It is expensive to keep a crime and corruption department on your banking institution. If you are dealing with a millionaire who is related to some oil mogul in Russia you can do your due diligence and Vladimirovich can hire a team of accountants to prove that his business is legit and not at all related to the corporativist oligarchy his uncle runs. Or it might be, but the risk vs reward is good enough to turn a blind eye for now.
Ivan, immigrant from Belarus who drives a bus and likes to withdraw cash from his <5000 euro account? Get this living liability out of my bank! I won't run a whole department or risk getting fined because some no name pauper. But since we can't just ban him let's just ask for ridiculous documents like proving the nationality of his grandfather (real story btw) or criminal records, translated in English, by an official translator. Let's annoy him so much with retarded requirements he will leave by himself and if he fails to provide our totally not arbitrary evidence we write a polite e-mail stating that we are sorry but we won't run his account anymore.
There’s a really great book called Kleptopia by T. Burgis. It’s about how wealthy oligarchs use the Western legal and banking systems.
He points out that the US financial system is squeaky clean. Oligarchs wind up in prison because they think they can pull the crap in New York that they pull in London.
But outside the financial sector it’s the 100% opposite. Americas permissive corporate transparency lets assets vanish.
The best example: if you want to get a mortgage to buy a house you have submit to a financial strip search. But if you want to buy a house with bags of cash, you don’t even need to give your name.
> The best example: if you want to get a mortgage to buy a house you have submit to a financial strip search. But if you want to buy a house with bags of cash, you don’t even need to give your name.
What is this an example of? You are submitting a financial strip search because the lender wants to ensure the borrower can pay the debt, not to ensure they are a criminal or not.
And that is because prior to 2008, lenders were giving out loans to people with zero underwriting, hence the cascading defaults, and then financial crisis, which led to more regulations on proper underwriting.
If you want to deposit that same cash in a bank, it's going to raise questions. Real estate is a bit of an exception here. For reasons explained in the article.
As separation of concerns, this sounds reasonable and efficient: why should it be the financial sector's job to weigh whether someone is good or bad?
Better to make finance focus on ensuring there are quality, documented links where legally required... and then perform the judging elsewhere (e.g. legal system, FBI, journalism).
That the US (and especially certain states) permits opaque corporate structures is a different problem.
> why should it be the financial sector's job to weigh whether someone is good or bad
In practice though that’s exactly what happens. Banks have to look for transactions that are potentially illegal (including OFAC and AML). And the banks not only report but have to block some of those transactions or they become liable for the initial crime (if it existed at all).
I'd go further and say it isn't the job of Western countries to fix corruption.
If Putin wants to fleece his people he can take his billions to a European bank.
I'd ask a slightly different set of questions: (1) "Is it good for {country} if {country's corrupt leaders} are able to bank elsewhere?" (2) "Is it good for {bank elsewhere country} if they accept corrupt money?"
(1) is probably not good for that country, but do other countries care? To some extent, this is just colonialism by proxy: extracting wealthy inequitably from a foreign country. Historically, few third party countries take issue with that, when they're the winners.
(2) is where the more interesting point is. Does the country accepting the money net benefit, or net loss? Aka the London banking question in a nutshell.
I'd argue that if money is political power (it is) and corrupt money can't be firewalled (it can't), then it's net loss.
Inevitably and especially if we're talking lifestyle roots (e.g. property, establishing a home, etc), that corrupt money corrodes government and civil systems in the banking country. At minimum, because the wealthy corrupt people bring their expectations and behavior with them!
>But tracking down holding companies consumes precious resources, and would be strategic, not just legal, decision.
And 9x/10 when you track down Perwinkle LLC you'll find that it's owned by a couple American brothers who own a successful regional HVAC business and everything they are doing is legal.
People love to act as if all this offshore stuff is frequently closely connected to illegal things but if you just randomly pull samples you'll be hard pressed to find anything that isn't just a case of someone completely legally doing what the law incentivizes. If there was actually anywhere near as high a crime to not-crime ratio as people imply every bureaucrat with political ambitions would be all over it.
Zero underwriting? You obviously do not know what you are talking about.
I got a "no-doc" non-conforming FHA loan back then. They fucking strip searched me. It was not easy--I still have PTSD from it. That same loan is still available on the market.
You also need a citation on your reason for the financial crisis of 2008.
I had to walk away from my home BECAUSE of the financial crisis (after having paid down 90% of the principle). Was it triggered by defaults or the credit default swaps themselves? Sure, maybe some bad loans were floated,but the sophisticated, hot off of the regulation preventing it, people in New York started gambling on the plebs losing their homes. Well, a few plebs (really, over-leveraged affluent people) lost their homes, and a cascading effect of credit default swaps came due and spun out of control. The crisis was directly caused by Bill Clinton signing a bill that removed key regulation that would prevent the very thing that happened: Gambling on Wall Street.
The 2008 crisis was directly caused by human greed, at all levels, and failing to be reigned in by regulatory bodies.
It's unreasonable to blame one source for something that metastisized over years, involving most parties in the financial sector, until exploding.
Banks could have chosen not to do this business or to hedge their risk in a better way. Credit ratings agencies could have shown some independence and objectivity. Derivatives buyers could have done more due diligence on what they were buying. Home buyers could have looked at the market and said "This is way too hot, and the party can't go on forever."
Deregulation handed everyone rope, including us, and we all hung ourselves.
It stings when you get personally @+$#ed, and it feels good to blame massive, systemic failures on one source, but they're systemic failures for a reason -- because the entire system was culpable.
It must be very difficult and emotional nightmare to walk out of your house. I'm sorry to hear that you lost your home. I don't know specifically what caused the financial crisis of 2008, but I do know that it was complex and had many factors. I'm sorry that you had to go through that.
Retail Banks were able to offer high risk loans with relatively low concern about the actual quality of the loan, due to the high demand for the repackaged assets. The repackaged assets used shenanigans to trick ratings agencies and make the lower quality loans look relatively secure. Thus secondary prices for the loans were high yada yada.
This is a general comment, nobody is saying every bank required zero documentation.
> I got a "no-doc" non-conforming FHA loan back then. They fucking strip searched me. It was not easy--I still have PTSD from it
I cannot imagine how bad some forms and id checks would have to be to give me PTSD.
further, some say that the expansion curves in Piketty's "Capital in the 21st Century" are not across the whole economy, but that rapid inflated asset values in real estate in particular, are drivers.
I don’t think the US financial system is anything close to clean but they might be strictly hostile to Russians and the government/regulators will not tolerate that.
That boils down to US conflict with Russia. Europe didn’t have a beef in this until the Ukraine invasion.
Read Kleptopia. It’s written by a British author and mostly about the British financial/legal system.
I’m not sure how much of it is current in light of the sanctions. The big example it uses (90% of the book) is Khazakhstan.
From what I’ve read more recently, many rich/middle class folks in Latin America are moving to the US. If their businesses so much as look at drug money, and then they so much as look at an American bank, they can wind up in a US prison for a long time.
So they just move to America to get away from drug gangs.
The US does not f*ck around with criminal financing.
