Slate Money – "Money Talks: Modern Money Laundering"

Host: Felix Salmon
Guest: Joe Salama, Chief Compliance Officer, Coinbase
Date: January 20, 2026

Episode Overview

This episode delves deep into the world of modern money laundering. Host Felix Salmon interviews Joe Salama, Chief Compliance Officer at Coinbase, to unravel the mechanics of global money laundering, the scale of illicit flows, evolving tactics, and the challenges (and occasional successes) in the fight against this perennial “cat-and-mouse” financial crime. The conversation explores how compliance professionals, international regulators, and law enforcement work to detect and deter laundering, and highlights why the world is both losing and gradually winning the battle against dirty money.

Key Discussion Points & Insights

1. The Cat-and-Mouse Game of Money Laundering

• AML as a Dynamic Battle
  Salama describes anti-money laundering (AML) work as a “never-ending quest” with constantly shifting tactics and technological advancements on both sides:

  “It really is like... a good old-fashioned, like white hats versus black hats, good guys versus bad guys race where each of you is improving your technology to stay ahead of the other side.” (01:45, Felix Salmon)

2. How Money Laundering Actually Works

• Classic Money Laundering Stages

  1. Placement (getting illicit money into the system)
  2. Layering (making it harder to trace)
  3. Integration (reintroducing cleaned money for use)

  Salama provides illustrative real-world examples, discussing why cash-intensive businesses (yes, including our beloved rice pudding shops) are targeted, and why TV shows like “Ozark” actually get a lot right.

  “Cash intensive businesses can be used for money laundering purposes... the formula is fairly simple: you’re taking in a lot of cash as a business, so illicit money gets commingled with legitimate receipts...” (04:23, Joe Salama)

• Trade-Based Laundering Now Dominates
  “Trade-based money laundering”—using fake invoicing in international business—is now far more significant than old-school bricks-and-mortar cash schemes.

  “Places like what we call trade based money laundering are more scalable... utilizing international commerce... with big numbers, but actually you’re moving illicit funds.” (06:17, Joe Salama)

3. Scale of the Problem

• Mind-Boggling Numbers
  Estimated global value of laundered money: $2–$5 trillion/year.

  “That’s like the GDP of a large country.” (07:47, Felix Salmon)

• No One Criminal Enterprise Dominates
  Sources include drugs, fraud, human trafficking, and more—crime is diverse and so is money laundering.

4. Cash, Art & Other Laundering Vehicles

• Cash Still Rules

  “The overwhelming majority is still in cash. Especially when you’re talking about drug trafficking, human trafficking... just US Dollars alone, it’s got to be in excess of a trillion dollars worth of cash flushing around.” (09:35, Joe Salama)

• Art Market Vulnerability
  The art world’s lack of KYC (Know Your Customer) checks is a weak point, but the scale is dwarfed by cash/trade-based flows.

  “The art industry ... does have a particular vulnerability... the high value, the transportability... there have not been really any KYC requirements.” (10:41, Joe Salama)

5. AML Compliance & Enforcement: How Effective?

• Banks & Financial Firms: The AML Frontline
  Big institutions have strict KYC and transaction monitoring. Companies that want to be trusted like Coinbase make compliance a “bedrock”.

  “Every transaction that ... flows through a financial institution... undergoes transaction monitoring. The traditional way is with rules, thresholds—you run your system to be more sensitive on a high risk client.” (13:56, Joe Salama)

• Complicity or Naïveté?
  Sometimes big companies are duped, but failures happen everywhere, not just crypto.

  “You will not find a traditional financial institution of any scale that has not had an AML-related fine.” (15:53, Joe Salama)

• Critique: Does it Just Move the Problem?

  “It kind of implies that it doesn’t actually do much good. All you’re doing by beefing up compliance is moving the money laundering somewhere else.” (16:50, Felix Salmon)
  “You create a bit of a strong trend around everybody increasing controls and that just makes it net harder for criminals.” (17:03, Joe Salama)

6. The Business of Money Laundering: Price & Players

• Cost of Laundering Has Dropped
  Once, laundering cost 25%+ of proceeds; now it's closer to 5%.

  • This is due largely to Chinese money laundering organizations, who can profit on both sides of demand—those needing to launder US dollars, and Chinese nationals seeking to buy dollars.

    “...the price has dropped... In particular, Chinese money laundering organizations have moved in... they get so much money on the second side of that equation that they’re able to cut prices on the front side.” (24:22, Joe Salama)

• China’s Central Role
  China-based groups now dominate global laundering—with a majority of the world’s laundered money ultimately tied to Chinese demand for dollars.

  “The overwhelming majority of it is China-based. I would suspect that it’s not exclusive... but I think we keep our focus everywhere.” (26:40, Joe Salama)

7. Laundering Logistics in Practice

• How It Works in the U.S.
  Even when masterminds are abroad, laundering involves American “money mules” to move small deposits.

