I've come to realize that viewing the world through the simple lens of laundering causes dumb systems to suddenly make sense. Silly rabbit, you thought these industries were there for the normal public?
Out in the developing world you’ll see all kinds of things that make no sense commercially, because they were really just a way to park a few million dollars in a way that slowly trickles out under the guise of legitimacy. Buildings with rent ROI> 100 years. A motorcycle dealership with 3000 motorcycles in stock, slowly selling them off , many > 10 years old and zero miles…. Etc.
Here in Colombia it's almost a staple to find perpetually-empty restaurants that never go broke. We call them "lavaderos" - kinda like "laundering-stations".
I've always wondered if Baskin Robbins is a front, I used to see them everywhere in Oregon, where they were always empty even during the summer made me wonder how they stayed in business. as a kid I always thought it was a mob front.
This is interesting to me and I see why it would work in a place with lower state capacity but in more developed countries it’s not a great strategy. You want your money laundering to operate through high volume cash businesses. When I lived in Seattle I used to sometimes go to a sketchy cash-only teriyaki joint. The food was great and they were always filled with paying customers. Sadly, they were later caught and shut down.
I'm not sure what good ways there are to manage this generally, other than limiting the size or types of financial transactions that can occur within a system.
Trying to stop money laundering via mass surveillance of people's transactions is futile and creates far more losses than gains for society. It is what's responsible for the epidemic of debanking that has emerged over the last decade.
"The Financial Conduct Authority reported that banks in the UK were closing nearly one thousand accounts daily, with just over 343,000 closed in 2022, compared to about 45,000 in 2017.[4]"
Money transfer is a basic utility and should not be rationed out and gatekept by government regulators.
I remember reading about a case where criminals bought an entire issue of a local lottery, thus collecting all the prizes, and apparently saw that a reasonable cost to launder their cash.
this works quite well even at small scale. In my country you can just go to any tobacconist, buy 1000 € worth of scratch cards with cash, and happily keep whatever comes out. And since they're heavily regulated, you can check winning probabilities in advance so you already know the expected return!
Add to the list almost all high end (dance) clubs, the kind that sell you the $50 bottle of champagne for $5000, "cleaning" thousands for every easily justifiable and anonymous bottle sale with close to 0 effort.
Actually, any business that can just add an arbitrarily huge markup for what are otherwise cheap, run of the mill products and services is probably also laundering money. Usually exclusive/luxury places, the ones where in one go they can convert the lowest possible cost into the highest possible clean profit.
Apparently in Vancouver BC (money laundering capital of North America), they use luxury watches and cars to launder funds as well, in addition to the obvious local casinos and real estate.
If something in the world doesn’t make sense, figure out who’s profiting from it.
That’s something that a friend mentioned to me a few years ago, haven’t forgotten it since, and now everything does make sense when viewed from the right context.
The expression goes back to the Roman Republic. Coined by former consul Lucius Cassius Longinus Ravilla, who 'gained fame for formulating the question "Cui bono?" ("Who benefits?") as a principle of criminal investigation.'
This is a fairly common view, but it overstates people's rationality abd assumes you have perfect information, leading people to pretty conspiratorial views.
Often the actual answer to things not making sense is that most things in the world are done poorly and many things are some mish mash of various interests rather than a singular actor.
Incompetence is far more common than malice, and many observers are themselves incompetent.
In my local neighbourhood there are a couple of commercial spaces that keep seeming to become new businesses, go through the expected few months of rebranding and outfitting, stay for a couple more months, then shut down. Only to become new businesses doing the same thing. Repeat ad nauseum.
Which would be fine, except it’s always the same owners. I’m not sure what the grift is, but I’m sure there’s one. Perhaps its simply taking advantage of business loans. Perhaps something more involved with contractors and business expenses charged differently on paper. I’m not sure, but I’m sure I’m curious.