The USA is the only economically significant country that opts out of participating in the Common Reporting Standard (CRS) data exchange. The USA claim that FACTA is enough. This puts the USA in the unique position where it only receives information from other countries through FACTA and its IGAs, without providing any information in return.
Why doesn't it provide information in return? Well, only specific bank accounts are subject to FACTA:
- Accounts of individuals who are not US taxpayers.
- US deposit accounts of individuals and entities that are not US taxpayers to which US income flows.
And certain types are exempted from the data agreement:
- US corporate accounts, even when foreign companies hold these US accounts.
- Investment accounts and custodial accounts (of individuals and entities), even when they are a resident in the FACTA partner country. This is true, as long as the custody account doesn't have income flows into this accounts (eg dividends or interests). Example: A German has a custody account in the USA and holds German shares in it. This data won't be disclosed to Germany. You probably know where this leads to...
If you think you are now in the need for an American corporate account, don't worry, we got you covered! Delaware offers setups without the need to file yearly lists of managers, owners (shareholders), directors, or members.
In case this is not sufficient for you because tax evasion isn't enough, and you are doing some really shady business, don't look further than this weird US arm called “Puerto Rico”. It is common knowledge among wealthy (and fishy) Europeans and Russians to just park your money there. Banks like the Euro Pacific bank allowed you to keep your money safe, and even allowed you to trade stocks electronically through IBKR without any disclosure to anyone. (ok, maybe the EuroPac Bank was too well known for this because they had to close down, but don't worry, there are a bunch of alternatives like facebank).
Combining a PR bank account with a Belize company is also very popular for money laundering. You know, Stripe doesn't allow banana republics, but for whatever reason PR is allowed there.
The setup is to create a company in Belize with a heavenly tax rate of 0% and just laundering through it to your bank account in PR. This is mostly used for companies who straight up do illegal things, but you know, you can sell virtual stuff all day long and it scales infinitely.
My personal opinion is that the USA doesn't want to disclose anything to third parties because they know too well that too much transparency would make them unattractive as the financial centre of the world. While they want to nail down US tax evaders at all costs, they have little motivation to fuck around with the billions of foreign capital in the US by providing too much information/support to foreign tax authorities.
Well, only specific bank accounts are subject to FACTA:
...
Investment accounts and custodial accounts (of individuals and entities), even when they are a resident in the FACTA partner country. This is true, as long as the custody account doesn't have income flows into this accounts (eg dividends or interests).
You say that investment accounts are subject to FACTA, but not anymore if dividends or interest earnings flow in? I'm confused.
Sorry, I missed “US” in this sentence. It should say:
Investment accounts and custodial accounts (of individuals and entities), even when they are a resident in the FACTA partner country. This is true, as long as the custody account doesn't have \*US\* income flows (eg dividends or interests).
To be clear: US custody accounts of individuals and entities, which are not US taxpayers, but receive US income, are subject to FACTA data exchange.
But, if you don't have the before mentioned US income to your account, you are exempted from data sharing.
Unfortunately, I don't have a reference, as I was told this by an advisor from PWC a few years ago. I guess you could contact any good tax consultant, tell him the details, and let him look into it. I have no idea about how 401K works in the US.
ever since US broke Switzerland by snooping via UK's help US determined to harbour all the world's dirty money... big fries only though and AML is just an extension to this..
SWIFT and Swiss don't just give up client data easily and yet they did due to US had exact names and details of every transaction, I recall some said fibre optic was tapped. too bad I left London soon after GFC there was a tonne of high quality gossip fun times.
Honest question, where does this happen? If you are buying a house, the solicitor or whoever is dealing with legal/deed etc will ask where the money came from, don't they? In the UK atleast that seems to be the case. Lenders are fine as long as you can show your future income (eg by being employed), but not much about how you got your initial deposit money.
When Australian companies offer shareholder deals (like capital raises, offering shareholders a chance to get in first on favourable terms) there is usually a neatly printed prospectus that has a couple of pages in very explicit language saying "this is NOT FOR AMERICANS. Please do not show this to a US citizen. If you are a US citizen, you must disregard this booklet!".
It always strikes me as unfortunate just how badly the US is locking themselves out of otherwise quite good investment opportunities. I always assumed that these service refusals were due to AML laws using logic similar to what you describe. It is always the US. We're ok with Europeans, Asians, Africans and South Americans.
That’s due to US securities laws, not AML.
The real reach through for Australia EY al. is FACTA, where any person with US citizenship invokes extra and onerous reporting requirements.
Or just changing tax residency. Moving from Norway to the US, brokerages will tell you to liquidate your assets or they'll do it for you, because they do not want to touch the reporting requirements to the US.
Being a millionaire is no where near enough for banks to look the other way.
They turn away millionaire accounts all the time. You need to have many hundreds of millions under management for them to do their diligence so you can open an account.
Most accounts under 10 million cannot even get cleared to trade high risk options. No way in hell they'll skip AML checks.
May be being a millionaire is not enough to get a non-hostile treatment from a bank but the problem is that the cost of compliance is of the same order for all customers (because reporting thresholds where exist are very low like €1K or $10K) but per-customer profit is different. This creates an incentive to disproportionately deny service to non-rich customers. This would be much less of a problem if government regulators where focused on people/entities which operate with truly large amounts of money so ordinary folks can stay under the radar and not be a burden for a bank. But for some reasons governments wants have a grip almost on everyone. So having below median wage as the main source of income doesn't not make one a low risk customer for a bank if there are other "risk" factors (like being an immigrant).
The same thing happens in Germany, with N26. Under the pretext of "regulatory requirements", they ask for information like income amount and source, employment status and industry etc. BaFin (the banking supervisory authority) is ignoring this, like they did with Wirecard
I know I'm expressing a minority opinion on this, but I'd much rather have an unregulated system where I was able to send and receive money without any sort of hassle or oversight, even if criminals and people frowned upon by the people who run SWIFT are able to do the same.
That will seem swell to you until better-funded criminals want a piece of your assets, money, or labor. There are very good societal reasons to keep crime to a manageable level.
>That will seem swell to you until better-funded criminals want a piece of your assets, money, or labor.
And the status quo where the banks take a bigger cut to pay for their big compliance departments and the government takes a bigger cut to pay for auditing those compliance departments is somehow better?
X-percent not in your pocket is X-percent not in your pocket no matter how you cut it. At least in the proposed "stop giving a crap" case nobody will be denied access to boring routine financial products because they have a 3rd cousin with the same name as a Turkish mob boss.
Yes, the status quo is definitely better. The numbers on total AML cost vary widely, and I think the high-end numbers are suspicious because there are incentives to inflate them. But taking them at face value, AML costs the US financial industry about 1% of revenue.
That is nothing compared to the costs of crime in high-crime/high-corruption societies. And looking at dollars alone doesn't paint a true picture. Criminal enterprises work through violence and add risk throughout the economy. E.g., if your business is doing well, a protection racket is not going to take 1% and call it a day. They'll take everything they think they can get. And if not, they break your leg. That serves as a strong disincentive to creating successful businesses.
Do the FDIC have disputes with the OCC? Probably. But unlike criminal gangs, they don't settle them with shooting wars in the streets.
