It makes non-crime also more expensive. My bank now, to comply with AML rules, has a yearly KYC process that keeps getting more and more annoying, requiring more paperwork, a lot more of my time to fill that paperwork and me feeling like a criminal (although a long term client and the bank made enough money of me).
I have no good solution, but this is also quite crappy.
Like for one of the business accounts, the KYC/AML 'assistent' for my bank kept sending back the documents with 'this is not in English'. It was my street name. The street name is a name, it's not translatable. But nope, they were not having it. And of course it's a 'different appartment' from my business account manager so he cannot help.
> My bank now, to comply with AML rules, has a yearly KYC process that keeps getting more and more annoying, requiring more paperwork, a lot more of my time to fill that paperwork and me feeling like a criminal
What paperwork would they even need for this? All they need to do is confirm the identity of the account holder. You either show up at their office and show your passport or ID card, or you do it remotely. This should not take more than 2 minutes.
That’s a problem with your bank, not with the regulation. They decided how to implement aml, and it sounds like they’ve done a bad job and can’t deal with internal organizational barriers.
It also means that more and more of completely legit businesses are just using grey platforms to avoid AML just because it's too much pain to deal with it.
KYC / AML is the bane of our existences. My wife and I have been moving quite a lot over countries: just because we work remote and, wrongly, believed we were free.
But we've been tagged (or are systematically tagged) as "suspicious" and it's a constant headache to settle in a new country and open new bank accounts there.
They literally ask questions like: "And why did you live there? And why did you then live there? And why did you sent two times 300 EUR to these two people?" (because they're my wife's brothers-in-law, fucktard: we're talking about 600 EUR!).
And the thing is: once they start asking questions, they basically already have decided that it's a no. And they'll keep asking questions until you give up or until they give you the finger. I just sent a 49 pages (49 pages: that's not "nearly a book" but it's sizeable) document answering oh-so-many questions. Mega intrusive.
"And why haven't you used your bank card during that month?"
Questions like that. Insanity.
It's so complicated that we decided that this time we'll try to stay long enough in one place, letting time for things to "cool down". Which is insane: we're supposed to be free, but we obviously aren't.
We even had a desperate banker (at HSBC) tell us, literally: "Look, now it's going to be horrible: I'll have to act as a robot and ask you lots of intrusive questions but I'm forced to. I have to, I have no choice. I must fill this if you want to have a chance to have your account opened. My job used to not be like this, but how it is and I'm sorry about it". He was obviously not happy about the totalitarian turn society was taking and his job was taking.
It's now the third time, over three countries, that the bank first tell us: "All is cool" to then have the "committee" (due to KYC/AML) reject us. And the bankers don't understand. I tell them: "Look, it's easy: you believe you live in a free society, but you don't, you live in a totalitarian state. No harm feelings, I know it's not your fault.".
And moving targets: "We'll accept you but we don't want you to keep shares of that company in that other country to your name" / "OK, fine, we'll sell them" / "Oh, if you sell them, we still don't want you to bill that company". Fuckers. (and, no, we don't work in porn or anything like that).
And we do nothing wrong. We suspect they also think they're snitching us and denouncing us to the various IRSes: they can. We do nothing wrong. Just wasted taxpayers dollars if the IRSes look into our cases.
And waste is the name of the game: worldwide KYC/AML budget estimated at $180bn while it apparently allows to seize... Drumroll... $15bn. 12x less than it costs. All the while having employees (the KYC/AML team) working against the interest of the bank.
All these KYC/AML people are the worst of the worst type of persons on this planet: those who "just comply" ("we're just doing our jobs, not our faut, it's the rules"). They let the bad guys through the net but make life super hard for the little guys.
Just fuck the people who came up with these rules and fuck those who enforce them. I've got no respect for these people.
*EDIT*: ah yup I remember a funny one... In one case my wife's address got changed to "island of Jersey": we know it because despite the bogus country, the (snail mail) letter still reached us. I'm 99% sure this "island of Jersey" country code from the bank was a special code meaning: "flagged account". I may be wrong but this is really suspicious (not to mention stupid: because there's then a high-chance we legitimately won't get our snail mail letters).
Nice point; but ... "you've got to look a little further / the argument i'm refuting is too simplistic" can continue here.
What cost does society at large pay for the 15% bite on people laundering money? How many legitimate transactions are made more expensive, or never begun at all, because of AML regulations?
