David Molnar writes:
> If payment mixes come online and the only visible users are "money
> launderers", then this common carrier argument will be difficult.
> Unfortunately, it seems to me that the early adopters of payment mixes may
> well be the "money launderers" -- it may take a while to convince other
> people that a payment mix is essential for their privacy and that they
> should use it.
Actually, payment mixes are absolutely useless to money launderers in
the present financial system. They would be used initially only by
people interested in protecting financial privacy.
The goal of a money launderer is to take funds from illicit activities and
get them into a form where they can be spent without arousing suspicion.
In practice the funds almost always start as cash. People don't write
checks to buy drugs. Therefore the problem facing the launderer is how
to take large quantities of cash, thousands or even millions of dollars,
and get it into the banking system in some quasi legitimate way.
The point is, payment mixes will not work with cash! You can't shovel
green paper into your phone line. In order to use a payment mix,
the money must have already entered the banking system. That is the
point where the drug dealer gets caught, and that is the point where
the laundering must occur. The payment mix cannot play a part.
A payment mix (or an ecash system) which is based on electronic money
transfers is good only for financial privacy. It is a useless tool for
money laundering and we should not be frightened away by attempts to
link the two.
Granted, at some point in the future it may become possible to purchase
many forms of contraband electronically. Once we get to the point where
homeless drug addicts carry smart cards with wireless data links so they
can beam funds for their fix as they stumble into crack houses, then it
will be appropriate to view payment mixes as a boon to money launderers.
But let's get real; this is decades away if it ever happens.
Best to get privacy-protecting financial payments established and
secure now, long before there is any legitimate objection on the part
of financial regulators. Working strictly within the electronic money
transfer system, these tools can only be used for legitimate protection
of financial privacy. Money laundering is a complete red herring.