>That is nothing compared to the costs of crime in high-crime/high-corruption societies.
Is it really though? How much was the US (or any other equally developed country) losing to crime and corruption prior to all this KYC/AML BS? Not that much. Letting a mobster have a bank account doesn't magically turn your country into Nigeria. If anything it makes your country better because the mobster doesn't have to store that value another way and then protect it (with violence).
>Criminal enterprises work through violence and add risk throughout the economy
So like government but with less abstraction?
> But unlike criminal gangs, they don't settle them with shooting wars in the streets.
Only because they don't have to. Being an above the table enterprise they can just go to the government court system and get their (credible threat of) violence that way.
All this violence you're complaining about w.r.t. organized crime is just their (low buck, because due process and diffusion of responsibility sufficient to dissuade revenge are expensive) way of settling business disputes.
It really is. People flee high-crime/high-corruption countries for good reason. They also have demonstrably worse economies over the long term. KYC/AML efforts are only part of the difference, of course. But we've ended up with KYC/AML because it's one of the least intrusive ways of keeping crime in check.
If you think otherwise, I encourage you to go live in a high-crime/high-corruption country and let me know how much you're enjoying the "freedom".
Was the U.S. before these KYC/AML laws (within our lifetimes) a high-crime/high-corruption country? If so, are the KYC/AML laws responsible for the reduction? If so, is the cost of these laws less than, approximately equivalent to or greater than the money saved by reduction?
I can honestly see that this could be the case. But I can honestly see that it might not be. A related situation would be occupational licensing: maybe it saves society money, maybe it costs society money; how certain are we that we are at the correct balance?
You know how we can be pretty sure that the NSA's data haystack hasn't done much to prevent terrorism because if it did they'd be shouting it from the rooftops?
Well occupational licensing is the same way. If there was even a shred of a farcical bad-faith argument that it saved money they'd be happy to spout it. The fact that the proponents don't even have that and instead shove appeals to emotion in your face tells you everything you need to know.
So crime was not at a manageable level prior to say 1970, when none of these AMLKYC laws existed? And crime has not been at a manageable level after say 2008 when crypto came into existence and made it impossible to actually enforce?
Man, for that brief shining window we really had perfection.
Yes, actually, the American mafia has declined severely since its heyday. There are surely many reasons, as it's part of a broader decline in crime in recent decades, but the increased difficulty of cleaning dirty money is part of it.
And crime has definitely gone up because of cryptocurrency. I'm not sure how much it has affected the more traditional sorts of crime, as I don't think it's much of a help in turning dirty cash into clean assets thanks difficulty of exchange and the ledger acting as "prosecution futures". But ransomware has grown massively thanks to cryptocurrency. And ransomware gangs have grown correspondingly in size and sophistication thanks to having all that money to spend.
AML regulations prevent about %0.05 of criminal proceeds from being 'harvested' and the cost of these compliance regimes costs vastly more than the value they bring. And it enables a vast financial surveillance system and a huge industry of AML analysts doing pointless busy work writing SARs nobody cares about.
The US mafia declined because of the rico act and the fact that there was less racism and better integration of italian americans. The current ethnic crime groups of today are different.
IMO AML is security theatre, much like the post 9/11 flying regulations making everyone's lives worse, especially if your name is Mohammed sending money to family back home in the home country.
> AML regulations prevent about %0.05 of criminal proceeds from being 'harvested' and the cost of these compliance regimes costs vastly more than the value they bring.
I look forward to your proving these two very numerical claims. But you can't just count existing criminal proceeds. That'd be saying, "The current level of speeding is so low that we can get rid of traffic cops." You have to measure the crime prevented, too.
AML is a boil the ocean way to prevent crime, except the ocean isn't being boiled because there isn't enough energy to actually boil the financial system. Instead it just annoys everyone with the financial equivalent of the ineffective TSA, where the TSA's own auditors bring everything and anything through with ease.
With all the money and human time used to prevent crime via AML, that could've been redirected to far more productive things. Especially in a country like the USA, where crime prevention issues are fairly obvious but not acted upon, such as robbery, murder, assault, rape, car break ins, property theft, damage, etc in California which aren't things effected much by AML either way.
“Money laundering” became a crime in 1986. The bank secrecy act originally just introduced the $10000 threshold ($80000 now) and record keeping requirements. It was later amended in the 90s to add suspicious activity reporting. Nearly all of the major mafia cases predate this. There are many reasons for this decline (https://www.journals.uchicago.edu/doi/10.1086/706895) but mostly it has to do with RICO, wiretap evidence becoming admissible, the witness protection program, changing demographics, and more federal prosecutions where the people involved were smarter, less corruptible and where the sentences were greater. I am incredibly skeptical that it had anything to do with the decline of organized crime in this country.
So you're saying the improved tracking of criminal proceeds, which started during the peak of the mafia's prominence and improved further as the mafia declined, had nothing to do with that decline? And further, has nothing to do with other criminal organizations not rising to prominence to fill the same role? I agree other things played a role, of course. You get to believe what you want, obviously, but I'm sure not persuaded.
> So you're saying the improved tracking of criminal proceeds, which started during the peak of the mafia's prominence and improved further as the mafia declined, had nothing to do with that decline?
Very few transactions hit the CTR threshold at the time it was instituted. It was nearly $80000 in today's dollars. Computerization was also very new so doing anything useful at scale with the records was difficult for the government.
I'm not a lawyer but I read RECAP and have read the appeals from a lot of these cases and very rarely were financial records mentioned as investigative leads. They almost always relied on informants who were a part of the scheme and electronic surveillance to figure out how the crime worked. Even now, how many criminal investigations do you think start from SARs? Obviously we'll never know because they don't release that, but I don't think there's any reason to think it is a substantial fraction. Money laundering in most cases nowadays is just tacked on after they discover that someone used money from the crime they already knew about.
And this, right here, is the fundamental problem with all of this. "Legal" vs "illegal" doesn't really tell us much these days about the value of the thing in question. Civil asset forfeiture losses per year long ago crossed the amount lost to simple robbery, politicians engaging in insider trading has long been seen as perfectly normal and acceptable, and large multinational corporations buying off politicians and getting return on investment in the tens of thousands of percent, likewise.
Very little separates the state from an organised criminal enterprise. A particularly cynical person might point out just how comfortably well the operating logic of states and large multinational corporations fits into the world of organised crime. The only thing that separates the two is legality.
You want to enslave a bunch of people and profit off their labor in some far flung corner of the world to whom nobody is much paying attention? No problem, just don't do it yourself. Invest in cobalt mining or diamonds in Africa, or manufacturing in China. A territory is getting uppity? Support the governmental structure that wants to brutally repress them by buying from their corporations or investing in their treasuries. Want to promote some nightmarish theocratic brutality? Saudi Aramco stock is a steal these days. In fact, I'm having trouble coming up with something that organised crime has historically profited from, which you could not do in a white market context in the modern world by simply trading in the full breadth of financial instruments, particularly in concert with the state financial actors already promoting these very things.