You need to balance the increased cost of legitimate transactions which is effectively zero against the cost of widespread money laundering. And having worked at two banks the cost of AML pales in comparison to the total amount of overheads.
Terrorism, sex trafficking, drug trafficking, organised crime etc. All are predominately financed through activities which depend on some form of money laundering. And the cost to society there is not measured in money but in lives, despair, suffering etc.
Well, at my country we have the extreme added cost in that you must let your phone take a photo of you or your computer link you to a government account when you open a bank account. If you are a foreigner, you must "register your identity" with the local government, a process that can take a week, and you will have to do anyway because you need it for everything.
Besides, KYC also helps recovering money from your run of the mill scams and fraud. The kind of thing that makes victims every day, so I don't think anybody here puts a negative value on it.
> How many legitimate transactions are made more expensive, or never begun at all, because of AML regulations?
Vanishingly few, I'd say? You're asking that in a rhetorical sense: "Ah, but you didn't think about this did you? That invalidates your point."
But your question is a real one with a quantitative answer. And in fact AML statutes exist (or don't) in lots of different markets in the real world, and were introduced at different times. You can look at the macroeconomics if you want and try to puzzle out the effect.
And really there is none. Western capitalism was going gangbusters through the whole period in the 20th century where cash flow tracking was being introduced. And contemporary regimes that resisted AML introduction (c.f the famous swiss bank account) really didn't grow any faster or slower.
1) That AML creates a massive honeypot of data for hackers, housed at institutions which historically have structural challenges with technology investment
2) The real, material downsides felt by non-criminals, as expressed by many others in this thread
3) That the sum total financial activity of criminals who would benefit from the lack of AML is likely a rounding error compared to money laundering carried out by banks like HSBC
4) The philosophical position that governments are entitled to dragnet surveil law-abiding citizens in order to combat crime
I've worked at a number of financial institutions including two banks.
No idea what you are talking about with AML creating a massive honeypot of data for hackers. If a bank's internal systems were to be widely compromised then stealing a few graph datasets would be the least of their worries. You would have dozens of attack vectors to steal significant amounts of money without the bank finding out quickly.
And compliance issues by HSBC et al is a direct result of a lack of proper AML/KYC systems and processes. So you're making the case that we should roll them out.
- 1 isn't necessarily true if certain techniques are used, and those techniques are indeed used (there's a bunch)
- 2 feels overblown by the other users here, to the point that I believe many who are opposed to AML efforts here are acting in bad faith and have other intentions
- 3 seems doubtful given modern Chinese and Russian money laundering efforts in the west
- 4 is a bigger discussion to be had, and in my opinion, can be justified given the societal consequences of not acting against money laundering. We've already seen a big consequence of it with real estate prices
So there are many regulations, making many things much harder and sometimes extremely inconvenient and potentially hugely privacy-invading, with all the negative effects also for legitimate entities which are MUCH higher in numbers, only for something that is 1% efficient.
So AML works because now criminals must pay a 15% fee. While if they were above board they would pay taxes, insurance, various social fees. In the Netherlands corporate taxes are 25%.
Literally the criminals are better off financially with the worthless anti-money-laundering system than we have than with being legal and paying taxes.
If the goal is to make crime more expensive it's been a miserable failure. Cocaine is cheaper inflation adjusted and Deutschebank and Wells Fargo are still in business.
These points seem like non sequiturs. There would really need to be a deep dive into why cocaine is cheaper (if it is? I have no earthly idea if it is or how one would be able to check). Assuming it is cheaper, it is because KYC laws are failing, or better production efficiency, or less competition among cartels?
The second point is hard to even reason about because I don’t think the purpose of banking laws is to put banks out of business. So I’d be curious what this has to do with anything if you don’t mind stating.
This is a good time to reflect that high-value economic activity has an unexpected side to it. Apple is a good example - nobody believed post-2006 Apple was possible before it started throwing out market changing products, and the idea that a phone company would swoop in and become the most profitable tech company was not on people's radars. If something had disrupted Apple, it would never have been detected. We'd probably still be slowly moving away from Blackberries even now.
The article raises a good point that the small amount of proceeds seized isn't evidence of failure. But the people saying compliance is negligible aren't properly accounting for the danger of increasing barriers to entry in the financial markets. We've got no idea what household names never came to be because they got bogged down in so much paperwork that they never hit a critical mass.