In the same way that buying a company and taking out business loans for expenses isn’t itself fraudulent, but can be done for that purpose, I can’t help but feel like there’s something going on.
Moving money around is a crime...why? It results in massive intrusiveness by government: full insight into everyone's finances, without evidence of a crime.
And, yes, this does get abused. Government is people, some of whom are evil, or out for revenge, or whatever. I had an acquaintance whose accounts were periodically frozen by the IRS, because he had pissed off the local office. He would get them unblocked, but only after weeks of missing mortgage payments and other bills.
Ending anonymous banking like in Switzerland was a major objective for the US. They said it was because it allowed money laundering for terrorists. People will get upset when the government talks about ending encryption in order to stop terrorism but the same concept applied to money apparently doesn't matter.
In practice we have a system where money laundering has not ended and we have much more financial surveillance for average citizens. That was probably the purpose all along and it never had anything to do with finding tax evaders or stopping terrorism.
What's the point of surveilling the movements of average citizens' money? They usually don't hide anyway. I suppose tax evaders were the target all along, with a smattering of criminal operators, e.g. drug dealers. Terrorists were but a pretext to produce moral panic.
The short answer is that said money is either the proceeds of a crime, or (in the other direction) being sent to or from a sanctioned person, organization, or country.
This is why it's so hard to push back against, like the TSA. "Do you want terrorists using the banking system?" is a killer argument for midwits.
Just replace "money" with a gold bricks. If I have them in the trunk of my car and move it around, you can't arrest my car on the assumption that the bricks are "the proceeds of a crime". You have to reasonably prove it with all the red tape involved, or GTFO of my way.
Money is a call option on the labor of its citizens. When money accumulates to people who operate against the best interests of its citizens more and more of a countries labor and future is traded for less societal value. There exists some tipping point where no societal value is created and money exists just to drain the vitality of its citizens. In other words, no matter how hard you work things only get worse.
This doesn't really have anything to do with "money laundering". For example, you get the same set of problems if the money is accumulating to monopolies or industries with artificial scarcity as a result of regulatory capture even though the law doesn't require them to "launder" the money they're accumulating.
Meanwhile in the case of classical criminal enterprises, the laws against money laundering don't actually work because in practice there are ten thousand ways to exchange value other than with official currency. And then the systems to prevent "money laundering" cause more problems for honest people who get trapped up in them out of ignorance, or become victims of corrupt government officials who use financial surveillance systems for oppression, whereas professional criminal organizations just restructure their activities to bypass the rules.
I'm in an EU country where banks go through all the necessary checks.
As someone who worked for a bank, I got hit by the AML check on a larger transaction, delaying it for over 3 months in the end, causing me to have to spend from my companies war chest instead.
Once, I mistakenly sent a large amount of money from my own account to my own account, which I had to spend multiple emails and phonecalls explaining the mistake to the tax authority.
But, we had cases where people illegaly transferred hundreds of thousands/millions of dollars to accounts without anyone reacting.
We have a large amount of real estate that is "bought in cash". It is especially popular among politicians who declare getting a large "loan in cash from their mother" or "their parents collected money for years". When you compare the salaries to the amount of cash earned, it is obviously impossible unless they were genius investors too.
We have corruption cases in which money was transferred from government companies into personal accounts without anyone's knowledge or anyone triggering a check.
These transactions are somehow legitimate and not investigated.
The AML system as it is is not just inefficient, it is suspect to corruption, human error and vindictiveness.
As someone who sees the outcome of people losing everything to sophisticated scammers/ fraudsters and thieves and how little authorities are able to do, nah, the overreach is not in sight.
There are more criminals than abusive IRS agents. And usually when people tell me stories like that, there is more to it..
C'mon, moving money is not a crime but moving money that has been illegally obtained is a crime (drugs, prostitution, illegal sports book,...) as is concealing the source or target of money sent to terrorist organizations and yes it makes certain things harder than they used to be for the rest of us.
Most of the commenters here have zero connection to reality eh.