The thing that really scares me though is that as I get older and more cynical and see the way people are responding as the boot stamps down harder on them, I find it harder and harder to care or see the above as something to get righteously indignant about. Why should I find the slavery of people abhorrent when they so clearly crave the lash?
I look forward to your evidence of this. But things like robbery, selling stolen goods, protection rackets, extortion, prostitution, and drugs are still all generally illegal.
Things like alcohol and marijuana have become legal, but I don't see much evidence that Budwiser/InBev is a mob front.
AML/KYC laws apply to cryptocurrencies as well, in fact more so because they are by default more suspicious. Try depositing big amount of BTC to an exchange, you will get questions.
I think I’ve heard someone calling this shotgun KYC. They will allow you to deposit but as soon as you show signs of using that money they take it as hostage until you prove you are not a criminal.
Sites like Paypal and Skrill did this because they know most people would otherwise just cancel on sign up , and when you've got money locked in you have no choice but to complete verification. Thankfully i haven't had to deal with their crap in the past 4 years due to better options existing.
Wise has brutal aml and zero kyc - I was abroad and using wise as I thought it intended, as a means to transfer from my US accounts to my EU accounts, both happy and kyc'd through the roof. Account closed, would you like to click a button that feigns an appeals process? Click here to have it instantly denied!
My brother actually abandoned 50€ 10+ years ago because he refused to do that verification ... I wonder if he could actually get that money back in any way still ...
Common with offshore online casinos: you can deposit and lose your money, but as soon as you try to withdraw winnings the KYC rolls out and you better hope you're not a US citizen because you weren't even supposed to sign up in the first place then.
Why is "if you gambled but we found out you weren't allowed to gamble, we'll take back your winnings but not give back your losses" legal? Shouldn't it have to be either "we'll reset everything back to before you gambled" or "everything you already did stands; you just can't do anymore (and are probably in trouble)"?
> Why is "if you gambled but we found out you weren't allowed to gamble, we'll take back your winnings but not give back your losses" legal?
I don't know the actual law is, but it could be that the customer is the one who committed the crime of illegal gambling. If that's the case, it doesn't matter if keeping his winnings is legal or illegal, if the gambler brings suit he puts himself in legal jeopardy and I don't think the courts will enforce contracts associated with illegal activities (e.g. a hitman can't go to court to force his client to pay).
It is likely not legal but the gamblers are too lazy to take it to courts I would guess, and the casinos are in jurisdictions where it might be really tedious or expensive.
It probably isn't, but generally their ToS says you're not allowed to be in the US when you sign up, and they don't operate in the US. So you'd have to go sue them in the jurisdiction of whatever island nation they're operating in (or get the authorities there to care).
Additionally, if you're within the majority of people who deposit money and lose it all you're not going to even know this unless you do some active research about the casino.
It does not really work like that and the bank rarely gets to keep that money.
If the SOW is not sufficiently established, the funds are either sent back to the origin of the funds or a SAR is filed, where another regulatory body will decide about the next steps.
In any case, the custodian bank does not make anything from doing this.
> annoy him so much with retarded requirements he will leave by himself
This is rare. It may be the effect. But plenty of financial institutions openly deny risky accounts; no need to needlessly spin wheels.
Your broader point is correct, however. Because of the risk, a lot will be demanded. Because of the reward, nobody is motivated to push back on compliance.
I have a funny passport so some institutions are often probing my life and the source of my funds. The criminal records translated to english (I’m not from an english speaking country, I don’t live or work on an english peaking country) happened to me.
I also had a chat with a polish woman who told me that UK banks required documents about her grandparents nationality when she went there for study circa 2014.
I am convinced xenophobia is alive and well through the financial system. Hell… even cheered by often progressive people who thinks the AML/KYC framework is protecting their lands from foreign barbarians.
Point is nobody is generating meaningless requests to push someone away. They can just push them away. The tediousness arises from not giving a shit, not outright malice.
My friend from asia arrived in the UK to study in 2011 and her school recommended all their students to a nearby high street bank. No difficulty opening an account with a passport and letter from the school.
There was almost certainly something crooked though: The account had a monthly fee, but almost anyone can get an account with no fees if they know about them.
a large backdrop to this topic is controlling Oil and Gas trade dollars .. narco dollars is real and large, but OaG trade volumes are large and increasingly fought over..
also agree on the xenophobia -- but instead of culture this is turf wars over control of large dollar trade over time
Go read patio11's AML article again. He gives examples. And says he has personally experienced it.
More importantly he explains why it happens. And expresses a wish for more scrutiny on how AML works in practice, because the common result has some bad effects.
Here is his explanation. Having regulators crack down on you is bad for business. Which they will do if money laundering is found. And money launderers actively want to bounce money between different organizations in different legal jurisdictions. Therefore if someone wants to send money to a different country, particularly if they look like they might be hard to find if regulators decide to ask hard questions, they get arbitrarily increased scrutiny. The result of which is indistinguishable from xenophobia. (Which may also be involved.)
>The result of which is indistinguishable from xenophobia.
Yeah, but it's not xenophobia: it's mandatory compliance activity associated with a framework that - if it did not exist - banks would not do. Motives matter. Xenophobia wouldn't be distributed in accordance with weak national finance controls etc.
Any instance is plausibly not xenophobia. Which ones are is hard to prove.
But in practice it is set up and carried out by people who often have some level of personal xenophobia. Thereby generating an institutional cover for personal feelings. The extent of this is impossible to verify. But certainly more than zero. And, anecdotally, likely far more than zero.
That the policies are not simply distributed in accordance with weak national financial controls is demonstrated by the fact that Patrick McKenzie (US citizen) has encountered these problems multiple times while trying to get Japanese banks to deal with US financial institutions. Japan does not doubt that the USA has strong national financial controls. But "foreigner wanting to deal with foreigners" still generates heightened scrutiny and sometimes real problems.
>Japan does not doubt that the USA has strong national financial controls.
US citizens have the opposite problem, FATCA, that makes overseas institutions allergic to doing business with them. I lived in Japan for four years and had absolutely zero problems with banking (including overseas fund transfers both inbound and outbound; getting credit cards; leasing a car), but I have a UK passport.
This seems more like following AML rules and not being interested in helping a working class person open an account because its not profitable. If you think retail banking is staffed by 'people who often have some level of personal' _racism_, just say so.
> At many institutions, one SAR is a non-event. Two, for a retail client, means one gets a letter saying the bank wishes you the best in your future endeavors and will not bank you anymore. That letter will often mention that this is a commercial decision of the bank and will not be reversed. Some clients receiving that letter will, on attempting to open account at a different bank, get refused because the first bank entered them into Chexsytems as “account closed at bank’s discretion” and the second bank, on reviewing that entry, said “yep, we are not touching this hot potato.”
> Frustratingly, regulators will say “Well, that is the bank’s decision. We didn’t direct them to do that.”, even though the purpose and effect of AML regulations is causing a lot of behavior not specifically asked for. Banks will, meanwhile, say “Our hands are tied. Look at these enforcement actions. Clearly, this is an unacceptable level of risk.” And meanwhile, there is an actual person who has done nothing wrong and now finds themselves somewhere between greatly inconvenienced and frozen out of the financial system entirely.
