Just to be clear, this is a step by step process for how to launder money, right?

No, as it doesn't detail necessary reintegration into the economy. You will need to offer a service for crypto which you report taxes on. Your "customers" either pay directly in XMR which there is no trail on, or they swap the XMR back for a more likely used cryptocurrency like bitcoin or Ether, and pay you with that. So now it is.

In any case as your lawyer might tell you: if the origin is illicit it is money laundering. If the origin is not illicit then its not money laundering.

The irony being that it is the onus of the accuser to determine the origin, and if you do it right that is not possible to know in any scenario. Typically money laundering then is a tacked on charge, after other clear evidence is already known, to help ensure a conviction.

But really at this point, its probably better if your public resources weren't spent on flagging transactions in the first place, and if the private sector was not burdened with doing this work for the state.

What should someone do if they want to turn legal funds into anonymous crypto? Do you think BTC->XMR is a sketchy thing to do if the BTC is linked to your identity?

I'd like to have some anonymous money just in case the future gets really dark, but I'm not sure if it's wise to flag myself as a BTC purchaser that changes to XMR.

Define sketchy? Many of us buy and sell XMR under our real identities regularly, and don't have any problems.

Of course, if the future is dark enough for a list of everyone who has ever bought XMR to be compiled, then your name would be on it, along with mine.

If you're worried about that, I suppose you could distribute the XMR to a bunch of different addresses over some length of time. (All addresses you control, unbeknownst to the authorities.) Then if they do hunt you down you have a plausible story that you spent it all.

is that how you really think?

stop using surveillance coins to begin with and just use Monero natively instead of as a conduit

In the mean time pollute the pool by doing more lawful transactions in monero, monero is half as old as bitcoin and has only been used on darknet markets for half of that due to its older user experience challenges

Just swap to the more fungible asset. Its a flight to liquidity the market always chooses that.

The state just figured out how to use transparent blockchains as a tool a decade late and the market has already moved on

You have the right ratio of technical knowledge and command of language to potentially make anything you write, believable. Do you have a blog of sorts?

I'm glad to read that, I just hope it is enough information for everyone reading this to be able to independently corroborate, without any further knowledge of my credentials.

Best way is to find someone on a service like local bitcoins who can meet you in a public place and sell you btc for cash. You can wait a bit to get a couple confirmations.

It's too time-consuming and/or dangerous to do any meaningful amounts, and it is monitored. You would probably have to wear a mask at the drop as well and things like that. Safer to just coinjoin + mix + xmr.

Buy mining equipment and start mining.

The ROI won’t be great but you’ll have virgin coins to do what you want with.

^ this right here if you're patient and only need to break even.

even in hot climates where power isn't cheap enough, buying digital asset mining computers to breakeven or even take a 5-8% loss is the best way to convert any amount of money from that local economy into the global digital economy.

> If the origin is not illicit then its not money laundering

It is if done for purposes of e.g. avoiding taxes or purchasing illicit goods.

That said, obfuscation per se is not illegal in most jurisdictions.

so like an illicit origin? :)

yes, people need to be aware of the universe of illicit origins. When I was working for the US government most of the people indicted under these laws (structuring, avoiding reporting thresholds, and then obfuscation so money laundering) were not terrorists or drug dealers. They were people like landlords freaking out because a tenant was suing them and they wanted to move their money without triggering a real or imagined $10,000 threshold. Whoops structuring is illegal straight to jail and we’ll take the money too! Tenant lawsuit still pending lol.

All while HSBC completely undermined the ‘purity’ of the licit financial system in the tune of billions over many years on behalf of the LITERAL CARTEL. Guys, 9/11 wasn’t that expensive to pull off, and today’s compliance measures wouldnt have flagged those wire transfers, so who is this for?

Stigmatizing the whole concept of having money and moving money has been an expensive and unnecessary and fruitless exercise. While increasing the costs of offering a financial service.

Also obfuscating money can be important for an individual's safety. For example for victims of domestic abuse or human rights activists in repressive countries.

Also the safety of individuals against government overreach, like people living in Xinxiang or Hong Kong.

Non-political checks on the power of the state, like cash and its electronic corollary, private digital currencies, are needed in case of the failure of the political system to prevent the state from becoming oppressive.

An institution like physical cash can be powerful/deeply-embedded enough to survive totalitarian governments.

> so like an illicit origin?

No. The obfuscation of licitly-acquired funds used for illicit purposes is still money laundering.

I doubt that is the case world-wide, right?

In the US, "tax avoidance" is a term which describes procedures that are always legal. When you stated "avoiding taxes" I believe you really meant "tax evasion".

> That said, obfuscation per se is not illegal in most jurisdictions.

And it can't be, as long as fiat money exists. There's no tracing involved in passing notes around. The only times fiat transactions become suspicious is if you try and cross a border with a lot of cash or valuables on hand, which is where crypto comes in because it knows no borders. This makes law enforcement nervous.