For the uninformed: if you cannot complete KYC or proof of wealth checks, you do not lose your money.
The institution you're trying to transact will just will not work with you. They might not for any number of other reasons: adverse media, dodgy transaction history, etc. etc. etc.
Just using an unlicensed hawaladar to transmit legally earned and taxed money is money laundering (whether that is the actual statute that would be charged, idk, but it falls under the stuff AML compliance is supposed to catch). The whole system is absolutely insane.
>Moving money around is a crime...why? It results in massive intrusiveness by government: full insight into everyone's finances, without evidence of a crime.
Because Karen is salty her teenage son's weed dealer isn't paying taxes, basically.
And then there's all the people who see these broad invasive things as a way to get at people who can't otherwise easily be caught, Al Capone and the like.
And don't forget all the idiots who see it as a means for "their guy" in government to exert control over people they don't like such as brown people without papers, uppity truckers with horns, etc.
In Canada any transactions over a certain limit require the regulated counterparty to file a Suspicious Transaction Report with FINTRAC.
FINTRAC is unable to establish a pattern in those reports and prosecute. Instead, when someone is charged with an indictable offence, their name and related entities are searched for STRs. Any financial crimes are then used to create additional charges.
The net result of this, because of lack of digitization and various privacy guarantees, is that it is almost impossible to be charged with financial crimes as a primary offence in Canada.
It is similar in the US, except we call it a currency transaction report [0]. Because the amount — $10,000 — is not indexed to inflation, these reports are extremely numerous, mostly automated, and are almost entirely useless — beyond conveying the ability to charge ordinary people with structuring [1].
> beyond conveying the ability to charge ordinary people with structuring [1].
It doesn't, lol. Structuring is when you make several smaller transactions to avoid a CTR. If a CTR was created, you aren't structuring. And if you are structuring, a CTR isn't created.
The Cullen Commission Report [0] was damning. Canada is “willfully blind” to the issue and is, at this point, knowingly funding international crime and terrorism.
The crazy thing about money laundering laws is that in many jurisdictions, just failing to prove the legitimate origin of your funds can be enough to lose assets, and face criminal prosecution, without the state ever proving an underlying crime. It effectively shifts the burden of proof.
Also, even if you can prove the legitimate origin of the funds you can’t be sure that your bank will accept them. If you can’t find a bank that will accept them then formally you may still have the ”asset” but you can’t really use the money.
Seriously, why would you have a problem explaining where a $5M came from?
In most places this is "proceeds of crime", requiring associated convictions.
In places that have unexplained wealth statutes, the bar is also pretty high - "balance of probabilities" is not hard to argue IF YOU HAVE LEGITIMATE SOURCES OF MONEY.
Any circumstance where the onus is on a private citizen to prove innocence instead of the government to prove guilt is a perversion of justice. Stupid voters and the government will destroy all privacy for the sake of "the guns, the gangs, the children"
It's extremely simple until it's not. Let's say you bought 100$ worth of BTC back in 2012 with cash at a meetup. Now it’s worth $1M, but you can't prove its origin. You now have a perfectly law-abiding person that risks being accused of "money laundering" just to keep what's rightfully theirs.
No, some financial institutions like Binance only allows clients to get statements for the last year or so. P2P transaction details go back only a couple of months.
Sometimes your employer goes out of business. Employees do not always preserve their payslips.
Then there are countries like Georgia, it's culturally acceptable to buy real estate with cash. If no valuation of the property was made, it becomes very difficult to prove where the money came from.
The money laundering control systems, as well as being ineffective at controlling crime can be a pain in the neck for the law abiding. I have money from my grandad, received 40 years ago. No one really has records going back that far but you try buying a house and they want proof of the origin of the funds. Trying going to your bank to get records from five years ago often gives a date out of range error.
