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scient

Yeah, KYC/AML is totally bad because of trying to actually prevent money being funnelled into crime organization etc.

This is why I cant stand ignorant crypto-fans.

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Please do not cross into incivility or stoop to name-calling in HN comments.

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Even according to the IRS's own estimates, laws like Fatca would never pass a cost/benefit test. The implementation costs of such bureaucratic monstrosities is in the range of hundreds of billions, whereas the benefit is a few orders of magnitude lower. The established banks do not complain much about it because the high fixed cost of compliance disproportionally affects small firms, thereby protecting them from being disrupted by innovative startups.

So I know next to nothing about these regulations but what do you mean by "cost/benefit" exactly? Surely if these rules are meant to fight (directly or indirectly) organized crime then you can't just judge them on the amount of money saved? If you spend $10 millions to prevent $1 million to reach a terrorist organization, can't you consider it money well spent?

Exactly. If we want to do a true benefit calculation, we have to look at alternate futures.

One important future to avert is where organized crime is rampant. Even if we look at only the economic costs, one study in Italy suggests mafia domination cost 16% of per-capita GDP. Given the US's $20 trillion GDP, that's quite a lot. And that's ignoring people's preference for security and safety. As an entrepreneur, for example, I think it's great that I don't have to worry about paying for "protection" to keep from having my business burned down or my legs broken.

We also have to look at terrorism. KYC/AML work to keep cash out of the hands of terrorists. Terrorism is, moral and human cost aside, very expensive. The 9/11 incident alone sees estimates in the $2-3 trillion range for total economic costs.

So even if KYC/AML really does cost hundreds of billions, which I doubt, it's a bargain compared to the problems it's meant to prevent.

[1] https://onlinelibrary.wiley.com/doi/abs/10.1111/ecoj.12235

[2] E.g., see https://www.brookings.edu/articles/the-world-after-911-part-... and https://archive.nytimes.com/www.nytimes.com/interactive/2011...

> One important future to avert is where organized crime is rampant... one study in Italy suggests mafia domination cost 16% of per-capita GDP. Given the US's $20 trillion GDP, that's quite a lot.

You’re making two separate, tenuous extrapolations here. Can you justify them?

I probably can. Did you want to ask some specific question? Better, do you you have a way of calculating path-not-taken costs for rampant organized crime that you think might be more effective?

I didn't see any calculation in the parent comment.

Are you asking me to do some sort of calculation? If so, could you spell out what and why?

The point of my original comment was to point out a couple of things we'd have to include in a cost/benefit analysis of KYC/AML regulation, not to actually do a proper analysis, which I would expect to run to hundreds of carefully researched pages.

Maybe I misread your comment. What did you mean by "Given the US's $20 trillion GDP, that's quite a lot"? What is "that" in this sentence referring to?

That "that" refers to the implied product of 16% times $20 trillion. It's meant to provide an order-of-magnitude notion of what rampant organized crime could cost an economy, so that people who had previously read "costs of such bureaucratic monstrosities is in the range of hundreds of billions, whereas the benefit is a few orders of magnitude lower" could more usefully think about what the benefits of crime reduction really are.

Let's try this again: What makes you believe that repealing KYC laws (which were introduced by the Patriot Act in the 2000s) would lead to the same conditions as Italy? And how is this consistent with the fact that the US didn’t lose 16% of its GDP to mafia activity before such laws were introduced?

Exactly. You have provided no reason at all to think that repealing KYC laws (which were introduced by the Patriot Act in the 2000s) would transform the US into Italy, which is frankly just silly.

It also flatly contradicts the fact that the US didn’t lose 16% of its GDP to mafia activity before KYC laws were introduced.

He meant cost bebefit to organizations to implement it. Take HSBC for example, one of largest China/HK bank. They waited until Fatca kicks in, then realized it will be too complicated and expensive to implement, so what do they do? Within 45 days they kick out all us-citizen based accounts off their grid. All gone. Thats how foreign banks “comply” with Fatca. Arguably some politicians say it was actually mean to work this way so us citizens behave nice and just keep their freaking money in us banks. I know of 3 friends who had to sold their hong kong based business because noone there would open them banking account anymore so here it is american politicans screwing over american citizens having business on a foreign land.

FATCA is about making non-US financial institutions report to the IRS et al about holdings of US citizens abroad. Worrying about terrorist cells in foreign countries made up of U.S. citizens is absurd.

FATCA is the stick used to dissuade tax evasion by US citizens. If people think they can evade taxes successfully, they will. Whether this impacts Bitcoin or other crypto is inconsequential.

My American relative that was born in the USA and lived there for about 6 weeks finally did their US tax returns a few years ago.

No tax owing and received some hundreds of dollars in refunds from the IRS.

They even corrected a mistake resulting in an even larger refund (forgot to apply for some program).

All because of increasingly draconious laws for non-filers that conveniently ignore that most Americans abroad aren’t millionaires.

Cost: hundreds of US$, data entry and processing.

Benefit to US: ?????

if the terrorist organization is able to fund itself, then no, 10 to 1 is not money well spent. You'll lose in the long run.

Do you have a source for your hundreds of billions (hundreds of billions what?). Compliance costs are usually baked in personnel and IT costs.

