchange and tell the taxation ministry that you simply made a great investment? Then you have a billion dollars minus tax in your bank account that you can do anything with. Dubai real estate is completely irrelevant to the process.
I think "money laundering" is like "ponzi scheme". The more likely someone on the internet is to use it, the less likely it is that they actually understand the term.
You may be right but let me explain why I think Bitcoin actually works well in this example for money laundering. You have cash and you buy bitcoin. US bitcoin exchanges probably do kyc (know your customer = laws / forms you file saying you know where the money comes from) but many offshore exchanges supposedly do not.
You could take your bitcoin and sell it on an exchange as you suggest but there are two problems with this. First, it's not that easy to sell a lot of bitcoin for real USD and the transaction costs can get high. Second, and more importantly, as money launder what you really want to do is take your dirty money in one jurisdiction and take it to another. Did you ever see Blow? Based on a true story. A US guy raised incredible money selling cocaine and stored it in a shady Panama Bank. The bank steals his money. What his recourse? If you are an oligarch in a corrupt country you want to get your money somewhere your government can't seize it. So why not take your bit coin and use it to buy real estate in Dubai? If you took your bitcoin and sold it in a way that ends up in a western bank, that bank is going to do kyc and defeats the whole purpose.
Obviously I have never laundered money and I don't really know. Tell me I am crazy.
But to buy bitcoin on an exchange, even if it doesn't have KYC laws, you'd need to have the money in a bank account first to do the wire transfer to fund your crypto exchange account. The problem of money laundering is how do you get it into the bank account in the first place. What I'm saying is that you'd have to do actual cash transactions, meaning giving someone paper money and getting bitcoin into your wallet. That's quite a problem, especially as the numbers get larger.
There are plenty of HNW individuals who want to buy or sell crytpo for cash no questions asked. Just last week a Swiss guy wanted to buy 1.5 million EUR of bitcoin from me for cash at a 10% premium. He'd supposedly have the cash delivered anywhere in Europe.
Too risky for me, but if you're a drug cartel, that's business as usual.
I think it's easier if we think about it with concrete people. How exactly would someone like El Chapo be using bitcoin for laundering activities?
Furthermore, when people bring up the laundering and crime argument, I always point out that the us dollar is by far the medium of choice for laundering money, crime, ransom, extortion, drug payments, human trafficking payments, terror financing.
Accepted almost everywhere, virtually untraceable.