>The money laundering control systems, as well as being ineffective at controlling crime
The point of AML/KYC regulations isn't to stop all crime, just like the point of US sanctions on Russia isn't to stop all Russian exports. In both cases it's to raise the cost of doing business for the entity being targeted. In the case of Russia, they can still sell their oil to India or whatever, but at a steep discount. In the case of drug cartels, they can still get their funds into the regular banking system, but also at a steep discount. Smuggling pallets of dollar bills across the border and setting up a network of front companies is expensive. Doing all that also which implicate them in even more crimes, so even if there's no evidence of them smuggling fentanyl, they can be prosecuted purely on the basis of having a car full of cash.
>I have money from my grandad, received 40 years ago. No one really has records going back that far but you try buying a house and they want proof of the origin of the funds.
The better question is why are you were sitting on cash for 40 years. In that time inflation already ate 66% of the value, and if you factor in the opportunity cost of not investing the money in stocks/bonds, the loss is even greater.
It wasn't in cash. It was in equities to a large extent. But they still ask for the source. Even if it's from selling shares they want to know where the shares came from. At least sort of. The whole thing is a box ticking exercise for compliance to cover their own arses.
In fact it's worse than that in some ways as I had an investment advisor who bought and sold stuff and I don't know if I have records of what exactly.
The point is to raise the barriers/cost of business high enough so that the larger criminal enterprises do not have competition from the smaller ones. Ensuring the greatest threats become even bigger ones, but also that any corrupt politicians/officials/bankers get even bigger payouts and the payouts they get are more predictable from fewer channels.
> The better question is why are you were sitting on cash for 40 years.
That's not a better question; that's just ignoring reality. Who cares why they were sitting on cash for 40 years? People should be able to do whatever they want with their money, even if it's not the most financially advantageous thing.
If I get the OP correctly it wasn't 'cash' that they were sitting on but it was a balance in a bank account. You can turn that into cash (unless lots of other people try to do the same thing at the same time, see also 'bank run') but strictly speaking it isn't cash.
I know a number of people who don't trust banks and so have their cash in a mattris or similer things. Most are dead - they remembered banks failing in the 1930s and said never again.
> I have money from my grandad, received 40 years ago. No one really has records going back that far but you try buying a house and they want proof of the origin of the funds.
This makes zero sense.
I have bought a house, and they want bank records going back like a few months or maybe a year at most. If that money has been sitting in an account for that long, nobody gives a shit where it originally came from. Like, if you had $100,000 for a down payment, they’re not checking the last twenty years of your paystubs to make sure the math checks out.
The only thing they really are interested in is knowing this money didn’t just appear out of nowhere because you got a personal loan from someone or because you got a conventional loan from a lender that hasn’t reported it to a credit reporting agency yet, and which would affect the decision to underwrite your loan.
If you’ve just been holding on to large sums of literal cash dollar bills for the last 40 years, that is such a comically ridiculous financial decision I don’t even know what to tell you.
> I have bought a house, and they want bank records going back like a few months or maybe a year at most.
I had to juggle with this a little bit because I had sold some crypto for the down payment, but it's crypto that I had been keeping in a hardware wallet for years. As a result, I could certainly generate records showing how long I'd had it, but they'd be my own records based on the blockchain--not from any bank.
They ended up accepting transaction records from Coinbase, though even those mostly just showed some Bitcoin being received into the account and then being sold before transferred to the bank. But I guess that was enough for them.
In any case: I did ask about it and they told me it wasn't actually for KYC laws or money laundering. The reason they want a paper trail is to make sure you didn't actually just borrow the money from someone else. And that makes sense, since they're super picky about you not opening any new lines of credit while trying to close the mortgage.
That requirement isn’t about money laundering at all. They are wanting to make sure that you aren’t borrowing the down payment from someone else, because that would mean you don’t actually have as much (or any) of your own money invested in the property.
The point of a down payment is to make it so the borrower has an incentive to not default on the loan, because the borrower would lose the down payment.
