That is the thing: if you are knowingly working with criminals to perform their crime then you are involved in crime:
Case 1: Planning the getaway from a bank robbery. Driving the getaway car.
Criminal? yes
Case 2: Driving a taxi with a person who happened to have robbed a bank earlier that day. Getting paid in stolen cash.
Criminal? no
Case 3: Helping to carry and hide away stolen goods or physical money when you know they are stolen.
Criminal: yes
Case 4: Helping someone with anything just because you are a nice guy/gal. Afterwards it turns out you assisted in a major art heist without knowing.
Criminal: no
Case 5: Helping to launder stolen money or money from trafficking when you know or should know[0] the source.
Criminal: yes
Case 6: well at this point you either get it or not.
The very concept that not telling the government about everything you do financially is somehow a crime is simply abhorrent.
Actually here we somewhat agree. As much as I am a fan of paying tax and avoiding criminality I'm also a huge fan of cash. :-)
[0]: (Actually it is stricter now - borderline hilarious as my bank for the last twn years starts asking for my passport because of the KYC rules)
Anyways yes if you are working with the criminals that's one thing. Running a BTC exchange, if you aren't inquiring about the customers funds (you shouldn't, it's none of your business!) then it should be no issue. If you somehow know the BTC was stolen from Mt Gox, then yeah, you're helping with the hack and should be charged for that (not for money laundering, just for whatever the general charge is as a participant to a crime).
Here we agree. If they knew or should have known then they are guilty.
(not for money laundering, just for whatever the general charge is as a participant to a crime).
I think this is what money laundering originally meant:
Washing dirty money by for example using them to pay shell companies who again pay "clean" companies.
Aiding criminal activity, which money laundering most assuredly is, is itself a crime.
If you go by the economic definitions of money, which generally include uniformity and fungibility, money laundering is really a whinge from law enforcement that police work is difficult, and can't they please go after someone who may be less dangerous and less guilty, but is much easier to catch?
You can't reasonably expect people to investigate the full history of all money they receive as payments. Merchants have the right to presume that their customers are innocent in the absence of blatantly obvious evidence to the contrary.
As they say, gold has no smell. A coin that was obtained by murdering its former owner cannot carry residual guilt from the crime. Once it is used to buy a sack of oranges at market price, it is indistinguishable from a coin that was mined and refined by devout monks, repeatedly donated to charity, sequentially blessed by all the religious figures at that bar where all the jokes happen when they walk into it, and then spent on a sack of grapefruits.
If you buy a house with 50% legit income, and 50% black market contraband profits, you don't seize half the house and claw the other half back from the previous owner. The proceeds of criminal activity attach to the criminal, not to the property. The money has no soul or conscience. It is innocent whenever the person who carries it is.
And money laundering is not a crime, in my opinion, because in order for it to be a crime, certain inaccurate assumptions about money have to be true--namely that money is not uniform and fungible. It artificially makes money from a marijuana dispensary business different from money from a pharmacy. Cash should be cash, agnostic of the sins of its bearer.
Money with a history is not uniform and fungible.
If you make a dollar that came from a criminal worth less than a dollar that came from a saint, you are attacking one of the foundation concepts of money.
For the sake of argument, let's say I get $1 from my crime boss for intimidating a witness. I put it in my pocket. Then I find $1 lying on the street. I put that in my pocket. Then I help an old lady put groceries in her car, and she tips me $1. I also put that in my pocket. Then I go to the convenience store and buy a pack of gum. I reach into my pocket and pull out $1. What is the source of that money?
My pocket. Most people simply don't care where that dollar came from before that. Most people have no conceivable means of knowing where it came from before that. And if they knew, they wouldn't have the recordkeeping capacity to distinguish which dollar came from which activity. They only really care that I pay for the gum instead of shoplifting or strong-arming the clerk.
But ever since the invention of forensic accounting as a crime-fighting/investigative-reporting tool, it would seem that following the money often remains a valid tactic even when other methods of investigation fail. This is because financial businesses must keep meticulous records, as a consequence of being such juicy targets for fraudsters. So all the cop has to do is pop down to the bank records office with a warrant.
So as a society, we have a choice between having money that is more suitable for open trade, and money that is more suitable for combating crimes. My personal preference is for the former. Those who would like for money laundering to be a crime in and of itself--rather than an inchoate offense dependent on other crimes--prefer the latter.
The root question is whether you believe that criminals should be allowed to participate in white-market commerce, like normal people. I do. With that opinion, their blood lucre spends the same there as all the more righteous bills. They might be discouraged from committing crimes if they are less able to profit from them, but I don't think that's the case. If you make the cost of whitewashing black market money 25% of its face value, the criminal just does more crime, or charges more for their black market stuff. It's just another cost of doing [black market] business.
If you're trying to make crime unprofitable, you really need to seize assets and revenue streams only after a conviction, and in proportion to the magnitude of the crime. Civil forfeitures with inanimate defendants and prosecuting inchoate offenses in the absence of primary offenses is just slapping justice across her blindfolded face.
Like, let's take the complication of know your customer out for a second. Of course you should not be prosecuted because a bank robber comes to your store and uses the money he stole to buy something. But if you are keeping fraudulent books in a cash-heavy business to conceal the source of tens of thousands of dollars you or your associates made through criminal activity, why shouldn't it be a crime?