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Wednesday, May 29, 2013
Anonymity + Money = Crime
News this week is of Liberty Reserve, a global online currency exchange, which got shut down and its owner arrested for money laundering because it allowed sending money anonymously. Now personally I have trouble believing that every single dollar at Liberty Reserve was of criminal origin and used only to buy criminal goods. You can't "launder" money in a system which doesn't contain clean money as well as dirty one. But it is certainly true that a part of the money was dirty.
That could also have consequences for other anonymous online currencies, like Bitcoins. Basically anonymous online money has been declared to be illegal by itself, because it *could* be used for illegal activities. Which is somewhat inconsistent, because obviously you can buy drugs with federally printed dollar bills. Should all printed money be made illegal, because it can be used for illegal activities and money laundering?
As non-criminal internet user my main problem here is that I can either have anonymity on the internet, or I can use money online, but not the two at the same time. For example, while I don't publish my real name on this blog, you can easily find it out by donating money to me. Paypal will send you a receipt with my real name on it. And whenever somebody hacks the database of an online game company, he can potentially find my virtual identity linked to personal data like my name, address, or even credit card data.
I think internet anonymity, while having its problems, has some value. Even if you don't do anything illegal, you are likely to cultivate a different image in different social circles. The quintessence of a private life is that it is private, and if everything about all aspects of your life can be researched online that privacy vanishes. There are a lot of activities that are legal, let's say political protest, partying hard, watching porn, spending too much time playing games :), where somebody might well wish that not everybody he knows can find out all the details. As the internet has a long memory, indiscretions of your youth might well crop up many years later. And not everybody is fully aware of these potential consequences and always guarded in what he publishes on the internet. Having anonymity on by default can save us from ourselves. And the global push towards eliminating anonymity on the internet has downsides which aren't always well balanced with the advantages of being able to catch criminals.
That could also have consequences for other anonymous online currencies, like Bitcoins. Basically anonymous online money has been declared to be illegal by itself, because it *could* be used for illegal activities. Which is somewhat inconsistent, because obviously you can buy drugs with federally printed dollar bills. Should all printed money be made illegal, because it can be used for illegal activities and money laundering?
As non-criminal internet user my main problem here is that I can either have anonymity on the internet, or I can use money online, but not the two at the same time. For example, while I don't publish my real name on this blog, you can easily find it out by donating money to me. Paypal will send you a receipt with my real name on it. And whenever somebody hacks the database of an online game company, he can potentially find my virtual identity linked to personal data like my name, address, or even credit card data.
I think internet anonymity, while having its problems, has some value. Even if you don't do anything illegal, you are likely to cultivate a different image in different social circles. The quintessence of a private life is that it is private, and if everything about all aspects of your life can be researched online that privacy vanishes. There are a lot of activities that are legal, let's say political protest, partying hard, watching porn, spending too much time playing games :), where somebody might well wish that not everybody he knows can find out all the details. As the internet has a long memory, indiscretions of your youth might well crop up many years later. And not everybody is fully aware of these potential consequences and always guarded in what he publishes on the internet. Having anonymity on by default can save us from ourselves. And the global push towards eliminating anonymity on the internet has downsides which aren't always well balanced with the advantages of being able to catch criminals.
- posted by Tobold @ 11:40 AM Permanent Link
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I believe the issue is that the money transactions are not subject to international money transfer standards/laws, which require a notification to the central banks of any transfer above a certain value.
While you could resort to cash, large amounts are very impractical to transport in suitcases (but it is still done).
While you could resort to cash, large amounts are very impractical to transport in suitcases (but it is still done).
# posted by 
: 29/5/13 12:48
: 29/5/13 12:48
Agree that anonymity is of value because of social taboos on legal leisure activities like watching porn, partying hard, youthful indiscretions, and such. But I'd say that's an argument for fighting against those taboos, not for enforcing privacy. Disgusting that people still think they should feel guilty and have to hide that they watch porn in this day and age. The progress and freedom of society relies on ever greater acceptance of other people's non-coercive activities.
At a personal level I am annoyed at services like Google+ and Facebook who want me to use my real name but that is a minor inconvenience. I have long since come to accept that real anonymity no longer exists on the everyday internet.
At a more serious level I think that access to genuinely anonymous information channels like TOR and Wikileaks is incredibly important for people subject to oppression. I realise that such services also facilitate criminals but I think the benefit outweighs the cost.