If the down payment is actually borrowed money as well (like suppose you get a credit card advance for the money), then the borrower won’t lose anything if they stop paying the loan, and there is increased risk that the loan defaults.
You shouldn't really need to prove where you got them from; what the system cares about is that you're not laundering it, and it's obvious that nobody launders money on a multi-decade timescale. All you should need to satisfy them is just to show that you've been in possession of it for so long the bank can't even show where it came from anymore. That is itself proof that it's not laundering. You may have good success just pushing back a bit with this point.
One fun way to get around this is to have enough money to sidestep the bank altogether. The title company does not give a shit about where the money came from. All they will want to see is a screenshot of your current balance so they know you aren't wasting everyone's time.
I bought a cheap property (vacant land with no utilities) then built the house literally $20 or $1000 at a time buying blocks/wood/pipes etc as I was building. All the money was legally earned and taxed, but the point is even the title company was sidestepped in this case beyond an amount pretty trivial in comparison to the value of the property and very little of it would have had to of went through the traditional financial system in order to make it possible.
> but you try buying a house and they want proof of the origin of the funds
Fannie Mae's assessment criteria for origin of funds has a time limitation. If that money has been in an account you control, for forty years, "origin of funds" is not a question. I want to say the cut off is something like 36 months, but it may be even less.
Depends on the jurisdiction and it may not be the lender that requires proof of origin but the party handling the transaction. They may even have a reporting requirement for 'suspicious transactions'.
They have them, but not from a web interface. Probably will require talking to a human, and a service fee to retrieve the records from physical storage.
We all complain about big brother, new surveillance tech, and the easy sharing of personal data with government. And yet, some of the biggest problems seem to be untouched. Is this incompetence, beuacracy, complicity?
The moment you try to look into the fines governments impose on banks caught money laundering and the rare cases in which bankers actually see a prison cell, your last option is the most likely one, with a sprinkle of the two others.
My main issue is that all the AML/KYC/KYB barriers we have to deal with never seem to be subject to efficiency tests, all the studies I read and the few audits of these system seem content with it's likely better than doing nothing... but never measure the lost opportunities in trade/business they cause.
In a way it's the same hopless fight against so-called piracy for movies/games. The motivated actors who want to break the law find ways to do it at a large scale, mostly without consequences... and the honest people are just hindered when they want to use their content (even lose access to it when DRMs rely on the existence of the developer/publisher and their goodwill to maintain it way past the time when that media was able to generate revenues).
I worked in the legal cannabis industry in California before the pandemic. The business I worked for had to jump through a lot of hoops, including dividing itself into multiple LLCs, in order to deal with the disparity between state and federal laws, and the business policies of banks and even some of our equipment vendors (I remember specifically that McMaster-Carr would not do business with you if you were a cannabis company). Most cannabis businesses were forced to work in cash, which made a lot of financial transactions difficult, but also made it easier to do business with those still in the "traditional market". In the end, the stricter regulations had the effect of greater concentration of ownership, but questionable efficacy in stopping illegal exports.
It's my understanding that cannabis is still federally illegal virtually without exception, therefore changing AML law might not do much for your industry since it was always an illegal conspiracy to knowingly aid and abet the commission of a felony.
It hasn't been my industry for years, and the legality of intrastate cannabis is still being fought in the courts, see the Canna Provisions case which has been ongoing since 2023 and is currently on the Supreme Court docket.
Well, sometimes they really gum up the works. I have developers in Ukraine and several times in the last year a wire transfer to them to pay them their monthly salary was held up for more than a month in transit. It was stuck at a bank in NYC and no amount of me pushing on my rep at Wells Fargo could get it unstuck OR returned. Last one ended up taking almost 2 months to get there! And, they told us it was going to be returned, so we paid the person via other means (BTC). Very frustrating.
I had the exact same experience paying developers in Serbia. It was pretty eye opening to how unreliable something fundamentally important like wire transfers can be, and made me appreciate crypto in a new light.
