I Think I’m In Love with Money Laundering

I’ve rarely changed my mind on something as much as I did going through these 250-odd pages (and not, from the author’s point of view, to the better.). It's the sort of thing that many went through during 'rona and vaccine mandates, having never thought particularly hard about the pros and cons of various vaxxes -- just taking whichever because that's what you do.

...but now that you're taking a page out of Orwell's literal book and shoving it down my throat arm, yeah I'm gonna look deeper at the issue beginning from a pretty nasty and aggressively anti-pow.

I had some stuff to bring re: AML -- particularly after I ran afoul of some banking fuckery #1417296 -- and know at some intellectual level that it's hopelessly ineffective and causes more harm than good: deputizing banks to become expensive and inefficient police investigators was always a stupid idea.

But the more journalist Oliver Bullough in Everybody Loves Our Dollars - How Money Laundering Won walked me through the “flaws” of AML and the ways they distort global economic transactions, the less I found them worth it.

In fact, the more I thought about it, the less sense it made to consider money illegal, dirty, or criminal.  In fact, the more I thought about it, the less sense it made to consider money illegal, dirty, or criminal.  

In a functional monetary system, all money is fungible -- dirty, bad, or from prior crimes all alike. It's not on me as a trader with some shady drug dealer or sanctions evader to police, inspect, or object. The CRIMES -- insofar as they're actually crimes -- are criminal, not the money.

No sats illegal, etc.

A monetary system works better in its coordinating function (#1429046) when it isn't lambasted with banks performing expensive KYC checks, everyone's identity is revealed and more or less open to darkweb types, when "criminals" try to avoid said set of rules by engaging in made-up transactions, or "fake" gambling through casinos or buying up durable goods to ship across the world ("trade-based money laundering"):

The book becomes filled with oxymoronic phrases like “illegal transactions,” even though we now recognize that per its essential nature you can’t have “illegal” money or “dirty” money.  

I’m happy that (wealthy) Chinese can circumvent stupid capital controls; I’m thrilled Russian citizens and companies can ship oil&gas to the rest of the world and thus allow us to avoid some of the damage from stupid, self-flagellating sanctions regimes; I’m very happy that oppressed people everywhere can get around the asinine financial rules placed upon them by despicable leaders; I’m thrilled that drug cartels can deliver products to willing buyers despite stupid wars on drugs.

I’m less happy that Mekong-delta fraudsters can scam people and live happily ever after, or that pimps keep trafficked women as sex slaves — and pay for their breakfast ham with cash. But the error, against natural law if not always bureaucrat-legislated law, lies in the “fraud” and the “slavery,” not the downstream money transactions. So people upset about those horrors should probably, you know, find the scammers or free the slaves — not freeze my bank account or forbid businesses from accepting cash.

We got a prime example of that cognitive oversight before the book had even started. In the Roman-numbered introduction the author recounts Russian drone-bombing of Ukrainian cities – drones using high-tech components that “Russia is unable to produce for itself,” and originates in Western production:

Those lethal slices of silicon had been smuggled to Russia and somehow paid for, a trade that would never have happened if the payments for them could not be laundered. (p. x)

Consequently:

Thousands of Ukrainians are dead and injured […] because of money laundering. (p. x)

Money laundering, the author thinks, is

"a support mechanism for the worst people in the world""a support mechanism for the worst people in the world"

Instead of realizing that when there’s a strong enough human will, there’s usually a way through the cracks, the author chalks up the theme of his investigation as the glue that holds the edifice together.

Instead of concluding that sanctions don't work — never have, never will — the author blames money laundering as the support mechanism that makes, e.g., Russian drone bombing of innocent Ukrainians possible.

And the hyperbole don’t stop…

“Precious few people appreciate the threat posed to the integrity of the world economy, to democracy or to the integrity of our institutions” (pp. 244-45).

[_I_ didn’t want to turn this into a Ukraine geopolitics commentary, but our friend Oliver is obsessed with this so what you gonna do.]

Ardoino boasts that USDT is an efficient tool for financing trade, since cargoes can be paid for cheaply and instantly. Intelligence analysts meanwhile say that Russian authorities are using the cryptocurrency to evade the sanctions put on their financial system after the full-scale invasion of Ukraine and to trade oil unimpeded. (p. 185)

(also, what's with this bullshit linguistic warfare... keep seeing this phrase "full-scale invasion"... wth does that mean, other than virtue/vice signalling that you're a Good PersonTM?)

Instead of concluding that sanctions don't work — never have, never will — the author blames money laundering as the support mechanism that makes, e.g., Russian drone bombing of innocent Ukrainians possible.

Put differently, then, if there were no way for Putin et al, or Russian oligarchs to sneak their money through the sanctions holes and make it look clean in the west, _would they just be Good PeopleTM instead??_ Would wars never happen? Would coca growers and drug smugglers _not_ do their thing?

It’s not because fraudsters and child molesters or murder-for-hire people can launder their proceeds through the financial system that they keep doing bad stuff: Put differently, if we wave a magic Den wand and make all money-laundering laws perfectly effective, would we really make that much of a dent in global organized crime or sanctions evasions or fraud or robberies or tax evasion?

HELL NO! (Ok, sorry, obviously tax evasion is not a natural crime!)… I guess I just don't buy the premise that "major financial institutions enabled criminality and spread misery on an industrial scale" (p. 130) by letting criminals (gasp!) transact on their monetary ledgers.

...and sometimes dude gets it:

to see why it is that the world is failing to stop money laundering. It is punishing the wrong people in the wrong way, while powerful governments have loaded costs onto others that they’re not willing to pay themselves. (p. 59)

If it’s totally broke and doesn’t work… do it more?

spank me harder, daddy isn’t a serious approach for dealing with the downsides of AML.

A hundred pages in, we get the first indication that maybe, just maybe, governments don't have everyone's best interests at heart Still, dude generally thinks money launderers are Bad People TM and government officers are heroes (p. 96)... and then a few pages forward we get an excellent example of laws backfiring: Rules aimed at squeezing Kremlin, squeezed its foremost opponents instead. Russians just use friendly countries, duh... while the very people best position to affect change in Russia are shut out because of your AML rules. I mean, coooomeee on!

TL;DR,TL;DR,

this is a witty, entertaining, and well-researched journalistic book whose premise is completely flawed. It's a great book if you can stomach the pearl-clutching rallying cries and the anti-crypto (Tether, really) stuff, and can look past the idiotically contradictory and economically illiterate nonsense spewed out on a regular basis.

1 out of 5.