What matters for ML/AML is money going from external accounts into MtGox. I do not believe that is $454mm/mo. A lot of the Bitcoin/Dollar stuff is internal to MtGox and is essentially daytrading, which is why you have crazy hundred-trillion dollar numbers on the F/X markets, too.
Yeah, I know. But it isn't insignificant and I can't believe that there aren't people with a few million dollars who want to launder it, and would do so if the service kept existing (or maybe already do).
Isn't the daily limit for reporting something like $10,000? There is clearly far in excess of that amount of money flowing through mtgox in transactions, so surely the possibility of money laundering is something the authorities would consider.
It is insignificant for anyone not already using Bitcoin and using Silk Road. (or, a nerd pot or RC dealer who just likes the idea of bitcoin)
There are many many opportunities for money laundering which are cheaper/easier/more stable than MtGox. I personally haven't had to worry so much about AML regulations since I was last seriously involved in digital payments around 2000, but while a lot of the easier routes to accept USD cash and move it out of the US have been addressed, there are still a lot of lower hanging vectors.
The main ML vector would be localbitcoin and other person to person cash exchanges, and they go in the wrong direction (generally people buying bitcoin and GIVING you cash). I'd bet the total volume of bitcoins you could buy for physical cash is less than $5mm/yr/person right now, without a seriously high profile. And probably way less. So, less than would comfortably fit in a bag in your trunk. For domestic stuff (like a pot grow in Humboldt and selling to NYC), shipping bulk currency back and forth is probably fine.
SR is a threat to narcotics control regimes, and it's possible there are other issues with anonymous payments through Bitcoin today, but it's not a high volume channel of going from USD physical currency in the USA to any kind of useful placement.
I'd bet the total volume of bitcoins you could buy for physical cash is less than $5mm/yr/person right now, without a seriously high profile.
Correct me if I'm wrong here, but couldn't you deposit money into bank accounts in "less stringent than the US" countries where mtgox operates, convert into bitcoins, then convert back into USD and withdraw from Dwolla as "legitimate" currency? That seems like the main use to me. You're getting around the paperwork and suspicion of a bank transfer directly into the US.
Of course Mtgox says that it complies with money laundering regulations, but you could chop up the transactions (foreign account -> mtgox -> bitcoins -> some other exchange -> different bitcoins -> mtgox -> USD). Once the money enters bitcoins, it's very easy to shuffle it around so it can't be "traced" (by which I mean have it go outside companies that comply with money laundering regulations- it is actually traceable technically, but I'm not sure the authorities have tools that do this yet or whether they actively look at it) and then pull it back out as USD. Seems like a problem to me, but I'm not a money launderer, so I dunno.
The problem is essentially all the buyers of drugs are in the US, and pay cash. You end up with a bunch of $5-20 bills in the US. You need to either pay electricity/personnel/fertilizer/rent/etc. to grow pot, or pay Chinese companies for research chemicals, or South Americans or Central Asians for cocaine or heroin, or old people/poor people for pharms (or sometimes foreign companies).
The direction is
product: producer (foreign) -> reseller (USA) -> user (USA)
The hard part is the initial stage of taking US physical $5-20 bills and depositing it into a bank account without arousing suspicion, at scale. You can't just deposit it into a US account and wire it overseas, and you can't as easily play the remittance game where you give ~$500/wk to a bunch of Mexicans to "remit to Mexico" to accounts you control.
Right now, the best thing to do is actually "bulk currency export", where you put it in a bunch of bags and ship it overseas, then deposit it into foreign accounts. Once you get it into a foreign bank, you SWIFT it to a slightly less shady jurisdiction, going through a bunch of steps to obfuscate (although doing traffic analysis on SWIFT is a solved problem; I suspect FinCEN is a Palantir customer...), then put it into investments, usually government approved/affiliated, which won't be questioned.
By buying slightly government affiliated assets (real estate?), you then get rent streams which are "clean", and then you invest those in the US.
Your average dude buying a few hundred pounds of weed in Humboldt for $1500/pound and flipping it for $3200/pound in NYC just moves bulk currency back in the same manner he shipped his product cross-country, pays his vendors in cash, and ends up with a lot of cash, which he spends on flashy purchases for his personal life (paying rent in cash, etc.), and with the excess, may make cash investments in assets (small businesses, whatever) which generate licit revenue, on which he pays taxes and then does whatever.
Bitcoin is totally irrelevant to that.
The market where bitcoin might make sense is if you're a US research dealer who wants to buy, say, 100 grams of some new RC from a manufacturer in China. The dodgy "sell to individuals" front there might be willing to accept BTC then fedex it to you. Otherwise you have to go through the trouble of doing a wire to a foreign account, etc.
It also could make sense if your retail buyers also take bitcoin. Maybe selling cocaine to VCs in SF/NYC could meet that (1 BTC ~= 1 eight ball), assuming you can then somehow take a bunch of BTC to buy larger quantities of cocaine (maybe via silkroad?). But in practice I think the only people selling serious weight for Bitcoin above the retail level are pharm, RC, or pot.
They're not making that much money. The processing fees are a fraction of that. It's still profitable, but at this point Mojang might still be making more than Mt. Gox.
I'd be impressed at any cartel making $454 million in an hour!!