The US banking sector is sick. It is becoming quite centralised and much more dependant on money printing than a healthy system would be. It has been part of the casino directing investment away from wealth generation and towards wealth-destructive ventures. AML/KYC is one of the things driving that and just because the cost is unmeasurable doesn't mean it isn't there.
I've never seen an instance of that happening. Could you send some examples of cartels owning banks or having a significant amount of control over them?
And the price is everyone suffering for that 1% of criminal intercepts. If you propose a weapon or a drug with such efficiency you would be laughed upon. Why financial world isn't doing the same?
All sorts of restrictions on freedom and privacy "work", if you consider those parts of the human experience to be of zero value simply because they are unquantifiable in a spreadsheet.
> The cost of moving these €300,000 packages to Colombia adds up very quickly. First, the coordinator had to absorb a 3% fee to convert the trafficker's original low denomination euro banknotes to the very compact 500 euro note. To that, add a 2-3% fee to pay the individual courier and 0.5% on airline tickets, as well as additional administrative costs like modifying luggage and bringing couriers to and from the airport.
Thus, money laundering sounds like a market that is ripe for disruption by some startup ... ;-)
Yes, it lowers criminal margins by 10-20%. So what? For it to make a meaningful difference that number would have to be a lot higher. And it's unlikely that the current approach to AML will result in that number changing substantially because criminals only need one weak link in the financial system to undermine the whole AML apparatus.
Most economically driven crime has very high margins. Wholesale drugs in the Netherlands cost ~10 times what they do in Colombia, and I don't think "only" 8xing your money on a drug shipment instead of 10xing it is a very good deterrent.
Edit: And you can look at threat intelligence company reports to find that Russians already sometimes pay in excess of 40% to "cashout" business email compromise or investment fraud wire transfers. They happily pay this because even getting half of $80000 when all it took you was sending a few emails with forged From headers is a great deal if you are already morally bankrupt enough to stomatch stealing.
It doesn’t work — because the robber-baron banksters and their politician and judicial enablers are completely free to commit crime, globally, using the banking system.
Almost all banks in the states are reluctant to deal with cash. That's why they are closing thousands of accounts every day in the name of de-risking. Many banks and credit unions just restrict how much money can you deposit per month. A local credit union opens business checking only if you agree to "no cash deposits". Chase restricts the max cash deposit per month to $4k for business checking.
100% AML compliance can be achieved, as regulators are pushing Banks to NOT accept cash/money orders/any untraceable monetary instruments. As this happens, Banks will debank you for reputational risk: maybe, you don't like vaccines or politicians that major news papers recommend you to support, etc. This is the path we are heading to.
I'm downvoting you because an estimated 3% to 5% of the world's entire GDP is linked to criminal activities (official CIA factbook numbers). Bitcoin doesn't even register on the radar of money laundering.
And only the dumbest of the dumbest criminals leave traces in a public ledger, especially now that several companies do specialize into analyzing these public ledgers to find evidence of criminal conducts.
[+] [-] anonzzzies|2 years ago|reply
I have no good solution, but this is also quite crappy.
Like for one of the business accounts, the KYC/AML 'assistent' for my bank kept sending back the documents with 'this is not in English'. It was my street name. The street name is a name, it's not translatable. But nope, they were not having it. And of course it's a 'different appartment' from my business account manager so he cannot help.
[+] [-] Aaargh20318|2 years ago|reply
What paperwork would they even need for this? All they need to do is confirm the identity of the account holder. You either show up at their office and show your passport or ID card, or you do it remotely. This should not take more than 2 minutes.
[+] [-] NorthOf33rd|2 years ago|reply
[+] [-] anovikov|2 years ago|reply
[+] [-] TacticalCoder|2 years ago|reply
But we've been tagged (or are systematically tagged) as "suspicious" and it's a constant headache to settle in a new country and open new bank accounts there.
They literally ask questions like: "And why did you live there? And why did you then live there? And why did you sent two times 300 EUR to these two people?" (because they're my wife's brothers-in-law, fucktard: we're talking about 600 EUR!).
And the thing is: once they start asking questions, they basically already have decided that it's a no. And they'll keep asking questions until you give up or until they give you the finger. I just sent a 49 pages (49 pages: that's not "nearly a book" but it's sizeable) document answering oh-so-many questions. Mega intrusive.