Why is there so much opposition to "you can't have a bank account anymore because when you had one, one of your checks would bounce almost every week", but so little opposition to "you can't have a bank account anymore for something that doesn't constitute proof of wrongdoing"?
The latter isn't a stated policy, but the result of many interacting policies, incentives, and institutions.
Hence it is hard to fix, hard to recognize as existing, and hard to prove to others as being a problem.
In other words, you can't get people to care, and even if you could, they would have no idea what to demand.
Whilst the former problem is (according to other comments) largely affecting African Americans. There is huge momentum behind preventing institutions from consistently disadvantaging African Americans.
(Note I have no clue whether African Americans more commonly bounce checks and get debanked for it)
The former affects blacks, which are a recognized political constituency. The latter allows you to debank your political opponents (cf Operation Chokehold), which is useful.
I'm also debanked, but sporadically, and weirdly at only some investment institutions. Fidelity outright banned me and demanded I call in to withdraw my money between absurd hours. I sent them an intent to file a lawsuit and I got my money wired within 48 hours. Vanguard and TD Ameritrade have no problem taking my money.
I'm also banned at Zelle, but Venmo and CashApp and Paypal are all fine.
What a weird world.
Of course none of them will tell me why I'm banned. I have my suspicions.
The best thing I've read on this topic is from Matt Levine at Bloomberg, restated in his newsletter on Wednesday:
"In general, the chief compliance officer at any company has a dial in front of her that she can turn to get More Crime or Less Crime, and at a normal company — a bank, for instance — her job consists of (1) turning it most of the way toward Less Crime, but (2) not all the way, and (3) acting very contrite when politicians and regulators yell at her about the residual crime. “We have a zero-tolerance policy for crime,” she will say, and almost mean."
The biggest money launderers are close to those who write the AML policies.
One of the most significant money launderers is a famous attorney from Shearman and Sterling in NYC.
From my experience, prominent financial executives attempted to engage in blatant laundering of drug money in BVI. These individuals were connected to the attorney and one is a public official appointed by 4 US Presidents.
This was 20+ years ago and I don’t know what they actually did, but I was in the room when they tried to do it. Outside the room hung a giant photo of George W. Bush golfing with the firm’s CEO.
They offered me $1 million in cash to fly with $100m at a time to Tortola. The financial structure was created by the attorney.
Thanks to the Wikileaks effect of the internet (rapid info declassification + sharing) more corruption is able to be exposed, and the scale is shocking and enormous.
The hardest part is then trying to change a known-to-be-corrupt system, when those who write the rules always do so in their favour.
Here in Australia we have slid into the bottom 10 percent of global corruption index [0]
Politicians, lawyers, accountants, and realestate agents have conspired to repeatedly prevent AML from being introduced to Australia since 2002.
Whistleblowers get threatened with life-destroying jail terms.
Politicians "retire" then take up cushy directorships with numerous companies they previously wrote seemingly treasonous laws for (dozens of slap-in-the-face-blatant corruption yet it continues on with impunity or any punishment except for maybe losing an election or a gravy train contract).
Thanks you are correct and I will fact check my posts a bit more next time.
I thought our last 15 years of politicians were massively unaccountable and corrupted by self-created taxpayer slush funds plus lobbyist megabucks, corporate kickbacks and post-politics directorships.
I suppose politicians everywhere are essentially driven by the same human frailties, yet mostly worse than what I am seeing locally!
Like, they offered you $1MM (clean) to put $100MM cash in a suitcase and smuggle it through customs? Or to babysit it on a chartered flight and claim it was yours at customs? Because those feel pretty different.
I assumed they were offering him clean cash. Maybe it was a "just help yourself to 1% of the bag". At any rate, the perk of working for money launderers and literally depositing the dirty money is you should be able to do the exact same strategy with your million.
Key point is, no one truly looks at the efficacy of AML which makes it more theatre than crime-fighting tool (not that it doesn't fight crime, it just does not do so efficiently nor is it likely the best way to do so, let alone us defining broadly what crime actually is).
If these systems were re-designed from the ground up, AML procedures and policies would likely look quite different than they do today.
The problem with compliance is that it is pseudoscientific. There is no independent oversight: all regulation and tools are promoted by compliance companies selling those tools. There is no penalty for punishing innocent. There is no reasonable cost. More is always better. There is no court to complain or a channel to opt out.
It's a bit like antivirus on PCs: it is sold to you as a scareware but in practice is snakeoil not really effective against any modern virus or trojan. You stil bear the cost of your PC slowing down 25%.
Here is a good Forbes post by David Birch on the topic:
Anecdotally, I know of at least one large FI that tells auditors it's doing x, y, and z for security, when in reality their security practices are abysmal. They spend $1MM a year on a vendor product that in theory does x, y, z (though quite badly), install it on a server, and then never think about it again.
I've had important projects canceled because executives go 'oh we already have $tool this project is a waste of time'. I demonstrate that $tool hasn't been updated in a decade, has 0 users, and is completely ineffective, and how the project will address these issues. They respond 'oh we already have $tool this project is a waste of time'.
You are not buying a solution, you are buying compliance. It does not matter if problem is either hidden or removed because the outcome for the executive success is the same. Hiding usually costs less.
Yeah, it's a box ticking exercise not a finding laundered money exercise. For one, the idea of approaching AML on an organisation to organisation basis seems flawed. Like no team has the whole view, so how can you be effective.
Example, my flatmate worked at a bank doing AML looking into flagged transactions. One day they found a chain of 87 different bank accounts moving money, 1k at a time to obscure it's source. All were real people who had passed KYC. The money came in from another bank, then went out to another. So she calls up the AML teams at those banks - they found similar chains. The only reason they found it at her bank was because the chain got too big.
It's much more of a financial intelligence collection operation.
The intelligence community has access to information about every transaction with greater than $10k (lower thresholds for monetary instruments) with at least one party of the transaction identified for over 25 years.
People also miss the fact that FIU operations also often include 314(a)/(b) letters (subpoenas for financial information on specific individuals) alongside their AML operations. Same for OFAC Sanctions monitoring (obvious example is Russian customers and assets).
The 10k rule mentioned is totally a thing. I was at a company implementing AML for the first time, and the compliance team told us to add it, which I always thought was an inane. They came up with a variety of rules with just arbitrary figures in them, including the 10k rule. Didn't matter if you had previously been transacting 7k regularly before jumping to 10k, didn't take overall volume into account, didn't look for unusually high acceleration of transactions. Just a magic number pulled out of industry precedents.
The interesting thing was if you read the actual legislative requirements it was excessively vague, like "take reasonable steps to find suspicious transactions". Institutions don't build software if they don't have to. The goal always was to do the minimum to check the box, not actually find laundered money.
The article is leaving out the fact that the $10k threshold is not at the discretion of the bank. It comes directly from the Bank Secrecy Act (https://en.wikipedia.org/wiki/Bank_Secrecy_Act).
The magic number is not the bank's magic number, it's politician's magic number.
