Why aren’t these banks put on the sanction list where it’s a crime to do business with them? Because the vast majority of what they do is not money laundering and when they are discovered money laundering, they generally stop. And when they don’t, they are added to this list: https://www.treasury.gov/ofac/downloads/sdnlist.txt
Whereas Tornado Cash is a service that is known to enable huge amounts of money laundering, and nothing was done to stop it.
What could be done to stop it? It's just a contract run on the blockchain. I suppose they could limit throughput, but not much else?!
Similarly, what could the Monero or ZCash developers do to stop money laundering on their blockchains? Here, not even throughput can be limited since amounts of transactions are completely hidden.
Well, there's a lot of obvious strategies that money processors in similar positions employ. They could confirm the identity of their users so that known criminals can be filtered and blocked. They could manually audit large transactions and require documentation demonstrating that they're legitimate. I understand why they don't want to do things like this, but I'm just not sympathetic; it sounds to me like a group of bankers in 2012 announcing their strong ideological commitments that LIBOR manipulation is good and they should be allowed to continue doing it.
The fact that you seem to be so brain-boggled about this is... it's just that a lot of very smart people have been warning for years that crypto-currencies are going to run into trouble. That the things they were building were simply parallel (with new names DAO etc) to the global financial system and that previous system has all kinds of controls and regulations that crypto lacked. That if crypto didn't get their shit straight there were going to be some very serious people showing up on their doorsteps.
But crypto-bros will be crypto-bros, wether they are the minnows hoping against hope that they can somehow move from greater fools to slightly less foolish or the sharks grifting all the minnows for every penny they have.. just kept living in denial or .. selling denial in the case of the sharks.. and now here we are.
It turns out that when you ask the global financial systems what they call a service that does what a mixer does, they reply 'a money laundering operation operating in plain sight'.
Dunno. If you learn your product is being used to commit crimes and can’t figure out how to counter it, you should stop building it. (Or at least pause and call a lawyer.)
Then american banks should be sanctioned, they are also involved in money laundering too.