KYC compliance: A form and proof of identity.

Actually it goes a bit further than that.

It means to determine the actual beneficiery of a bank account in addition to traceability of the funds used.

The bloke showing id may not be the actual owner of the funds and it's up to the bank to determine this.

FATCA has nothing to do with KYC / AML provisions.

It involves, simplified, reporting requirements of US account holders by foreign banks to the US authorities. It's main purpose is to avoid tax dodging by US persons.

I'm not arguing that it's a great law, since it's not. For example: it can make it extremely hard for US persons living abroad to open a bank account because foreign banks just don't want to bother with those onnerous reporting requirements.

It has nothing, whatsoever, to do with KYC / AML provisions, which are very rightfully imposed on financial instituions. And yes, I work for one.

I bet you also can’t stand people who oppose mass surveillance. Those ignorant people! Don’t they understand the government is just trying to prevent crime?

Money is by far a more delicate topic.

I think it easily falls under the same umbrella.

Financial privacy, especially from the state, is the ultimate form of privacy.

There's a reason we have had bank secrecy [0] a long time before anything like the modern Internet-based privacy movements, with their much more expanded definitions, came along. Heck, some countries based a whole lot of their appeal on the strength of said bank secrecy laws, like Switzerland.

[0] https://en.wikipedia.org/wiki/Bank_secrecy

Unfortunately bank secrecy is quite over even in Switzerland. They constantly get pressured by the EU to share data regarding EU citizens' accounts. The hunt for taxes is ongoing, under the pretense of preventing money laundering. Yet something in excess of 200bn euros was laundered through the Estonian branch of Danske Bank.

why? Why is what you do with your money different than what you do with your speech?

A) Large criminal organizations bypass KYC/AML/ABC just fine.

B) Low-level crooks and privacy minded folks are the ones that get caught.

C) Cost of compliance with KYC/AML/ABC is greater than the money recovered.

https://www.forbes.com/sites/francescoppola/2018/09/30/the-b...

> In that connection, a senior employee from the correspondent bank in question assessed that out of ten non-resident customers from the Estonian branch, the correspondent bank would be comfortable only with servicing one given the customers’ characteristics. The employee also warned Danske Bank against Moldovan customers and customers transferring money to Moldova.

Criminal organizations just mule the cash to a friendly bank. Then things proceed accordingly and the correspondent banks will blindly play along for years.

The end goal of these things are not what is sold in PR-speak. It is about expanding the surveillance state for TIA purposes.

https://en.wikipedia.org/wiki/Total_Information_Awareness#/m...

https://en.wikipedia.org/wiki/Total_Information_Awareness

There is a reason they renamed this the "Terrorism Information Awareness" center and then "shut it down". But, of course, other agencies just quietly use the software instead with some superficial changes.

If you think any of these ever really get "shut down" because overreach or the like...yeah. They don't. They just re-named, classified, and better hidden in some intelligence agency's toolbox.

You shouldn't trust the labels on laws.

> Low-level crooks and privacy minded folks are the ones that get caught

Low-level crooks getting caught is how higher-level crooks get caught.

> Cost of compliance with KYC/AML/ABC is greater than the money recovered.

Recovering money isn't even the main overt point.

AML is bad because it makes a crime out of something which isn’t actually bad. Yes, criminals are bad people who do bad things and they should be caught & punished. But KYC/AML are about making it easier to find criminals by their behaviour, not about crime directly. They violate the right to privacy, among other things, but most people don't care because — by definition — most people are normal: they don't carry $10,000 across state lines; they don't pay cash for everything; they have state-issued identification. They don't care if abnormal people who aren't criminals are inconvenience or oppressed by KYC/AML laws.

Such 'abnormal' people can usually work within the law too, by declaring currency etc.

AML is good because it makes it much more difficult for the proceeds of criminal activity to be blended in to the legitimate economy.

Can you provide me with just one example why money laundring is supposed to be a good thing?

And can you explain how the average person is inconvenienced in any way, shape or form by AML / KYC regulations?

Sorry, but your argument, so far, is just libertarian drivel.

> Can you provide me with just one example why money laundring is supposed to be a good thing?

Money laundering isn't good; the actions which are termed 'money laundering' in the law are neutral.

> And can you explain how the average person is inconvenienced in any way, shape or form by AML / KYC regulations?

https://www.washingtonpost.com/nation/2018/09/01/police-seiz...

https://www.thestreet.com/story/12793654/1/file-10000-irs-fo...

https://ij.org/michigan-man-cleared-wrongdoing-still-fightin...

https://www.chicagotribune.com/news/nationworld/ct-customs-a...

https://www.forbes.com/sites/instituteforjustice/2018/05/15/...

And on, and on, and on. It's a real problem.

Money laundering isn't good;

Just a second, in your original post you say:

AML is bad because it makes a crime out of something which isn’t actually bad.

So which is it? You can't have it both ways.

You conveniently left out the second clause of the sentence: it’s not good; it’s neutral.

There are three moral valences: good, neutral & evil. ‘Money laundering’ is neither good nor evil, but simply neutral. The things it attempts to hide may be evil, but it itself has no moral value.

That is my whole point: criminalising it makes a crime out of something which is neither good nor evil.

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