These days, AML algos look at cash transactions in a sliding window fashion: $2k ATM deposit on Jan 1, 2022; $3k cash deposit on Jan 21, 2022; $3k cash deposit on Feb. 28, 2022; $3k cash deposit on March 18, 2022. Boom, in the span of 3 months, $11k cash deposits, back office (not tellers) can file a SAR.
Sort of. If these are normal transactions given the customer's trade, no report is made. SARs are only filed if you are suspicious (that's what the S stands for) that a crime has occurred. This is where knowing your customer comes into play.
CTRs, on the other hand, have a limit of $10,000, and while it is aggregate, it's aggregated over a single business day. CTRs do not require suspicion. They are routinely filed for ordinary, legal transactions.
If you are a US citizen and you have any kind of middle class life that crosses international boundaries, you quickly become familiar with many of these terms and processes.
Hold a balance in a foreign bank? File a FBAR (foreign bank account report). Move large sums of money? Be prepared to document the source of the funds. I'm now practiced at preparing bundles of PDFs that show a "paper" trail.
BTW, filing a FBAR requires you to report the maximum balance in an account, something that most definitely is not reported on a bank statement unless you hold the balance for more than a month. This is hardly ever the case in an active account.
AML and KYC really took ground around 2001. The 9/11 was the pretext, but the real reason was because there was now a technical possibility to electronically track all the transactions.
How we managed to live and fight crime without it for the previous millennia is a mystery.
Every post from patio11 is such a joy to read: precise, exact, descriptive, and entertaining. I'd love to understand where his writing style comes from and how to emulate it.
The true answer, which may not be useful, is that style is what happens when one writes five million words. For the first few hundred thousand you end up sounding a lot like your favorite authors and what your teachers wanted. Then you start doubling down on what is working, try random experiments, bounce around an incentive gradient a bit, and also accumulate a decade plus of life experience and hopefully some knowledge. Eventually, people start sounding like you. There is no day in the middle where you hire a focus group of writing professionals to develop a house style guide.
That is a joke but not much of one; writing style guides to capture "What is... taste? How do we scale it?" is a project I've actually been involved with. This project brief has defeated many talented people, the least of which being me.
Agree, It's the perfectly balanced between "too dry/academic", or "too vague/gimmicky".
It's often mentionned in HN, but in the same style, I cannot recommend enough "Money stuff" [1] which is Matt Levine's newsletter at Bloomberg. Highly entertaining.
I think it's a witty and knowing but rather opaque writing style that's designed to make you work. Often worth the effort, but he could use an editor or beta tester to help dial it back a bit.
There were a few times when I almost sent him a tweet that he got some logic backwards, but after rereading, I realized that I had misread it, that it's right but confusing.
I hope to hire an editor one of these days, but some of my characteristic style is intentional and some is just a reflection that the production function is "Crikey I've put the kids to bed and now have checks watch four hours to write prior to my effective deadline."
Maybe it's because English is not my native language, but I had a very hard time to get the gist of both articles. I'm not even sure I have learned something concrete about KYC/AML. The only take away I have is that it's a deliberately opaque set of rules and that neither the regulator nor the banks have a complete picture of what is actually going on in the financial system. And that it's leaky as hell.
But maybe that is all the author tried to convey to the reader, just in an opaque way :)
I really hope he compiles these blogposts into a book. There is so much nuanced industry knowledge here.
> I'd love to understand where his writing style comes from and how to emulate it.
In the "good old days" they made students memorize passages from great authors and reproduce them. The idea being that this process will force you to think about the structure of their sentences and vocabulary. I used to do this when I was a kid, but I don't think I did it enough to have an impact.
Princess Leia, before your execution, you will join me at a ceremony that will make this battle station operational. No star system will dare oppose the Emperor now.
Princess Leia:
The more you tighten your grip, Tarkin, the more star systems will slip through your fingers.
Every government and central bank in the world is tightening their grip around the tiniest transactions of their citizenry. In the meantime, they are printing Trillions and shovelling it to their sycophantic corporate and political elite buddies.
And then, they wonder why people are being driven to use Cryptocurrency...
For those of you who are offended by this characterization; how does burdening 8 billion law-abiding Citizens with impossibly complex and arduous KYC/AML requirements make sense -- when just one FTX incident exceeds the value of all legitimate remittance transactions on the planet for the entire year, and KYC/AML doesn't affect the likes of FTX, Tether, etc. in the least?
Perhaps you feel like you're "doing something". You are -- making every law-abiding free Citizen feel like a criminal and expend countless hours of life-energy, to do precisely nothing to solve the problem, while crippling the legitimate small business and personal enterprise of the entire planet.
I think it's appropriate you open with Star Wars, as this is mainly fantasy.
> burdening 8 billion law-abiding Citizens with impossibly complex and arduous KYC/AML requirements
Not sure if you read the article, but they just aren't a significant burden for most people. They could be better, sure.
And I think the "driven to use Cryptocurrency" example does not pair at all well with FTX. The massive wave of cryptocurrency failures from Mt Gox to FTX demonstrate beautifully why an unregulated financial system is a terrible idea.
No, you aren’t burdened. The bulk of humanity is, though.
The compliance costs in terms of effort/time/money expended per dollar of revenue affected is probably 10x to 100x for them, as it is for you. This has been my experience, and my observation across many life stories. I taught basic finance to hundreds of mid- to low-income families in the 2000’s.
So again - a “let them eat cake” admonishion.
And FTX was just a massive, traditional fraud. Literally nothing to do with Cryptocurrency, other than as the medium of the fraud.
Random charlatans stealing money from gullible and trusting marks.
The bulk of the legitimate cryptocurrency platforms continue working. A few that were obvious mathematical impossibilities implode - much like fraudulent businesses have for ages past.
> No, you aren’t burdened. The bulk of humanity is, though.
I look forward to somebody demonstrating that. The author of the article, a domain expert, thinks otherwise.
> And FTX was just a massive, traditional fraud. Literally nothing to do with Cryptocurrency, other than as the medium of the fraud.
Other than the medium, the culture, the community, the domain, and the regulatory vacuum of cryptocurrency. So a great deal to do with it. And it's not as if it's an outlier for the space.
If it's really the burden you are concerned about, you might look again at cryptocurrency. The burden just to use it is relatively high. Then there are the higher caveat emptor burdens. And then we get to the vast, vast sums lost through volatility, exchange costs, user error, incompetence, fraud, and theft. Being upset about KYC/AML and not about that is a situation of motes and beams.
Well, there was that entire huge NFT crypto scam bubble.
To a first and probably second approximation, crypto is only good for getting scammed and scamming others. There's a lot of overly credulous people in the field, which just attracts crime like a moth to a flame.
It can't be proof of ownership if it's all of those things because ownership is decided by eg judges and not what's written in a random database somewhere.
As we've seen with the reactions of prominent crypto figures who've gotten robbed, approximately nobody really believes that the ledger is the final determiner of ownership. They don't say, "Well, other people own that money now," and move on. They tend get mad and call the cops, just like everybody else.
And as we're seeing in the great raft of crypto-related bankruptcies, judges don't take it seriously either. Just because somebody happens to hold the keys for tokens means very little to them. Something that appears quite palatable to the people who might get some of their investment back.