I'm sure that besides crypto there's many ways to move large amounts of money or valuables across borders though. The rich do it, they just set up shell companies and pay licenses for intellectual property, paying a token amount of corporate taxes.

> The irony being that it is the onus of the accuser to determine the origin

Not really, you need to be able to justify to the tax authority how you got in possession of any amount of assets you have and prove you pay taxes on it.

So if a large amount of money eventually show up in your bank account (or you buy a house or any other "visible" asset) and it is not compatible with your previous tax returns it is likely the tax authority will notice it and at that point you are fried

That’s the point of reintegration.

Reread that paragraph and dont skip it this time.

You run a very successful fly-by-night VPS service paid for only in crypto. There is a decent sized market for that by the way. Too bad most of your customers are fake, anyway be diligent and actually mimic your customer behavior over TOR.

Run a subscription service.

Figure it out. Some to all of your customers will be fake because it will just be you making more accounts and paying yourself.

Report taxes on your wildly successful SaaS cloud business.

Assuming you even want govbucks, you deposit the clean crypto into your business and personal bank accounts.

No different than cash based services except its online/digital native and not constrained by local market liquidity and brick and mortar overhead.

How do you explain your business suddenly failing after you're done transferring your old funds into it?

And isn't it easier to simply cash out XMR you've allegedly mined back in 2014? Long-term held. cost basis zero, capital gains rate 20% max in the US. That's even better than the 21% corporate income tax.

You are right; also I would imagine the tax authority does not even care too much about where the money came from, they just want to make sure you paid enough taxes. Criminal investigation agencies of course do care.

The IRS has a criminal enforcement department, and they absolutely investigate criminals and press charges that have nothing to do with tax evasion. Often they work with other branches, but they are fully fledged FBI agents and can prosecute any crime they want.

Usually they do that when they stumble upon them during tax/laundering investigations, but they'll prosecute anything.

I's a guide on how to pay privately with cryptocurrencies. You should still report and pay tax for private cryptocurrencies.

Privacy and tax evasion are not identical..

correct, if the origin is illicit it is money laundering. If the origin is not illicit then its not money laundering.

the licit private transactions are indistinguishable from illicit

Illicit money that you pay taxes on is generally not problematic, at least to the IRS. You probably still need to worry about other three letter agencies, though, depending on how it is illicit.

Edited to add: I’ve heard of drug dealers doing it. Whether it’s true or not I can’t say.

how exactly would one do that (pay taxes on illicit $)? are there public examples of it?

According to the IRS[1] "income from illegal activities, such as money from dealing illegal drugs, must be included in your income on Schedule 1 (Form 1040 or 1040-SR), line 8, or on Schedule C (Form 1040 or 1040-SR) if from your self-employment activity." So I guess you'd just count it as "other income" on your 1040.

[1] https://www.irs.gov/publications/p17

Thats a trap my guy, you are incriminating yourself when reporting that

That’s the point of criminalizing all options

Are you?

Or just avoiding an easy conviction under tax evasion laws?

paying taxes on illicit activities = relying on admitting the illicit activities either directly on the tax form or in an audit = FAIL

not paying taxes on illicit activities = tax evasion and likely discovery of illicit activity in criminal investigation = FAIL

money laundering = illegal if the government has determined the source is illicit = FAIL

those are the options and deterrents.

if you money launder with proper obfuscation, you wind up with money that you do pay taxes on and will never trigger an investigation.

Indeed. As the old saying goes, Al Capone got nailed on tax evasion. As I understand it, the IRS is more interested in the amount than where it came from.

Capone got nailed for evasion because his brother got nailed for evasion and he got scared so he tried to preemptively normalize his own tax situation but in doing so indirectly admitted that he hadn't paid taxes, so they busted him with no further evidence required.

But they also were trying to bust him for evasion because he declared zero income and lived a visibly lavish lifestyle. The government was gathering evidence on his spending to estimate his income and how much he evaded.

You can't sustainably solve that problem by simply paying lots of tax on magic illegal money, especially not in today's interconnected world. Laundering is core to the solution.

Isn’t that the purpose of money laundering, to create an income stream so that you can pay taxes on it? I don’t know tax law in depth, but it seems like if one could just report to the IRS anonymous money it would largely obviate the need for money laundering at all. Of course there’s the question of other gov agencies.

You can always cash out "Bitcoin you [allegedly] bought back in 2010", or Monero you mined back in the day so there's no way to even prove its source, and declare that to the IRS. With a cost basis of almost zero, you'll pay long term capital gains tax, 15% or 20%.

BTW when you declare your crypto gains, the IRS not only does not care about the source, there's not even a place on the forms to list the source.

That might change in the future though.

But also don’t do that

You want to unlink the transactions

There are other reasons why someone would want financial privacy other than to commit financial crime, just as there are other reasons why someone would want communication privacy other than to conspire to commit a crime.

“Yesnt”