Moving Bricks: Money-laundering practices in the online scam industry

https://globalchinapulse.net/moving-bricks-money-laundering-practices-in-the-online-scam-industry/

by speckx • 2 years ago

236 157 2 years ago

globalchinapulse.net

teddyh• 2 years ago

Hit piece on Telegram?

eitland5• 2 years ago

No, not as far as I have seen.

It seems they only describe that Telegram has been used extensively by criminals for the same reasons everyone else use it:

Great ux, reasonable privacy (for what we needed).

Note: all that is in a flux now. Personally I trust Telegram less now as it seems the same exceptions the French has made for themselves can also be used by russia or any other terrorist regime.

goatsi2• 2 years ago

The assumption has been that Telegram provided significantly more access to Russia years ago, as it remains unblocked (with channels even run by the government), and Pavel Durov wasn't arrested when he visited Russia after laws were passed that would apply to Telegram but he claims they were refusing to follow.

nullorempty• 2 years ago

What criteria do you use when calling regime a terrorist regime?

rangerelf• 2 years ago

Note: all that is in a flux now. Personally I trust Telegram less now as it seems the same exceptions the French has made for themselves can also be used by russia or any other terrorist regime.

What made you believe that Russia hasn't had a firehose into Telegram's backend for the longest time?

blendergeek• 2 years ago

Telegram’s encryption and anonymity provide a readymade technological platform for illicit activity, helping people to overcome information barriers and gaps in the circulation of information

That sentence is definitely in the "services like Telegram should not exist" camp. I wouldn't call the entire article a "hit piece" but the author is definitely trying to sway minds in favor of more government crackdowns on apps like Telegram.

pbreit• 2 years ago

Is the issue the stealing or the laundering?

alephnerd• 2 years ago

Along with Chinese organized crime, these marketplaces and brokers are protected and linked to Cambodia's ruling family [0] who themselves are ethnic Teochow/Nanyang.

[0] https://www.wired.com/story/pig-butchering-scam-crypto-huion...

Jerrrrrrry• 2 years ago

drugs, crime, fin-laundering, and china capital outflow (all of the above)

these are the epitome of all the use-cases of all the cryptos

andriesm• 2 years ago

The imaginary crime of money laundering. If the underlying activity is a crime, we already have laws to deal with that. Why is any attempt at financial privacy deemed money laundering? Why does making any tool that help law abiding citizens have financial privacy, also guilty of money laundering?

Of course, now that most people have bought into money laundering, the goal posts are now getting moved that any attempt at privacy can be considered illegal.

You use or provide a messaging service that has unbreakable privacy - we'll make this a crime too!

Why should it be illegal to use a crypto tumbler/mixer service?

Oh because some people use it for crimes.

Then arrest the CEOs of gun companies, because guns can be used to commit crimes!

beaglessss16• 2 years ago

While AML regulations likely have an impact, imo their main secret motive is financial surveillance.

earnesti3• 2 years ago

This kind of legislation is crafter by big masses of lawyers, lobbyists, politicians, whatever. Additionally they change all the time. There are many different motivations at play. Maybe it is surveillance, maybe something else, in the end who cares, because it is impossible to read minds.

goatsi2• 2 years ago

The "money laundering" at focus in the article is receiving money directly from people who are being scammed, and moving it quickly enough that the police cannot freeze or recover it when the scam is discovered. That's different from usual money laundering.

mandibles• 2 years ago

If cash were invented today, it would be illegal.

JumpCrisscross21• 2 years ago

If cash were invented today, it would be illegal

Based on what? Is 2008 not "today," because last I checked cryptocurrencies aren't illegal.

jjulius• 2 years ago

Why is any attempt at financial privacy deemed money laundering? Why does making any tool that help law abiding citizens have financial privacy, also guilty of money laundering?

These are untrue absolutes.

beaglessss16• 2 years ago

There is still an element of truth. If you don't provide KYC for a bank account there is now a crime if it is knowingly allowed. You could go offshore but now you need to report the account. You could form an anonymous LLC but law recently changed an now must report UBO to fincen.

You could store cash/gold in an anonymous safe deposit, but FBI raid and steal this. You cant fly with large cash because again feds steal it. You can't carry it out the country in large without reporting it.

Crypto, same story, KYC at the exits and P2P offramp actors getting treated as 'unlicensed money transmitter' etc which again triggers KYC.