So in practice, it looks like digital ledgers are more of a "fantasy football" version of ownership tracking: taken very seriously by people who play the game while they're playing it, but not by anybody else, and also not when the game's over.
Not sure why you're getting downvoted. Are there possibly some uses of crypto that are a) value creating, b) socially positive, and c) not more easily/cheaply solved with other technologies? Sure. But it's got to be a small fraction of total money put in.
From MtGox to FTX it's been more than a decade of incompetence and fraud. I'm sure there are sincere people who were just excited about the technology who are devastated that the grifters and criminals rushed in to take advantage of their regulatory vacuum. But if they are truly sincere, they can't deny the massive problems in the space.
> And then, they wonder why people are being driven to use Cryptocurrency...
If only. Normal people are only buying crypto to speculate. They drive the price up to absurd levels and then write it all off as a scam when it corrects. Meanwhile good technology like Monero remains marginalized instead of replacing the USD as it should.
You seem to be speaking for ... a lot of people you can't possibly know -- such as me, and every person I work with and deal with on a day to day basis in the Crypto R&D field.
As for Monero -- don't complain, let's bring it mainstream by building something. Specifically: something that state-level interference can't stop, even if they're quivering in rage that it exists!
That's what us "speculators" who code every day on large-scale Cryptocurrency decentralized systems are doing...
> such as me, and every person I work with and deal with on a day to day basis in the Crypto R&D field.
You ended up proving my point. Normal people don't research or develop cryptocurrency technology, they buy and sell it on Binance. It's hard enough for people to understand BTC, the altcoin situation is next to hopeless.
> As for Monero -- don't complain, let's bring it mainstream by building something.
I've gotten paid anonymously in XMR for a small programming task. It was a wonderful experience, I wish everybody would pay me that way. The technology already already works. If anything still needs to be built, it's even stronger privacy guarantees against the perpetual government encroachment.
This is a social problem. How do we get people to drop USD and start using XMR instead? It's a form of the ages old circular logic problem of bootstrapping: nobody uses it to buy things because nobody accepts it, and nobody accepts it because nobody uses it to buy things.
Always kind of wondered why monero onlyfans or state weed hasn't happened much. Work that is legal, but the financial system makes an absolute bitch to actually financially transact for.
I'm wondering to this day. Prudish financial institutions refusing business to "questionable" businesses are one of the problems cryptocurrencies were intended to solve.
But when I suggested that here I got called out for it. No idea why there was so much hostility.
I wonder what else you don't fancy. I mean, your argument is essentially the financial version of the "terrorists and child molesters" argument. Do you also support mandated cryptography backdoors because cryptography also protects criminals?
All this mandatory financial reporting for "anti-money laundering" purposes or whatever is just the financial arm of the global panopticon. You're defending total global surveillance and control. You're advocating giving up freedom for security.
> burdening 8 billion law-abiding Citizens with impossibly complex and arduous KYC/AML requirements
TFA notes that "This will affect the typical user of the financial system precisely zero times during their lives." It is very much not a complex and arduous situation in most instances, only in very few edge cases. (Which patio11 wants us to pay closer attention to.) I had occasion to unexpectedly transfer $10k over ACH recently, and, while a few minutes on the phone with my bank confirming things was slightly annoying, I would describe it as neither complex nor arduous. I am confident that it did not trigger a CTR or SAR, given it was not a cash transaction, and I was happy to answer a few questions.
This is just factually untrue. AML policies unjustly affect millions of Americans.
At US Bank, you can’t deposit cash without an ID which is standard post 2018 or so. Yet go to a US Bank in a low income area, deposit $100 in a family member’s account and they will ask for ID, social security number and your job.
US Bank has been involved in multiple money laundering scandals leading to deferred criminal prosecution.
Many friends have times where they can’t withdraw their own cash, have had accounts closed, have been falsely reported for fraud without any recourse etc etc.
Also because financial fraud and identity theft is rarely prosecuted, regular Americans are bombarded with friction and hassle to transact.
People outside normal banking use Chime or prepaid bank cards, which promptly get banned from being used in a wide variety of businesses.
AML policies and the Bank Secrecy Act is a violation of the 4th Amendment. The BSA (a misnomer) has expanded in scope since the 70s and as money has inflated. It’s went from an adjusted $70,000+ to $600 today (or $85 in 1970s dollars).
And it seems the Supreme Court is going to act on the BSA sometime in the next year. It is a crime against the individual, a violation of civil rights and indefensible.
It is purely motivated by tax enforcement and controlling the population. It does not prevent or identify crime. There is an estimated trillion+ of trade based money laundering every year.
I'm always gobsmacked at the level of ... jawdropping "Let them eat cake!" self-delusion displayed by some wealthy people.
"This hasn't affected me, so it mustn't affect anyone!"
The grinding day-to-day slogging, through the mud of irrelevant and useless regulatory burden experienced by the "lesser" classes of civilization (and anyone actually trying to run a small business) is just astonishing.
Basically, many people just "stop". They can't navigate it, and know they'll never defeat it. So they just cease to try.
I thought their response was sarcasm. Surely no one would seriously think it is reasonable to be questioned over the phone over $10k which is what, enough to cover a month of expenses for an upper middle class family in Manhattan or San Francisco?
As for a SAR, lmao. It's illegal for them to tell you if you triggered it, how on earth would you know?
> This is just factually untrue. AML policies unjustly affect millions of Americans.
If it's that clearly untrue, presumably you can document this?
And I'll note that even if you can, it doesn't necessarily contradict what you're replying to, which was, "This will affect the typical user of the financial system precisely zero times during their lives."
With 330 million residents, millions of people could have KYC/AML problems and patio11 still could be right. I've never had a problem like that, and have only heard one person ever mention it. And he was an Australian trying to open a US bank account to get around certain Australian import taxes, so I suspect he was somebody who should have been having problems.
While I appreciate the problems that you're describing, I'm dubious that it violates the 4th amendment. In particular look at the Private Search Exemption. Which says that the 4th amendment does NOT apply to searches done by private parties. And if a private party has voluntarily done the search and reported it to the government, the government may redo the search without a warrant, but can't exceed what the private party said.
This applies here because both KYC and AML procedures are set up and carried out by private banks. Which makes it a private search, that fits squarely in the exemption.
In turn this begs the question of whether the government can encourage through intentionally vague regulation behavior that they cannot directly ask for. But given the courts we have, I suspect they will avoid answering this question.
Furthermore it is hardly the worst violation of the 4th that is common. I'm personally most incensed about civil forfeiture. Through the workaround of suing your stuff instead of you, all Constitutional protections are voided. The result is essentially legalized robbery by the government, carried out by the very law enforcement departments that directly profit from the proceeds. Given that the courts have repeatedly OKed this, why would you expect them to object to KYC and AML?
It's not really a private or voluntary search when it's imposed by government. Otherwise I could just make a law saying everybody who walks down X private road has to get searched by private security or turn around, obviously that won't work. The private road owner might never wanted to do it, they're only doing because the gun of the government man is at their head.
