ZCash can be, will be, has been and is being used by criminals. So what. Criminals use the internet, cars…pens, even…who cares. The goal of ZCash is that the user is assured of the means to trade value privately. Whether criminals or JP Morgan use it to keep their transactions their business is irrelevant. As @root stated, privacy is a basic right, and while I don’t agree anyone has any right to anything other than their willingness to assert their own will in proportion to their willingness to be violent or suffer pain by doing so (slight digression), Privacy in the modern age should be assumed to be something everyone “should” have…
Money laundering is the act of concealing the true nature of the illicit gains. If A sends ZEC to B and both are using a Z address, then no one knows from whom or to whom or how much ZEC was sent other than the parties. If A sends ZEC in return for some value derived by criminal conduct, then both A and B are parties to the act of money laundering and the conspiracy to commit it. However, since criminals are not too choosy to the laws they violate, ML is something they do every day. Proving ML in this example is impossible without one of them ratting out the other…
Here’s how I see it if someone wanted to take cash from whatever source and turn back into cash not appearing to be from any source:
Open an account on Coinbase (let’s hope they can soon);
Buy some ZEC with fiat;
Send that ZEC from CB’s t address (they surely won’t ever offer Z addresses if they include ZEC there) to your own t address somewhere else, like, say Winzec;
From Winzec send your ZEC in your t wallet to a Z address, and then from that Z address to a new Z address (NB, the person would want to make many smaller transactions of odd amounts over time so the total ZEC can’t be learned if inspecting the blockchain);
4a. To be safe, the operator could do another Z => Z send of different amounts to add more smoke;
Now from that final Z address, they would send that ZEC to a t address on Krapen or another exchange.
Then he would sell the ZEC there on Krapen for fiat and then withdraw that fiat to a bank account different than the one he used to fund his CB account.
Some side prep work he could do would be to setup one bank account in one country with one strawman and then the second (or many) in other countries with another strawman or strawpersons.
Do I think this is being done? Surely it is. Any sophisticated criminal operator in the modern age would likely be doing something like that right now…and again, so what! Freedom aint free, y’all…some will exploit the freedom for their own gain by all means.
While I don’t want to be writing the “Anarchist’s Cookbook to Laundering Crypto in the Modern Age”, I am illustrating the process to make the point below. KYC/AML is there for one reason, and that’s to stop (or make difficult) operators from doing just what I’ve outlined above.
You see, the Entry and Exit Gateways into crypto are well controlled by the greedy hand of Government. It’s their sole intention to know who is using their money and when and how they do. If you want to convert fiat <=> crypto, you have to pay the toll to get onto the road. It is at the entry and exit gates where the ML Operator can be caught.
tl/dr: People use crypto for money laundering; ZEC makes this easier to do; Exchanges make this harder to do; liberty should never be more important than safety.