No, it isn't. Banks exist to induce stability and liquidity (i.e., the efficient flow of capital) within the economy. Hot dog stands exist to sell hot dogs. Money exchanges exist to transfer currencies to (you guessed it) facilitate commerce in different regions.
The hair you're attempting to split between "laundering" and "washing" does not exist in the financial world, and would not impress financial regulators.
There's no such thing as financial privacy when you, by virtue of being a citizen of a country, consent to be taxed on income and investment. Your financial actions may not be necessarily public to your fellow citizens but they absolutely and without possible argument must be to your tax assessor, and this exists to hide transactions from them. Of course it's illegal.
You can revoke that consent, as it is possible to become a citizen of no country, but I wouldn't recommend it.
>>this exists to hide transactions from them (tax assessor)
Not true, this tool exists to provide privacy on an otherwise public ledger. Your tax assessor has no right to know about a transaction as soon as it occurs. A crime is only committed if you don't voluntarily declare it at a certain point in the future.
LE laziness and citizens conceding territory unnecessarily is creating a nanny state.
My poor, so-very-put-upon friend: you can choose to leave.
But there is a collectively hashed-out social contract you accept by staying, and it should be of no surprise that the law takes that contract as table stakes and acts according to it.
US Citizens can't leave. They must pay tribute to the United States globally and beyond until they die. Income earned in outer space is taxed as income earned in country.
Yeah, that's the price of retaining your American citizenship, which is among the most valuable in the world to have if you ever have a "I need to call my consulate" problem. But you don't have to retain your American citizenship--there are a lot of countries out there!
Granted, that's assuming you're a valuable enough contributor to society that you'll find another country interested in taking you, one that won't similarly have expectations around "people in a society should pay taxes", but that's a you problem.
It's not that tough. You just need another citizenship, $2_350 to pay the renouncement fee, and an appointment at a USA consulate/embassy to formally renounce. You also need to pay an exit tax if you have a net worth of $2 million+.
Rosa Parks publicly broke the law and was publicly punished for it, because that's how civil disobedience works. In doing so, she engendered significant public sympathy and acted as a spur to change minds and, eventually, laws.
Comparing that to hiding your financial transactions so you avoid KYC is genuinely embarrassing.
-- as it was explained to me (I don't crypto) - because everything is public - you might want to disassociate (wash) transactions from yourself for perfectly legitimate reasons - not really needed in traditional finance as people typically don't have access to your bank account - however - this is not necessarily the same as wanting to take money you gained illegitimately and make it legitimate (launder) --
This is the hair splitting I mentioned: no government in the world cares that you're doing money laundering because you're opted into a public-by-default money transfer system. The answer is to simply not use an immutable public ledger for your finances, since you're not required to.
The government will not carve out a subset of crimes because of an unnecessary self-imposed restriction on financial privacy.
-- by the same token - it's a bit uncouth to support and provide frameworks of legitimacy for "future focused technology projects" - however not enable services that account for edge cases in said new systems - I generally agree with you - but playing the devils advocate a bit - the crypto folks should probably be able to wash their "cash" if the reporting parameters are implemented correctly - no? --
The hair you're attempting to split between "laundering" and "washing" does not exist in the financial world, and would not impress financial regulators.