  “A typical scenario is the organization will employ a whole bunch of money mules... Those money mules will then deposit the funds either into accounts that are theirs or the ultimate beneficiaries.” (29:29, Joe Salama)

8. Odds of Getting Caught

• Enforcement Statistics: It’s a Rounding Error
  Only “tens of billions” are recovered against “trillions” laundered—less than 1%.

  “Estimates in terms of recoveries are probably in the tens of billions... compared to multi-trillion dollar laundering. So, tiny, less than 1%.” (30:59, Joe Salama)

• Compliance Costs Outpace Recoveries
  “Banks and financial institutions are spending in the hundreds of billions on the compliance side.” (31:14, Joe Salama)

• Salama’s Rhetorical Question:

  “Would we all just be better off writing checks out to the victims because— instead of spending the money on the controls, ...you could get ten times the recovery for the victims.” (31:39, Joe Salama)

9. The Hope: Blockchain, AI, & Cooperation

• Blockchain's Promise
  Large asset seizures (like the recent $15 billion in Bitcoin) are possible because of blockchain’s transparency, which offers hope for shifting the balance.

  “The advantage of the blockchain is you have full transparency... like what DNA did to criminal investigation.” (33:21, Joe Salama)

• Crypto as a Crime Deterrent?
  Ironically, blockchain’s traceability is now discouraging some criminals from using crypto.

  “A lot of criminals that thought it was a safe space... have moved out ... it wasn’t quite the ease with which they thought they’d be able to operate.” (34:24, Joe Salama)

• International Cooperation is Key, But...
  Salama is hopeful, but acknowledges that progress on cooperation is slow and global standards are uneven.

  “We do need better international collaboration... but, what I would say is, it’s loosely coordinated and there’s a lot of room for improvement.” (37:58, Joe Salama)

Notable Quotes & Memorable Moments

• “When you look at a space where... total asset recoveries are in the tens of billions annually globally, a single seizure that’s got a value of $15 billion is a massive chunk.”
  (33:21, Joe Salama) — on why blockchain seizures are a game changer

• “I think when you combine the transparency of blockchain with... AI, you have the data set and you have the capability to really analyze that data set and make tremendous progress.”
  (32:49, Joe Salama)

• “If you’re looking at it from a pure economic vantage point, taking all morality out... it may be the case [that money laundering is a good economic bet]. ...But if you do get caught, it’s not going to be a great life for you.”
  (35:13, Joe Salama)

• Salmon’s Challenge:

  “You’re saying that over the next five years you are optimistic... I’m looking around the world and see absolutely nowhere... where there’s an improvement in international cooperation...” (37:58, Felix Salmon)

• Salama’s Final Markers for Progress:

  “I want to see the recoveries go up. I want to see the overall headline number of amounts laundered going down... that’s the game changer.” (38:46, Joe Salama)

Timestamps for Key Segments

| Timestamp | Segment/Topic | |-----------|---------------| | 01:07 | “White hats vs. black hats” – AML as ongoing tech race | | 04:23 | Cash-based money laundering explained, “Ozark” reference | | 06:17 | Rise of trade-based laundering | | 07:36 | The global scale: $2–$5 trillion per year | | 09:35 | Why cash still dominates; US dollar flows | | 10:41 | Art world used for laundering (no KYC) | | 13:56 | How risk-based compliance & transaction monitoring work | | 15:53 | AML failures across both traditional banks and crypto | | 16:50–17:26 | Does compliance just push crime elsewhere? | | 24:22 | Why the price of laundering dropped: China’s role | | 26:07 | Laundering now costs ~5 cents on the dollar | | 29:29 | How money mules enable laundering in the U.S. | | 31:14 | Compliance costs vs. asset recoveries; is it worth it? | | 32:49 | Blockchain, seizures, and Big Tech hope | | 34:24 | Blockchain pushes some criminals out of crypto | | 35:13 | The risk vs. reward calculation for money launderers | | 37:58 | International cooperation: hopes and skepticism | | 38:46 | “I want recoveries up, laundered sums down” – tracking future progress |

Conclusion: Where Are We Headed?

Joe Salama is ultimately cautiously optimistic: blockchain technology and AI may soon tip the balance, enabling more effective tracing and asset recovery, IF there’s greater international cooperation and a focus on the right choke points in the financial system. But with trillions still sloshing through the shadows and less than 1% being clawed back so far, the anti-money laundering world has a steep hill to climb.

Salama signs off pledging to return in five years to see if these predictions hold up—and whether the system has made meaningful progress or remains stuck chasing its own tail.

For questions or feedback, email slatemoney@slate.com.

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