Quickly you realize it's about shutting off all the exits of privacy, not money laundering which only has increased cost consolidating power to more dangerous organizations.

soco2• 2 years ago

The underlying is one thing and the overlying another thing. It's one thing to not declare your money and thus be tried for tax evasion only, and another thing putting said money in financial tricks (as we both know that's the only goal of mixers) in order to commit tax evasion. If you want, think like the difference between murder and manslaughter - which also have many degrees and associated crimes like assault, arson, rape... we always try for those as well.

smeej• 2 years ago

(as we both know that's the only goal of mixers)

Do "we" know that's the only goal?

I've reported every digital currency-related gain or loss I've ever had on my taxes, but that doesn't mean I wanted the guy I bought my llama wool socks from to be able to trace my whole holdings. I know how easy it is to do. I learned how to do it in an afternoon.

Believe it or not, some of us just really don't think the world needs an indelible record of what kind of socks we wear, not because we actually think anybody will care, but because we reject the principle that buying socks should require a data record for third parties.

We might be weirder than you, but that doesn't make us dishonest cheats.

dataflow4• 2 years ago

Why is any attempt at financial privacy deemed money laundering?

Is it? I thought laundering money is only illegal if it's covering up illegal activity. Otherwise how is that different from e.g. the shell corporations that mask the sources of their funds.

beaglessss16• 2 years ago

Almost all large financial transactions or storage useful and active in commerce require KYC or reporting so the magic is the very act of privacy makes it illegal.

ETH_start• 2 years ago

In this case, the people are actually laundering money.

So-called anti-money laundering laws criminalize far more than money laundering, like financial privacy.

In any case, I would argue that the focus should be entirely on the crime that generates the illicit revenue, and not the after-the-fact laundering of the proceeds. When the focus is on the latter, laws are inevitably passed that mandate people to submit to warrantless surveillance of their financial transactions. The populace at large should not be made to sacrifice freedom and privacy in a largely futile attempt to track illicit criminal gains after the fact.

No useful money — i.e. no money that is unencumbered enough to be practical to use, and that provisions people with a modicum of protection against arbitrary state seizure — will give the state the ability to significantly prevent criminals from profiting from the proceeds of their crimes, merely by tracking and policing its flows.

ajross2• 2 years ago

Then arrest the CEOs of gun companies, because guns can be used to commit crimes!

So, obviously people know this, but it's important to spell out:

There is an explicit protection for keeping and bearing arms in the constitution. No such language exists for "financial privacy", in fact the fourth amendment explicitly says the government can search and investigate citizens' property, just that they have to get a warrant based on probable cause.

potato3732842• 2 years ago

It's probably only a matter of time until the SC extends "papers and effects" to mean "your stuff on other people's hard drives" in some capacity. That will probably trigger a bunch of re-litigation around the financial side of things though I have no idea what the consequences would be.

valicord• 2 years ago

You're exaggerating of course, but as a matter of principle, if X is a crime, then obscuring the evidence of having done X must surely also be a separate crime in its own right? Otherwise someone would do X, then destroy the evidence and be in the clear, since original X is now impossible to prove.

mistrial9• 2 years ago

no - this assumes the absolute existence of an unspecified crime, so the question has incomplete context and poisonous assumptions. There are rights of privacy for individuals and groups in mature systems of law. The extremes of "everything I do is my own information" and the opposite "we enforcers have a right to all information at any time" are both explicitly not allowed, for real reasons.

samatman2• 2 years ago

No, it very much should not be. We have an existing sort of crime for knowing participation in that kind of thing, it's called being an accessory.

If someone buys, let's say a bike, off an online marketplace, and it turns out to be stolen, they're out the price of the bike. It never belonged to them and gets returned to the owner. But it must be proven that they knew it was stolen for that to qualify as accessory to theft.

If you make any action which has the effect of obscuring evidence of crime, regardless of mens rea, into a crime, you will end up prosecuting innocent people. That's why this legal doctrine works the way it does.

yieldcrv• 2 years ago

Hey actually there is good news! I follow this topic and the broken dragnet of AML/KYC a lot

The US federal law of Money laundering relies on there being an illicit origin, which means it is impossible to be charged with just money laundering and it can only be a tacked on charge (but it may be the only charge that sticks). Merely obfuscating the origin is not a crime, it’s just stigmatized.

Ironically, if you are successful with money laundering, the origin looks licit.

The government acts like that never happens, DOJ always issues these pompous press releases about how nobody can hide in our financial system, but they dont know anything.

ywvcbk2• 2 years ago

any attempt at financial privacy deemed money laundering

If by privacy you mean concealing it from the government then yeah, that’s generally illegal in pretty much any place that has income/capital gains/wealth taxes.

navigate8310• 2 years ago

generally illegal in pretty much any place that has income/capital gains/wealth taxes

Authoritarian governments typically enforce fiat currency to monitor citizens, especially those with financial ties to anti-establishment entities. They couldn't care less if you're trading tomatoes.

