Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

How the government set up a fake bank to launder drug money (2012)

npr.org

Post reply on HN
Print view View original

11–20 of 106 posts

Re: How the government set up a fake bank to launder drug money (2012)

#11

Post by vmception »

singlow wrote: post #7
ptsneves wrote: post #3

I always wonder how this is legal in the U.S.A? Creating a fake bank in another country sounds like committing fraud in another country. At worst it can be they would be charged with money laundering themselves. What is the line of what is acceptable at entrapment in the United States? What stops any agency from creating permanent fake banks for example? I am glad drug lords get busted. I hate them, but I think if th…

Were the bank activities themselves illegal? It would only be entrapment if they were soliciting the illegal activity. It sounds like they were just soliciting banking services in a way that was attractive to illegal actors. Even if the banking services themselves were not legal, it would seem like entrapment if they used that to charge them with banking crimes. If NYPD operated a Limousine service in hopes that crim…

The bank activities were illegal and non compliant. The OCC was about to cut them out of the entire banking network for poor reporting, meaning no OCC-licensed banks could take or send wires to them or hold accounts in their name. It would have shut off all trade for this bank without knowing what they’re doing or alleging any crime, yet.

This is how the US enforces its will worldwide.

The Treasury has a similar way to do that, without the OFAC list. They did it in 2018

https://www.google.com/amp/s/www.forbes.com/sites/francescop...

Back to the OCC, the outcome of the audit would have solidified criminal charges against the bank directors, but then they backed off with the “this is a government operation” excuse. Other reasons they would back off being any other kind of leverage, which small banks do not have.

Re: How the government set up a fake bank to launder drug money (2012)

#13

Post by vmception »

wil421 wrote: post #5
ptsneves wrote: post #3

I always wonder how this is legal in the U.S.A? Creating a fake bank in another country sounds like committing fraud in another country. At worst it can be they would be charged with money laundering themselves. What is the line of what is acceptable at entrapment in the United States? What stops any agency from creating permanent fake banks for example? I am glad drug lords get busted. I hate them, but I think if th…

If the government setup their own Silk Road and busted a bunch of drug dealers it wouldn’t be any different than starting a bank. The first informant said I have drug traffickers asking for banking services. They setup what they were already seeking. Most likely a few governments and courts in multiple countries were already OK with it by the end.

Yeah, just a heads up that darknet commerce goes much darker after every enforcement action.

More of it switches to Monero despite being less convenient, debilitating tracing capabilities.

It accelerated need for completion of Monero multisignature capabilities, allowing the custody of funds to remain with the buyer and seller, instead of requiring the exchange as an escrow provider which is where many of the funds are seized when the government finds a server and takes it down.

Buyers and sellers do their own encryption handshakes based on certain software protocols. Instead of all messages stored on the marketplace server. And they avoid certain apps like Wickr.

The effort to take down a marketplace increases while the yield decreases. Classic war of attrition.

Everyone already knows the best practices, they are just too lazy to implement them until there is evidence that it’s necessary and not just paranoia.

Re: How the government set up a fake bank to launder drug money (2012)

#15

Post by spoonjim »

ptsneves wrote: post #3

I always wonder how this is legal in the U.S.A? Creating a fake bank in another country sounds like committing fraud in another country. At worst it can be they would be charged with money laundering themselves. What is the line of what is acceptable at entrapment in the United States? What stops any agency from creating permanent fake banks for example? I am glad drug lords get busted. I hate them, but I think if th…

In the US, “entrapment” is fairly narrow and covers only those situations where the police actually directly tell you to commit the crime.

Re: How the government set up a fake bank to launder drug money (2012)

#16

Post by lainga »

saul_goodman wrote: post #10

Let's see, so they didn't nab any of the big players in the operation. So effectively they helped the biggest players by making it harder for the small to mid-tier drug cartels do conduct business. Sure, way to put the squeeze on the cartels there... A tangent to this is the way we conduct drug enforcement in the US. It's much better for police departments to wait until after the dealers make money to catch them so t…

> So effectively they helped the biggest players by making it harder for the small to mid-tier [insert entity here] do conduct business

Well, at least the government is consistent. When all you have is a hammer...

Re: How the government set up a fake bank to launder drug money (2012)

#17

Post by shadowgovt »

vmception wrote: post #13
wil421 wrote: post #5

Earlier quoted context omitted.

If the government setup their own Silk Road and busted a bunch of drug dealers it wouldn’t be any different than starting a bank. The first informant said I have drug traffickers asking for banking services. They setup what they were already seeking. Most likely a few governments and courts in multiple countries were already OK with it by the end.

Yeah, just a heads up that darknet commerce goes much darker after every enforcement action. More of it switches to Monero despite being less convenient, debilitating tracing capabilities. It accelerated need for completion of Monero multisignature capabilities, allowing the custody of funds to remain with the buyer and seller, instead of requiring the exchange as an escrow provider which is where many of the funds a…

Of course, but these patterns are true of most businesses (and indeed much human behavior). Companies have policies planned exceeding implementation because the cost isn't justified (until it is).

... and "enforcing the law incentivizes criminals to spend more on not getting caught" isn't really an argument for not enforcing the law. Indeed, from the point of view of law enforcement, it's short-term win-win... Every resource spent on being harder to catch is a resource not spent on the actual harmful criminal activity.

Re: How the government set up a fake bank to launder drug money (2012)

#18

Post by vmception »

shadowgovt wrote: post #17
vmception wrote: post #13

Earlier quoted context omitted.

Yeah, just a heads up that darknet commerce goes much darker after every enforcement action. More of it switches to Monero despite being less convenient, debilitating tracing capabilities. It accelerated need for completion of Monero multisignature capabilities, allowing the custody of funds to remain with the buyer and seller, instead of requiring the exchange as an escrow provider which is where many of the funds a…

Of course, but these patterns are true of most businesses (and indeed much human behavior). Companies have policies planned exceeding implementation because the cost isn't justified (until it is). ... and "enforcing the law incentivizes criminals to spend more on not getting caught" isn't really an argument for not enforcing the law. Indeed, from the point of view of law enforcement, it's short-term win-win... Every…

These are not hard best practices.

Re: How the government set up a fake bank to launder drug money (2012)

#19

Post by suifbwish »

saul_goodman wrote: post #10

Let's see, so they didn't nab any of the big players in the operation. So effectively they helped the biggest players by making it harder for the small to mid-tier drug cartels do conduct business. Sure, way to put the squeeze on the cartels there... A tangent to this is the way we conduct drug enforcement in the US. It's much better for police departments to wait until after the dealers make money to catch them so t…

You nailed it. You have to let the fruit ripen before you pick it. Also if you don’t go after the suppliers, you will have more distributors to harvest later. It’s literally a cash crop for the DEA/police
Post reply on HN