Readit News
Gambling: https://www.cbc.ca/news/politics/online-gambling-sites-money...
Casinos themselves: https://www.ibtimes.com/political-capital/trumps-businesses-...
Commerce: https://www.wired.com/story/wired-awake-180518
Crypto: https://financialcrimeacademy.org/cryptocurrency-money-laund...
Shell companies: https://newrepublic.com/post/192244/trump-celebrates-destroy...
Real estate: https://www.firstaml.com/resources/5-ways-criminals-launder-...
Most folks will remember the 2019 temination of lootbox key trading for CS:GO on Steam.
https://www.bbc.com/news/technology-50262447
https://www.gamesindustry.biz/research-identifies-suspicious...
https://www.sciencedirect.com/science/article/pii/S266628172...
I'm not sure what good ways there are to manage this generally, other than limiting the size or types of financial transactions that can occur within a system.
https://en.wikipedia.org/wiki/Debanking
"The Financial Conduct Authority reported that banks in the UK were closing nearly one thousand accounts daily, with just over 343,000 closed in 2022, compared to about 45,000 in 2017.[4]"
Money transfer is a basic utility and should not be rationed out and gatekept by government regulators.
I remember reading about a case where criminals bought an entire issue of a local lottery, thus collecting all the prizes, and apparently saw that a reasonable cost to launder their cash.
Reminds me of True Lies.
Actually, any business that can just add an arbitrarily huge markup for what are otherwise cheap, run of the mill products and services is probably also laundering money. Usually exclusive/luxury places, the ones where in one go they can convert the lowest possible cost into the highest possible clean profit.
Deleted Comment
http://wormwoodiana.blogspot.com/2025/04/do-charity-bookshop...
which legally evade taxes and
https://www.londoncentric.media/p/asf-aziz-london-candy-shop...
which illegally evade taxes not to mention
https://www.theguardian.com/uk-news/2022/dec/26/more-than-90...
and
https://www.esquire.com/uk/style/grooming/a65829331/high-str...
and these are frequently accused of being involved in all sort of crime not least money laundering.
If it's legal I think it's "avoidance".
That’s something that a friend mentioned to me a few years ago, haven’t forgotten it since, and now everything does make sense when viewed from the right context.
https://en.m.wikipedia.org/wiki/Cui_bono
Often the actual answer to things not making sense is that most things in the world are done poorly and many things are some mish mash of various interests rather than a singular actor.
Incompetence is far more common than malice, and many observers are themselves incompetent.
In my local neighbourhood there are a couple of commercial spaces that keep seeming to become new businesses, go through the expected few months of rebranding and outfitting, stay for a couple more months, then shut down. Only to become new businesses doing the same thing. Repeat ad nauseum.
Which would be fine, except it’s always the same owners. I’m not sure what the grift is, but I’m sure there’s one. Perhaps its simply taking advantage of business loans. Perhaps something more involved with contractors and business expenses charged differently on paper. I’m not sure, but I’m sure I’m curious.
In the same way that buying a company and taking out business loans for expenses isn’t itself fraudulent, but can be done for that purpose, I can’t help but feel like there’s something going on.
Quick calculations on minimum wages, rent, other costs and the required amount of sales show that they can not be profitable.
Deleted Comment
And, yes, this does get abused. Government is people, some of whom are evil, or out for revenge, or whatever. I had an acquaintance whose accounts were periodically frozen by the IRS, because he had pissed off the local office. He would get them unblocked, but only after weeks of missing mortgage payments and other bills.
In practice we have a system where money laundering has not ended and we have much more financial surveillance for average citizens. That was probably the purpose all along and it never had anything to do with finding tax evaders or stopping terrorism.
As with the TSA, any system designed to filter "bad guys" ends up being a huge imposition on average citizens, because there's a lot more of them.
Dead Comment
The short answer is that said money is either the proceeds of a crime, or (in the other direction) being sent to or from a sanctioned person, organization, or country.