AnthonyMouse6• 2 years ago

This doesn't explain why surveillance is required on the buyer's side. Why can't you go to a retail store, buy an anonymous prepaid debit card for cash and then use it to make purchases over the internet without giving anyone your social security number? The cash you're using has already been taxed.

JumpCrisscross21• 2 years ago

If the underlying activity is a crime, we already have laws to deal with that

This is like complaining about DUIs being illegal because we already have laws banning manslaughter.

Why is any attempt at financial privacy deemed money laundering?

It's not. Layering per se isn't illegal. It's suspicious but legal, in the same category as carting a semi-automatic into a grocery store in an open-carry state.

Why does making any tool that help law abiding citizens have financial privacy, also guilty of money laundering?

It doesn't. Practically every prosecution of money-laundering services included evidence of knowledge by the operator that their customers included people committing crimes.

AnthonyMouse6• 2 years ago

This is like complaining about DUIs being illegal because we already have laws banning manslaughter.

The premise of DUIs is to punish a person acting recklessly. The premise of KYC is to punish a third party for not conducting mass surveillance on predominantly innocent people in case one of them commits a crime. It's hard to see how these are analogous.

Practically every prosecution of money-laundering services included evidence of knowledge by the operator that their customers included people committing crimes.

This is quite a fig leaf for any entity operating at scale. The customers of any major bank will obviously include people committing crimes -- they have millions of customers. They also have thousands of employees, and then some percentage of them will be criminals as well. Expecting the intersection of these to be literally zero is an unreasonable standard.

More to the point, the underlying problem is what it incentivizes them to do, i.e. manufacture some opaque and arbitrary indicators and then conduct mass surveillance and punish innocent people for running afoul of secret rules.

soulofmischief5• 2 years ago

It's suspicious but legal, in the same category as carting a semi-automatic into a grocery store in an open-carry state.

Any suspicion toward a US citizen for open-carrying a semi-automatic weapon (which you realize is like half of the handguns in circulation, right?) is entirely due to one's own prejudice and misconceptions. It is objectively not suspicious. The individual is openly carrying it, not hiding it. Concealed carry should not be suspicious either, but open carry should be less suspicious.

This would be a good moment to examine your biases against a fundamentally protected human right as recognized by our constitution.

legitster• 2 years ago

Why is any attempt at financial privacy deemed money laundering?

Ummm. Taxes?

Money laundering is very clearly accounting fraud. If embezzlement is a crime, then money laundering is just embezzlement in reverse.

I feel like you are down an absolutist rabbithole about privacy. There are certain practical limits to privacy. You cannot blight yourself from other people's vision. You cannot operate in a society (whether it be grocery shopping, owning property, driving a car) without existing in some form. "Privacy" only makes sense in the context and is not some maximalist ideal that you can apply to any situation.

bdjsiqoocwk2• 2 years ago

If the underlying activity is a crime, we already have laws to deal with that.

Why should guns be illegal, we already have a crime against killing.

Breathtakingly idiotic.

lcnPylGDnU4H9OF2• 2 years ago

That's actually a good argument against outlawing guns. What point are you trying to make?

vkou• 2 years ago

The imaginary crime of money laundering

There's nothing imaginary about trying to hide money that you stole from someone, so that it can't be taken back from you.

tempodox• 2 years ago

I never knew it could be so interesting to be an anthropologist!

And I love how the article gives the Chinese words for all the terms involved. It feeds my fascination for everything that is Language.

The Chinese word tongdao, which we chose to translate as ‘gateway’, parallels the English word ‘channel’—a linguistic coincidence that shows the intermediary nature of these businesses, which act as a channel for the circulation of both information and money.

Exposition like this is so rare. I cannot upvote this article enough.

Bluestein• 2 years ago

Indeed. I also noted the clarifying language here. It is great, and a great article to boot.-

Bricklaying it is ...

jfil• 2 years ago

You might enjoy the book "Gang Leader for a Day" by Sudhir Venkatesh. He spends time with a street gang and explains its operations.

frozenlettuce• 2 years ago

Here in Brazil, I've seen some people starting to suspect on web influencers for money laundering. Pick your niece/nephew, start a social media account, buy followers/likes then start laundering the money on fake ads and partnerships.

Animats• 2 years ago

So that's what keeps USDT going.

dennisgideon• 2 years ago

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Moving Bricks: Money-laundering practices in the online scam industry

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