Shostack + Friends Blog Archive


Supreme Court Narrows "Money Laundering"

The Supreme Court narrowed the application of the federal money-laundering statute on Monday, ruling for criminal defendants in two cases in which prosecutors had employed broad definitions of two of the law’s major provisions.

The two rulings are likely to crimp the government’s ability to bring money-laundering cases, although not necessarily to the degree that an initial reading of either might suggest. (“Justices Narrow Money-Laundering Law,” New York Times.)

The money laundering laws are a great example of bad law, and I’m glad to see them narrowed. They’re bad law because they include tremendous prosecutorial discretion, because they’re exceptionally expensive to enforce, and they infringe on the privacy and liberty of normal people.

Recently, I talked about “The Costs of Security and Algorithms” and the link between these silly laws and a how banks had shifted their risk-management dollars from looking for bad loans to looking for money launderers. Sometimes this goes to a ridiculous extent.

When I was moving to Montreal, I didn’t have enough ID to purchase a Canadian dollar cashiers check to reserve my apartment and satisfy Bank of Boston’s AML regulations. The check was for some nominal sum, like $1000. Fortunately, Zero-Knowledge was willing to loan me the money, and cut my landlord a cheque that day.

I’m glad they’ve narrowed the law, and I hope this will be the first of many chips that bring down the edifice.