This is why it's so hard to push back against, like the TSA. "Do you want terrorists using the banking system?" is a killer argument for midwits.
It's a real shame that kind is allowed to vote. IMO, they're more destructive than the 90 IQ and below crowd.
A great article on this dynamics that is worth a read (https://www.propublica.org/article/china-cartels-xizhi-li-mo...)
Meanwhile in the case of classical criminal enterprises, the laws against money laundering don't actually work because in practice there are ten thousand ways to exchange value other than with official currency. And then the systems to prevent "money laundering" cause more problems for honest people who get trapped up in them out of ignorance, or become victims of corrupt government officials who use financial surveillance systems for oppression, whereas professional criminal organizations just restructure their activities to bypass the rules.
I'm in an EU country where banks go through all the necessary checks.
As someone who worked for a bank, I got hit by the AML check on a larger transaction, delaying it for over 3 months in the end, causing me to have to spend from my companies war chest instead.
Once, I mistakenly sent a large amount of money from my own account to my own account, which I had to spend multiple emails and phonecalls explaining the mistake to the tax authority.
But, we had cases where people illegaly transferred hundreds of thousands/millions of dollars to accounts without anyone reacting.
We have a large amount of real estate that is "bought in cash". It is especially popular among politicians who declare getting a large "loan in cash from their mother" or "their parents collected money for years". When you compare the salaries to the amount of cash earned, it is obviously impossible unless they were genius investors too.
We have corruption cases in which money was transferred from government companies into personal accounts without anyone's knowledge or anyone triggering a check.
These transactions are somehow legitimate and not investigated.
The AML system as it is is not just inefficient, it is suspect to corruption, human error and vindictiveness.
https://www.amnesty.org/en/latest/news/2024/09/india-fatf-ra...
There are more criminals than abusive IRS agents. And usually when people tell me stories like that, there is more to it..
For the uninformed: if you cannot complete KYC or proof of wealth checks, you do not lose your money.
The institution you're trying to transact will just will not work with you. They might not for any number of other reasons: adverse media, dodgy transaction history, etc. etc. etc.
After you pay your W2 income taxes for the year, your income for the year is no longer taxable.
edit: I guess I can't argue with the holy writ of wikipedia, but it's how they got Al Capone.
Money laundering is disguising the source or use of funds (making illegally sourced cash look legally sourced).
Plenty of people would (do) happily pay some tax on cash as part of avoiding difficult questions about the source.
Because Karen is salty her teenage son's weed dealer isn't paying taxes, basically.
And then there's all the people who see these broad invasive things as a way to get at people who can't otherwise easily be caught, Al Capone and the like.
And don't forget all the idiots who see it as a means for "their guy" in government to exert control over people they don't like such as brown people without papers, uppity truckers with horns, etc.
FINTRAC is unable to establish a pattern in those reports and prosecute. Instead, when someone is charged with an indictable offence, their name and related entities are searched for STRs. Any financial crimes are then used to create additional charges.
The net result of this, because of lack of digitization and various privacy guarantees, is that it is almost impossible to be charged with financial crimes as a primary offence in Canada.
Source: former RCMP financial crimes consultant.
[0]: https://en.wikipedia.org/wiki/Currency_transaction_report
[1]: https://en.wikipedia.org/wiki/Structuring
It doesn't, lol. Structuring is when you make several smaller transactions to avoid a CTR. If a CTR was created, you aren't structuring. And if you are structuring, a CTR isn't created.
0: https://cullencommission.ca/
https://www.nemannlawoffices.com/blog/law-enforcement-seized...
In most places this is "proceeds of crime", requiring associated convictions.
In places that have unexplained wealth statutes, the bar is also pretty high - "balance of probabilities" is not hard to argue IF YOU HAVE LEGITIMATE SOURCES OF MONEY.
https://news.ycombinator.com/newsguidelines.html
You're acting like the government will charge you for a $100 in your wallet.