"And why haven't you used your bank card during that month?"
Questions like that. Insanity.
It's so complicated that we decided that this time we'll try to stay long enough in one place, letting time for things to "cool down". Which is insane: we're supposed to be free, but we obviously aren't.
We even had a desperate banker (at HSBC) tell us, literally: "Look, now it's going to be horrible: I'll have to act as a robot and ask you lots of intrusive questions but I'm forced to. I have to, I have no choice. I must fill this if you want to have a chance to have your account opened. My job used to not be like this, but how it is and I'm sorry about it". He was obviously not happy about the totalitarian turn society was taking and his job was taking.
It's now the third time, over three countries, that the bank first tell us: "All is cool" to then have the "committee" (due to KYC/AML) reject us. And the bankers don't understand. I tell them: "Look, it's easy: you believe you live in a free society, but you don't, you live in a totalitarian state. No harm feelings, I know it's not your fault.".
And moving targets: "We'll accept you but we don't want you to keep shares of that company in that other country to your name" / "OK, fine, we'll sell them" / "Oh, if you sell them, we still don't want you to bill that company". Fuckers. (and, no, we don't work in porn or anything like that).
And we do nothing wrong. We suspect they also think they're snitching us and denouncing us to the various IRSes: they can. We do nothing wrong. Just wasted taxpayers dollars if the IRSes look into our cases.
And waste is the name of the game: worldwide KYC/AML budget estimated at $180bn while it apparently allows to seize... Drumroll... $15bn. 12x less than it costs. All the while having employees (the KYC/AML team) working against the interest of the bank.
All these KYC/AML people are the worst of the worst type of persons on this planet: those who "just comply" ("we're just doing our jobs, not our faut, it's the rules"). They let the bad guys through the net but make life super hard for the little guys.
Just fuck the people who came up with these rules and fuck those who enforce them. I've got no respect for these people.
*EDIT*: ah yup I remember a funny one... In one case my wife's address got changed to "island of Jersey": we know it because despite the bogus country, the (snail mail) letter still reached us. I'm 99% sure this "island of Jersey" country code from the bank was a special code meaning: "flagged account". I may be wrong but this is really suspicious (not to mention stupid: because there's then a high-chance we legitimately won't get our snail mail letters).
[+] [-] unknown|2 years ago|reply
[deleted]
[+] [-] unknown|2 years ago|reply
[deleted]
[+] [-] h2odragon|2 years ago|reply
What cost does society at large pay for the 15% bite on people laundering money? How many legitimate transactions are made more expensive, or never begun at all, because of AML regulations?
[+] [-] threeseed|2 years ago|reply
Terrorism, sex trafficking, drug trafficking, organised crime etc. All are predominately financed through activities which depend on some form of money laundering. And the cost to society there is not measured in money but in lives, despair, suffering etc.
[+] [-] marcosdumay|2 years ago|reply
Besides, KYC also helps recovering money from your run of the mill scams and fraud. The kind of thing that makes victims every day, so I don't think anybody here puts a negative value on it.
[+] [-] ajross|2 years ago|reply
Vanishingly few, I'd say? You're asking that in a rhetorical sense: "Ah, but you didn't think about this did you? That invalidates your point."
But your question is a real one with a quantitative answer. And in fact AML statutes exist (or don't) in lots of different markets in the real world, and were introduced at different times. You can look at the macroeconomics if you want and try to puzzle out the effect.
And really there is none. Western capitalism was going gangbusters through the whole period in the 20th century where cash flow tracking was being introduced. And contemporary regimes that resisted AML introduction (c.f the famous swiss bank account) really didn't grow any faster or slower.
[+] [-] nateabele|2 years ago|reply
1) That AML creates a massive honeypot of data for hackers, housed at institutions which historically have structural challenges with technology investment
2) The real, material downsides felt by non-criminals, as expressed by many others in this thread
3) That the sum total financial activity of criminals who would benefit from the lack of AML is likely a rounding error compared to money laundering carried out by banks like HSBC
4) The philosophical position that governments are entitled to dragnet surveil law-abiding citizens in order to combat crime
[+] [-] threeseed|2 years ago|reply
No idea what you are talking about with AML creating a massive honeypot of data for hackers. If a bank's internal systems were to be widely compromised then stealing a few graph datasets would be the least of their worries. You would have dozens of attack vectors to steal significant amounts of money without the bank finding out quickly.
