Money laundering has always been a big problem in the financial sector. Turning “dirty” money into “clean” money makes it nearly impossible to trace criminal activity. One could argue money laundering is a sold as the banks themselves. US Bancorp is fined $613m to settle “willful” violations of the Bank Secrecy Act. It is once again evident financial institutions are the go-to solution to launder money. Cryptocurrencies such as Bitcoin, on the other hand, are very small fish in this cesspool.
Addressing money laundering problems is not easy by any means. With so many people involved in these processes, it’s only natural some transactions go by unnoticed. Banks staffers often fail to recognize or report suspicious transactions. In the case of US Bancorp, it will cost them a hefty penny. With $613m in fines to be paid, some bank members will be to blame. It also shows how relatively easy it is to launder funds through the banking system. There are quite a few institutions who either don’t flag transactions or do not bother to deal with the reporting side of things.
Most of the fines will be paid to the US Treasury. The remainder will go to FinCEN, The Federal Reserve, and the Office of the Comptroller of the Currency. While such a fine is steep, it’s usually a drop in the bucket. Entities such as US Bancorp can make a lot more money from processing these illicit transactions like normal. They collect fees for every transaction, after all. This fine will not necessarily make any big dent in their earnings. More worryingly, people will probably forget US Bancorp was even involved in this scandal in a few months from now.
It is uncanny how these are the same banks who tell people Bitcoin is a tool for criminals and terrorist. Unlike the systems used by US Bancorp and consorts, Bitcoin is as transparent as it can get. There is a degree of pseudonymity, but people can flag transactions in real-time. All information other than users’ identities is public and traceable. Converting Bitcoin to real money needs to be done through brokers or exchanges. These companies perform checks to prevent money laundering as well. It is very cumbersome to cash out crime proceeds with Bitcoin as of right now.
Even then, the converted money is still processed by banks. If they do not perform proper AML checks, bitcoin isn’t to blame for their shortcomings. US Bancorp and consorts need to be punished far more severely for failing to adhere to regulatory guidelines. They have all of the information on hand to flag, track, and identify suspicious behavior in a few minutes. Why they aren’t doing so is anybody’s guess right now. Money laundering will always be facilitated by the banking system.
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