Regulation is always a cat-and-mouse game
In 1990, you could easily find a Swiss bank willing to accept cash unconditionally and deposit it directly. Until 1998, when Switzerland strengthened its anti-money laundering laws, such behavior could no longer be carried out smoothly.
Before 9/11, the U.S. security process was not strict. Although you were required to declare cash over $10,000, it was completely legal to carry, for example, $2 million in cash out of the country at one time.
Today, Japan still uses a lot of cash. It is the only G7 country where cash is widely circulated at the social level. You can even buy a house with hundreds of millions of yen, which is unimaginable in developed countries that highly promote cashless payments. In Japan, the use of cash is like capillaries, flowing flexibly and penetrating every corner of society.
The amount Japanese spend on pachinko each year exceeds the entire GDP of New Zealand, almost all of which is paid in cash.
But I guess Japan's good days of using cash are coming to an end. Look at several countries around it. In 2020, the proportion of cashless payments in South Korea, China and Singapore were 93.6%, 83% and 60.4% respectively.
I guess you will see more and more "No Cash Accepted" signs in the future.
Why do governments frown on cash? The answer is money laundering. The black market and gray industries prefer cash. Paper money and gold (to be exact, the US dollar and gold) are still the most unified and equivalent exchange items to this day.
How many steps does it take to put an elephant in a refrigerator? Three. The same is true for money laundering.
First, process the stolen money. Deposit it in various commercial places that use a lot of cash, such as hotels, casinos, and restaurants. Do you know what other business in our country uses a large amount of cash? That is funeral homes.
Secondly, the funds are transferred layer by layer. The funds are constantly moved to make the tracking clues disappear, making it impossible for law enforcement agencies to track them. For example, various commercial stored-value cards, gift cards, mooncake coupons...
Finally, consolidate the funds. Mix the washed white money, grey money, and black money together. As long as the money is washed clean enough, you can spend it as you like. Have you ever tried mixing white pepper and flour? They all look the same color, and that's what they want to achieve.
Cash is rarely seen nowadays. This is also the reason why code merchants have become popular in the past few years. For a long time, Pinduoduo has been a hotbed for money laundering, which I will not elaborate on here.
Have you ever wondered why central banks of various countries have been frantically promoting digital currencies (CBDCs) in recent years? If it is for the convenience of payment, various electronic and third-party payments are already very developed, and money is all numbers in banks and can be controlled at any time. Isn’t it redundant to create a digital currency?
In fact, the central bank’s digital currency is a regression in the guise of technology. It makes it impossible for people to own private property. Its main function is to facilitate the government to closely monitor residents. One of its ultimate goals is to prevent money laundering.
Why do you have code merchants running points?
Why is there a four-party payment
Why do ants move?
Why are there underground banks?
Why is there a memory loan?
Why, because it's a cat-and-mouse game, one wants to rule, the other wants freedom.
It is difficult to withdraw funds because the rule of law is not sound
You may say, what does the money I earned from cryptocurrency trading have to do with money laundering?
Sorry, in the eyes of law enforcement agencies, you are laundering money.
Money Laundering
Illegal operation
Help letter
Help cover
Illegal foreign exchange trading
Tax evasion
Pick a crime for yourself, there's always one that suits you.
What is "presumption of guilt"?
That is to say, if law enforcement agencies believe that you are guilty, they can prosecute and arrest you and presume you are the actual criminal unless you can prove your innocence.
You have just become rich, and you show off your luxury cars and beautiful women, live a lazy life, and chat and laugh with your wealthy neighbors.
What would the IRS think if they saw this?
His first reaction was, where did you get this money? Did you pay taxes?
You have to prove that the money is clean.
In March 1996, the Criminal Procedure Law was amended, and Article 12 clearly stipulates that "No one shall be found guilty without a judgment by a people's court in accordance with the law."
However, is this really the case? How many confessions were signed in the People's Court?
Also, go and ask the supermarkets next to the police station who bought the mustard paste.
Here's another number. In 2021, 111 cities in China announced the income of local police. Do you know how much the fines and confiscations of Yancheng, Jiangsu, a third-tier city at the prefecture level, are? 3.727 billion, ranking third among these 111 cities, 29 million more than Shenzhen.
In 2021, the fines and confiscations income in Yancheng, Jiangsu increased by 1.1 billion compared with the previous year. Their explanation in the financial final accounts was just one sentence: the law enforcement income of public security and other departments increased significantly.
Compared with 2020, Yancheng’s fines and confiscations revenue increased by a full 1.1 billion.
All cities (note: all) have not announced the composition of fines and confiscations. Shanghai even lists fines and confiscations as "other income", and outsiders do not know the specific figures of fines and confiscations.
Why do local governments sometimes turn a blind eye to legal supervision? This is because the domestic "Regulations on the Management of Public Security Organs' Funds" stipulates that the funds of public security departments mainly come from government grants, fees, fines, confiscated items, etc. Among them, public security organs need to hand over part of their income to local financial departments in accordance with legal provisions.
Starting from September 1, 1993, the public security and industrial and commercial departments at all levels investigated and dealt with smuggling and trafficking cases in accordance with the law. 50% of the fines and the value of confiscated items went to the local finances as local revenue and were deposited in the local treasury. The other 50% went to the central finances and was uniformly handed over by the Ministry of Public Security and the State Administration for Industry and Commerce.