At a more serious level I think that access to genuinely anonymous information channels like TOR and Wikileaks is incredibly important for people subject to oppression. I realise that such services also facilitate criminals but I think the benefit outweighs the cost.
Disgusting that people still think they should feel guilty and have to hide that they watch porn in this day and age.
Depends on where you are. Imagine during an election an American politician is revealed to have several subscriptions to porn websites: He'd lose the election. In many European countries people would simply ignore that piece of news and just shrug.
I always find it funny that in spite of that puritan attitude towards porn, America is the world's largest producer of it.
Depends on where you are. Imagine during an election an American politician is revealed to have several subscriptions to porn websites: He'd lose the election. In many European countries people would simply ignore that piece of news and just shrug.
I always find it funny that in spite of that puritan attitude towards porn, America is the world's largest producer of it.
There have long been limitations on physical currency so why would people expect anything different with virtual? From the post-war England controls, to all the street vendors exchanging currency behind the iron curtain, to current days signs at customs about the maximum currency you are allowed to bring in.
http://www.theverge.com/2013/5/24/4363960/google-no-longer-able-to-pay-developers-in-argentina-for-apps-pulling
Those of us old enough to remember Carter and Volker and 18% money market rates are more sympathetic to the idea that central banks need a way to measure and control the money supply.
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There was some talk about anonymous vs unidentifiable. I.e., if you registered every where as userDC1F4E7A versus everywhere wanting to know you are Billy Flynn of Chicago. E.g. there is real value in a game forum site having all posts attributed to your single forum ID regardless of the alt. But that ID is not a character name or login ID. I forget the internet theory term for this: not anonymous but not personally identifiable?
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P.S.: Perhaps America is the leading porn producer because of the Puritanical attitudes?
An American politician would lose for different reasons. In the South it would be for moral reasons, in California it would be because of the campaign's focus being derailed by the "porn degrades/objectifies women" debate.
http://www.theverge.com/2013/5/24/4363960/google-no-longer-able-to-pay-developers-in-argentina-for-apps-pulling
Those of us old enough to remember Carter and Volker and 18% money market rates are more sympathetic to the idea that central banks need a way to measure and control the money supply.
----------------------------------
There was some talk about anonymous vs unidentifiable. I.e., if you registered every where as userDC1F4E7A versus everywhere wanting to know you are Billy Flynn of Chicago. E.g. there is real value in a game forum site having all posts attributed to your single forum ID regardless of the alt. But that ID is not a character name or login ID. I forget the internet theory term for this: not anonymous but not personally identifiable?
---
P.S.: Perhaps America is the leading porn producer because of the Puritanical attitudes?
An American politician would lose for different reasons. In the South it would be for moral reasons, in California it would be because of the campaign's focus being derailed by the "porn degrades/objectifies women" debate.
This is why I don't use Facebook or Google+. The only places I register at are the ones that let me create a public username. I avoid websites that require Facebook (or other social networks) to post comments.
# posted by : 29/5/13 20:00
: 29/5/13 20:00
Bitcoin probably doesn't have as much to worry about because there is a complete registry of every single bitcoin transaction that has ever taken place. You can follow a bitcoin from creation to wherever it goes if you want, so money launderers will be leaving a trail if they tried to use bitcoin as a cleaner.
Uncontrolled and anonymous financial transactions are ideal for crime. Unlike in movies, it's not easy to wire large sums of money between banks and even less countries without attracting a lot of attention.
Tobold, you live in Europe. Every country in Europe has strict regulations that banks have to follow with respect to transactions of their customers. If you go to your bank tomorrow, deposit EUR100k in cash. They won't let you do it without proof of origin of the fund. If you wire EUR100k to your account from a bank in Venezuela, you will immediately get reported. This is a great tool to fight crime and fraud. As they said "hit them where it really hurts: the bank account"
Virtually no one who wants to have access to anonymous transaction is innocent. Not necessarily drug smuggling but likely tax fraud.
Tobold, you live in Europe. Every country in Europe has strict regulations that banks have to follow with respect to transactions of their customers. If you go to your bank tomorrow, deposit EUR100k in cash. They won't let you do it without proof of origin of the fund. If you wire EUR100k to your account from a bank in Venezuela, you will immediately get reported. This is a great tool to fight crime and fraud. As they said "hit them where it really hurts: the bank account"
Virtually no one who wants to have access to anonymous transaction is innocent. Not necessarily drug smuggling but likely tax fraud.
Uncontrolled and anonymous financial transactions are ideal for crime.