It is a public search carried with the dirty work portion of the search done by private entities directed by the state.
But the government DIDN'T impose it. Whatever the bank's procedures may be, the regulator can say with a straight face, "We didn't tell them to implement those procedures, and we didn't tell them to take those actions. That was their decision."
And, unbelievable as it may seem, the government won't be exactly wrong either.
I don't think anyone can say with a straight face that the KYC laws as written don't impose the requirement to search
papers to verify proof of identity, address, etc.
Sure cute games can be made about the semantics of it, but that's why we have human beings as judges. It's blatantly obvious that when you threaten to toss someone in a cage for not doing something that you are imposing that on them, it's not voluntary and you are doing it on behalf of the imposer. If a human being judge truly can't recognize that then the whole system is broken and we need to start over.
Actually the laws as written DON'T impose any such requirement. Banks generally choose to implement policies that do that, but it is not required. And during COVID, many banks changed those policies.
https://www.bitsaboutmoney.com/archive/kyc-and-aml-beyond-th... goes into this. The primary concern for regulators is that you must have made statements to the bank that you can later be put in jail for lying about. And the bank must have approved procedures in place for identifying when transactions are high enough risk to decide to take verification steps.
On your comments about judges, you apparently have substantially more confidence in the common sense applied by the legal system than I do. Don't forget we now have a Supreme Court judge (Amy Barrett) who is on record, in a legal paper no less, saying that fiat money and the Fed are obviously unconstitutional, and judges should handle that by simply avoiding ever considering the question. (Read https://scholarship.law.nd.edu/law_faculty_scholarship/1304/ if you think I'm making that up.)
The letter of the law not explicitly saying "search their ID paperwork" does not mean it's not an imposition created by government. The "written" text seldom is a good indication of what is actually imposed. For instance, for a period of time a shoe lace was considered a machine gun [0]. You would never realize it unless you looked at the documented directives/interpretation of regulators.
If the practical imposition placed on you by regulators is that you in practice are needing to search paperwork to satisfy KYC, that's a government imposed requirement no matter what the actual law says.
In copyright law and free speech analysis something even stronger happens where the rules are sometimes extremely unclear with no real way to get clarity but some random punishment has been imposed that causes everyone to read tea leaves constantly and self-censor themselves; this is called a "chilling effect" and is absolutely taken into consideration when analyzing a challenge to the constitutionality of a law or regulatory structure.
I agree with your broader point but I’m pretty sure the Supreme Court case is about a technicality involving foreign bank account reporting, basically whether a failure to file that you had 5 foreign bank accounts is 5 counts or 1 count of FBAR violations. Unless there’s another pending case I haven’t heard of?
Funniest AML thing I ever did. Went to open a new account in the app, it's like sorry you haven't verified your identity can't do it through the app. Okay. Walk into a branch, ask to make a new account. They're like nah, you need to come back with proof of where you live before we can verify your identity. I'm literally standing in front of you. With ID. I already have 3 accounts, what's a 4th?
A bit of a quick side story: A bank I worked for set up a lock for all business sites on their firewalls and WAF for any IP geolocalized as Russian. It just dropped or rejected all network packets completely. Individuals could still use their service, though.
It was like that since at least a decade ago, since original Russian attack on Ukraine and I have not heard of any issues they run into with that approach.
> In part this is because some Americans in the financial industry will involve HR if you describe money as having a color other than green. There are, of course, many speakers of English for whom the history and current relevance of U.S. race relations do not pose strong concern relative to, for example, domestic public corruption
I’m disappointed this is the way patio11 chose to summarize why we’re reducing the usage/connotations of “white = good; black = bad” in various contexts.
It’s crazy how we all live in easy Germany now. Governments keep files on everybody and when they decide to go after someone try to find a crime in one of those files.
My hope is that someday people will be able to open bank accounts and transfer money online without revealing their deadname to the bank, having it shoved in their face in bank websites and emails and phone calls, and doxxed to everybody sending them payments for purchases, or even a $1 donation over Ko-Fi.
Yes but most likely his wife or son wouldn’t show up in World-Check or whatever compliance system they use nowadays. Instead of engaging in this hypothetical we can just look at the million examples where modern day multi millionaire criminals passed KYC, to which the usual suspects will say “well that wasn’t real KYC” or “we have since closed those loopholes” which they have been saying for the past 30 years. This weird experiment of outsourcing crime enforcement to banks does not work and I’m not sure why this massive consensus exists that it does.
Everyone can get banked unless they didn't pay overdraft fees (in Chex Systems in some way). All he needs is one bank and brokerage firm for total access to the domestic and international electronic banking system. There are enough around. All the major ones would take his account. Negative media exposure lol, as if this is publicly broadcasted, but even then, those fees would be enticing.
Do you mean KYC now, or what passed for KYC in the 20s?
Before he got busted by the Feds, he went to baseball games and posed for pictures, and "respectable" people might be seen with him. I don't think he'd ever have been invited to the White House, though.
As someone else here said: no, the "reputational risk" would doom him now.
this is so cute I dont even want to bother explaining it
How are we on a KYC thread, with people that actually do KYC, believing their koolaid
They see the accounts
They know the gaps in the regulatory framework, or should
They should know the pointlessness of this exercise but apparently the idealism (or a couple internal examples I’m unaware of) is convincing still and masquerades as reality
KYC is as strong as the weakest link in all financial institutions and all pooled accounts
Do you protest when a hitman can't do another hit or access his corrupted proceeds to pay his maid or or pay his kid's dental bills?
If you are an employee or dependent of a violent organization, the 'unfortunate' effect is someday people may no longer want to do businesses with that organization or its corrupted money.
> Do you protest when a hitman can't do another hit or access his corrupted proceeds to pay his maid or or pay his kid's dental bills?
No, I would not protest freezing the account of a hitman. Now please show me how I can hire a govt sponsored hitman with USD and I’ll lend your argument some credence.
edit: lol person below appears to have no idea what an analogy is... nor the fact I was referring to fellow violent instigators of violence and not literally restricting it just to the ones a specific HNer can readily hire for a specific task. But fucking weird to ask, not to mention their solicitation may be a crime.
Nowhere these articles written by chatGPT? If an editor were involved the articles would be about a paragraph each or they they would have been put through the shredder.
I have been in the industry for years. The author said nothing enlightening or important.
<Actually ChatGPT>
Thank you for taking the time to provide your feedback. I appreciate your perspective and years of experience in the industry. ... I apologize if the articles did not meet your expectations. Thank you for your comment, and I hope you will continue to engage with the content in the future.
</Actually ChatGPT>
Ivan, immigrant from Belarus who drives a bus and likes to withdraw cash from his <5000 euro account? Get this living liability out of my bank! I won't run a whole department or risk getting fined because some no name pauper. But since we can't just ban him let's just ask for ridiculous documents like proving the nationality of his grandfather (real story btw) or criminal records, translated in English, by an official translator. Let's annoy him so much with retarded requirements he will leave by himself and if he fails to provide our totally not arbitrary evidence we write a polite e-mail stating that we are sorry but we won't run his account anymore.
That's basically AML compliance to you.