When the government has no tax revenue, the powerful will find ways to squeeze the fat of the land.
Now that Zhang Mazi is dead, who will care about the people of Echeng?
I know someone in the industry who specializes in helping local police with "disposal of non-performing assets in the cryptocurrency world." These bids often involve tens of millions of dollars, and the information has been anonymized, so you can just take a look.
When the rule of law is not sound in a region, it brings two effects:
Weak financial supervision facilitates rent-seeking and capital flight.
The discretion of law enforcement is vague, and the public security police in any small county can arbitrarily freeze and arrest the parties across regions and directly impose fines and confiscations without going through legal procedures.
People with status and connections still have a lot of channels for transferring money, such as charity foundations, military business, payment licenses...
Little-known fact: There is no upper limit on foreign exchange settlement for large state-owned enterprises. The US$50,000 upper limit is just a shackle on the heads of the grassroots people.
If you don't have any connections, you can go to the exchange for C2C trading. This is the worst way to withdraw funds in my opinion, because you don't know who your counterparty is, and you will get into trouble sooner or later. Regarding this point, I have already elaborated in detail in the previous article "Coin Circle Withdrawal Guide 1.0", you can read it if you are interested.
In the foreseeable future, it will become increasingly difficult to withdraw money from the cryptocurrency circle. Give up your fantasies and face the reality as soon as possible.
Is Hong Kong a safe haven?
Unfortunately, no.
I have seen countless cryptocurrency influencers pushing tutorials on how to withdraw funds from Hong Kong. I just hope you understand the consequences.
In short, in the cryptocurrency world, a common phenomenon is that a large number of small investors follow the advice of big Vs and find the same intermediary to open a card. This intermediary has account managers with whom they have deep cooperation in several banks.
You have to understand that if one of his clients has a serious problem, the bank will conduct a reverse audit. All cards issued through this intermediary may be checked.
Your account may be closed and you may be asked to send a check to get out; in serious cases, you may even be involved in a criminal case.
Let’s talk about lawyers. This is also a pitfall. If a lawyer who specializes in helping people to set up BVI offshore shell companies is involved in something, most of the companies he runs can be found using his name as a clue and will be marked as high risk.
Which law in Hong Kong stipulates that crypto companies in Hong Kong can serve mainland users? Are you a Hong Konger? Do you have a Hong Kong passport?
The information of your withdrawals to Hong Kong bank accounts will be reported back to the mainland through CRS every year. Have you legally declared taxes on your large assets in Hong Kong?
Not to mention deposits, even the insurance purchased in Hong Kong will be automatically reported and there is no way to avoid it.
Hong Kong is not the Hong Kong of the past. Please do not go to crowded places.
Amplification of the chain of trust
Those who really understand how to withdraw funds know what it means to "amplify the chain of trust."
Using a fake identity or trying to exploit platform loopholes to open an account, especially one related to money, I can only say that this is really bold.
Many people may have forgotten, or still don’t know, about the PayPal fund freeze incident last year. Tens of millions, or even hundreds of millions of dollars, were frozen due to non-compliant sales, and there was no way to appeal, and the company involved went bankrupt immediately.
This kind of thing depends on the platform’s mood. If the platform is short of money or is under review, it will freeze the funds in one fell swoop.
You may see people introducing various platforms for money movement in various places. Today it is a digital bank, tomorrow it is a new exchange. But don't worry, these will not last long. They only look at the surface and don't go deep into the essence. When it comes to withdrawing funds, they can only work hard, and when one goes bankrupt, they will switch to another, and there will be no end.
You are a legitimate citizen, you don't want your money to be mixed with those black and gray industries. You just want to cash in your legitimate income and improve your life. Why is it so difficult?
Some people may say, then change your nationality, for example, Singapore has no capital gains tax.
But this is not what we are going to talk about now. Assuming that the readers of this article are all mainland citizens, we will talk about changing nationality later.
It is difficult to withdraw money, mainly because the essence of the matter is not understood clearly.
What is the essence? It means to know the quality of the money in your hand and how to make it clearer and more transparent.
The money you get from the U merchants on the exchange is "dirty". The money you withdraw from the exchange may be relatively clean, but in the eyes of some banks, it is also "dirty" and still dangerous.
Your journey starts with withdrawing funds from an exchange and ends with entering a bank account without foreign exchange controls.
I will elaborate below...
How to withdraw funds
You know that Kraken, Binance, OKX... these exchanges can open accounts through offshore companies and then withdraw funds to the bank accounts of offshore companies.
But it is difficult to open a bank account for an offshore company now, especially a corporate account.
Why do banks stay away from cryptocurrency exchanges’ money?
Think about it, they serve a cryptocurrency client with a large amount of funds flowing in and out, and the money they earn is still uncertain. If the funds are involved in organized crime, the regulatory authorities will come to find fault immediately. If you are a bank, you would rather kill the wrong person than let him go, and simply not serve this type of client.
The money you withdraw from the exchange is often monitored. The bank knows that this is the exchange's account and will also mark your account as a cryptocurrency fund account.
How to avoid this marking?
The answer is: transfer money to yourself.
There is an unwritten rule circulating in bank internal controls, which is that the risk of transferring assets under an individual's name is the lowest.