And compliance issues by HSBC et al is a direct result of a lack of proper AML/KYC systems and processes. So you're making the case that we should roll them out.
[+] [-] beebmam|2 years ago|reply
- 1 isn't necessarily true if certain techniques are used, and those techniques are indeed used (there's a bunch)
- 2 feels overblown by the other users here, to the point that I believe many who are opposed to AML efforts here are acting in bad faith and have other intentions
- 3 seems doubtful given modern Chinese and Russian money laundering efforts in the west
- 4 is a bigger discussion to be had, and in my opinion, can be justified given the societal consequences of not acting against money laundering. We've already seen a big consequence of it with real estate prices
[+] [-] nichtverstehen|2 years ago|reply
And anyway these costs will be just passed on to the Dutch drug consumers, so what exactly is achieved here?
[+] [-] swinglock|2 years ago|reply
[+] [-] joshspankit|2 years ago|reply
[+] [-] can16358p|2 years ago|reply
Great, what a waste of resources.
[+] [-] light_hue_1|2 years ago|reply
Literally the criminals are better off financially with the worthless anti-money-laundering system than we have than with being legal and paying taxes.
What nonsense.
[+] [-] yetanotherloss|2 years ago|reply
[+] [-] constantly|2 years ago|reply
The second point is hard to even reason about because I don’t think the purpose of banking laws is to put banks out of business. So I’d be curious what this has to do with anything if you don’t mind stating.
[+] [-] roenxi|2 years ago|reply
The article raises a good point that the small amount of proceeds seized isn't evidence of failure. But the people saying compliance is negligible aren't properly accounting for the danger of increasing barriers to entry in the financial markets. We've got no idea what household names never came to be because they got bogged down in so much paperwork that they never hit a critical mass.
The US banking sector is sick. It is becoming quite centralised and much more dependant on money printing than a healthy system would be. It has been part of the casino directing investment away from wealth generation and towards wealth-destructive ventures. AML/KYC is one of the things driving that and just because the cost is unmeasurable doesn't mean it isn't there.
[+] [-] yownie|2 years ago|reply
[+] [-] notsound|2 years ago|reply
[+] [-] NotYourLawyer|2 years ago|reply
[+] [-] xvilka|2 years ago|reply
[+] [-] throwaway22032|2 years ago|reply
[+] [-] aleph_minus_one|2 years ago|reply
Thus, money laundering sounds like a market that is ripe for disruption by some startup ... ;-)
[+] [-] from|2 years ago|reply
Most economically driven crime has very high margins. Wholesale drugs in the Netherlands cost ~10 times what they do in Colombia, and I don't think "only" 8xing your money on a drug shipment instead of 10xing it is a very good deterrent.
Edit: And you can look at threat intelligence company reports to find that Russians already sometimes pay in excess of 40% to "cashout" business email compromise or investment fraud wire transfers. They happily pay this because even getting half of $80000 when all it took you was sending a few emails with forged From headers is a great deal if you are already morally bankrupt enough to stomatch stealing.
[+] [-] LorenPechtel|2 years ago|reply
Furthermore, this piece does not address the misuse of the rules to keep legal businesses out of the financial system.
The question almost never is "does this work?", but rather "is this worth the cost of doing it?"
And nothing about the other use of AML rules: combating tax evasion.
[+] [-] pjkundert|2 years ago|reply
It doesn’t work — because the robber-baron banksters and their politician and judicial enablers are completely free to commit crime, globally, using the banking system.
This KYC/AML only affects scum like you and me.
[+] [-] raincom|2 years ago|reply
100% AML compliance can be achieved, as regulators are pushing Banks to NOT accept cash/money orders/any untraceable monetary instruments. As this happens, Banks will debank you for reputational risk: maybe, you don't like vaccines or politicians that major news papers recommend you to support, etc. This is the path we are heading to.
[+] [-] nnurmanov|2 years ago|reply
[+] [-] djoldman|2 years ago|reply
[+] [-] celtoid|2 years ago|reply
Please donate to support my writing! BTC: 1Db... XRP: rMp...
[+] [-] TacticalCoder|2 years ago|reply
And only the dumbest of the dumbest criminals leave traces in a public ledger, especially now that several companies do specialize into analyzing these public ledgers to find evidence of criminal conducts.
[+] [-] based-nerd|2 years ago|reply