> If that aggregation vehicle is through a privacy-focused coin like Monero or Zcash, or anything onion routed (e.g. Lightning network), how exactly do you demonstrate laundering?
You should be more concerned about how you demonstrate it's not laundering, because in more and more jurisdictions KYC (Known Your Customer) regulations in banking means you will in more and more circumstances get questions about where your money came from and potentially be asked to prove it.
This may or may not affect your jurisdiction now, but these will likely get more common as crypto spreads.
E.g. my ex bought a house recently, and part of the funds she paid the deposit with were transferred from her sister as part of her inheritance from her dad. Which created a whole circus with her lawyer, who was obligated to be certain they were not dealing with laundering, of digging up not just her statements, but dealing with requests for her sisters bank statements, and documentation of the source.
If one of those steps is effectively a tumbler, the answer may very well be "you can't prove the money is clean; we can't deal with you, and we have to report this"
No need to make any specific approach illegal even - just require that anyone you make large payments to are sufficiently satisfied the source is clean, which will be exceedingly hard for users of methods that obscure where it's from.
You should be more concerned about how you demonstrate it's not laundering, because in more and more jurisdictions KYC (Known Your Customer) regulations in banking means you will in more and more circumstances get questions about where your money came from and potentially be asked to prove it.
This may or may not affect your jurisdiction now, but these will likely get more common as crypto spreads.
E.g. my ex bought a house recently, and part of the funds she paid the deposit with were transferred from her sister as part of her inheritance from her dad. Which created a whole circus with her lawyer, who was obligated to be certain they were not dealing with laundering, of digging up not just her statements, but dealing with requests for her sisters bank statements, and documentation of the source.
If one of those steps is effectively a tumbler, the answer may very well be "you can't prove the money is clean; we can't deal with you, and we have to report this"
No need to make any specific approach illegal even - just require that anyone you make large payments to are sufficiently satisfied the source is clean, which will be exceedingly hard for users of methods that obscure where it's from.