Guns are ideal for crime. Nevertheless America insists that guns also have legal applications and that people should have the freedom to buy them. Crowbars are ideal for the crime of burglary, would you want to make those illegal too? And we could go on and on about various things that can be used for crimes but aren't illegal.
The question is whether there are situations in which you would want to legally but anonymously transfer money. For example an anonymous donation. Or buying something you don't want your employer or spouse to know about. If you want to keep criminals out of such a payment system, just limit the amount you can transfer to be only useful for everyday stuff.
Guns are ideal for crime. Nevertheless America insists that guns also have legal applications and that people should have the freedom to buy them. Crowbars are ideal for the crime of burglary, would you want to make those illegal too? And we could go on and on about various things that can be used for crimes but aren't illegal.
The question is whether there are situations in which you would want to legally but anonymously transfer money. For example an anonymous donation. Or buying something you don't want your employer or spouse to know about. If you want to keep criminals out of such a payment system, just limit the amount you can transfer to be only useful for everyday stuff.
Thanks Tobold.
I think the gun comparison you raise is quite relevant. The key question is, if you ban guns, does it become harder to kill your neighbor if you feel like it? It's all about the alternative available to you to commit the "crime" /ilegal act.
Government, for right or wrong, have decided it was a good thing to control financial transaction to limit money laundering or tax fraud (including the US government, in spite of their position on guns). The effectiveness of those measures is directly linked to the availability of alternative. As it was discussed above, alternative exists, such as carrying bags of cash, but they are risky (actually I personally know someone who smuggled $5 million in cash through an airport after her boyfriend decided to withdraw all the money on his company bank account and leave the country with it - that boyfriend is still wanted by Interpol for the last 5 years).
Availability of anonymous ways to transfer large sums of money give criminals a great alternative to the regular controlled bank transfers, hence making the control measures ineffective.
Whether or not banning guns will reduce murder rate can be debated. Arguably violent deaths are much more frequent in e US than many other countries.
In the case at hand, if we make possible fully anonymous bank transfer than you will see more CFOs and accountant emptying their companies bank accounts. If Apple's treasurer can wire anytime $10 billion of cash to a fully anonymous account, tentation is going to be great
I think the gun comparison you raise is quite relevant. The key question is, if you ban guns, does it become harder to kill your neighbor if you feel like it? It's all about the alternative available to you to commit the "crime" /ilegal act.
Government, for right or wrong, have decided it was a good thing to control financial transaction to limit money laundering or tax fraud (including the US government, in spite of their position on guns). The effectiveness of those measures is directly linked to the availability of alternative. As it was discussed above, alternative exists, such as carrying bags of cash, but they are risky (actually I personally know someone who smuggled $5 million in cash through an airport after her boyfriend decided to withdraw all the money on his company bank account and leave the country with it - that boyfriend is still wanted by Interpol for the last 5 years).
Availability of anonymous ways to transfer large sums of money give criminals a great alternative to the regular controlled bank transfers, hence making the control measures ineffective.
Whether or not banning guns will reduce murder rate can be debated. Arguably violent deaths are much more frequent in e US than many other countries.
In the case at hand, if we make possible fully anonymous bank transfer than you will see more CFOs and accountant emptying their companies bank accounts. If Apple's treasurer can wire anytime $10 billion of cash to a fully anonymous account, tentation is going to be great
@Unknown - currency is everything that people are willing to accept as currency. Like tide http://www.theatlantic.com/business/archive/2012/03/why-are-criminals-stealing-tide-detergent-and-using-it-for-money/254631/
The criminals are smart enough to find currencies, because sometimes the currency has either value of its own or is just used to track a system of favors. You can control the gateways when they are exchanged to legal tender. But lets say two crime syndicates can easily make all their internal payments in private bitcoin blockchain.
So you get instead of criminal techno literate criminal in 5 years.
Some citizens may need anonymity for good reasons. Hiding from employers, spouses for legal activities or just plain old privacy. Maybe my dear wife need not know for the sparkling pony I bought in neverwinter for 60$ ...
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The criminals are smart enough to find currencies, because sometimes the currency has either value of its own or is just used to track a system of favors. You can control the gateways when they are exchanged to legal tender. But lets say two crime syndicates can easily make all their internal payments in private bitcoin blockchain.
So you get instead of criminal techno literate criminal in 5 years.
Some citizens may need anonymity for good reasons. Hiding from employers, spouses for legal activities or just plain old privacy. Maybe my dear wife need not know for the sparkling pony I bought in neverwinter for 60$ ...
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