Sometimes your employer goes out of business. Employees do not always preserve their payslips.
Then there are countries like Georgia, it's culturally acceptable to buy real estate with cash. If no valuation of the property was made, it becomes very difficult to prove where the money came from.
The point of AML/KYC regulations isn't to stop all crime, just like the point of US sanctions on Russia isn't to stop all Russian exports. In both cases it's to raise the cost of doing business for the entity being targeted. In the case of Russia, they can still sell their oil to India or whatever, but at a steep discount. In the case of drug cartels, they can still get their funds into the regular banking system, but also at a steep discount. Smuggling pallets of dollar bills across the border and setting up a network of front companies is expensive. Doing all that also which implicate them in even more crimes, so even if there's no evidence of them smuggling fentanyl, they can be prosecuted purely on the basis of having a car full of cash.
>I have money from my grandad, received 40 years ago. No one really has records going back that far but you try buying a house and they want proof of the origin of the funds.
The better question is why are you were sitting on cash for 40 years. In that time inflation already ate 66% of the value, and if you factor in the opportunity cost of not investing the money in stocks/bonds, the loss is even greater.
In fact it's worse than that in some ways as I had an investment advisor who bought and sold stuff and I don't know if I have records of what exactly.
That's not a better question; that's just ignoring reality. Who cares why they were sitting on cash for 40 years? People should be able to do whatever they want with their money, even if it's not the most financially advantageous thing.
Okay...
This makes zero sense.
I have bought a house, and they want bank records going back like a few months or maybe a year at most. If that money has been sitting in an account for that long, nobody gives a shit where it originally came from. Like, if you had $100,000 for a down payment, they’re not checking the last twenty years of your paystubs to make sure the math checks out.
The only thing they really are interested in is knowing this money didn’t just appear out of nowhere because you got a personal loan from someone or because you got a conventional loan from a lender that hasn’t reported it to a credit reporting agency yet, and which would affect the decision to underwrite your loan.
If you’ve just been holding on to large sums of literal cash dollar bills for the last 40 years, that is such a comically ridiculous financial decision I don’t even know what to tell you.
I had to juggle with this a little bit because I had sold some crypto for the down payment, but it's crypto that I had been keeping in a hardware wallet for years. As a result, I could certainly generate records showing how long I'd had it, but they'd be my own records based on the blockchain--not from any bank.
They ended up accepting transaction records from Coinbase, though even those mostly just showed some Bitcoin being received into the account and then being sold before transferred to the bank. But I guess that was enough for them.
In any case: I did ask about it and they told me it wasn't actually for KYC laws or money laundering. The reason they want a paper trail is to make sure you didn't actually just borrow the money from someone else. And that makes sense, since they're super picky about you not opening any new lines of credit while trying to close the mortgage.
The point of a down payment is to make it so the borrower has an incentive to not default on the loan, because the borrower would lose the down payment.
If the down payment is actually borrowed money as well (like suppose you get a credit card advance for the money), then the borrower won’t lose anything if they stop paying the loan, and there is increased risk that the loan defaults.
Fannie Mae's assessment criteria for origin of funds has a time limitation. If that money has been in an account you control, for forty years, "origin of funds" is not a question. I want to say the cut off is something like 36 months, but it may be even less.
Helpfully, all this information is public: https://selling-guide.fanniemae.com/sel/b3-4.3/verification-...
My main issue is that all the AML/KYC/KYB barriers we have to deal with never seem to be subject to efficiency tests, all the studies I read and the few audits of these system seem content with it's likely better than doing nothing... but never measure the lost opportunities in trade/business they cause.
In a way it's the same hopless fight against so-called piracy for movies/games. The motivated actors who want to break the law find ways to do it at a large scale, mostly without consequences... and the honest people are just hindered when they want to use their content (even lose access to it when DRMs rely on the existence of the developer/publisher and their goodwill to maintain it way past the time when that media was able to generate revenues).
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