Hacker News Reader

Comment by geomark | Hacker News Reader

This is the thing I find very disturbing. That an industry as highly regulated and essential to every day life as banking can pick and choose based on management's moral choices.

View on HN

It's not a moral choice. It's a case of the business is not worth the hassle. KYC rules mean the bank is on the hook if they are found to harbor ill gotten gains and the sex industry had a some troubles in the past, while not producing enough volume on an individual level to make it worthwhile for a bank to overlook things.

Not just in the past. There's a current case going on about a major channel that Pornhub used to feature about performers being allegedly both lied to about where the footage would be available and raped.

Very possibly what spurred PayPal to make this change.

That sounds like something that should be handled by law enforcement, not your bank.

Sesta/Fosta potentially make Pornhub/Paypal liable.

Pornhub is Canadian, not American (their HQ is Montreal). Of course PayPal is American and Pornhub has plenty of dealings with the US, so your point stands.

> Pornhub is Canadian, not American (their HQ is Montreal).

That doesn't necessarily make them, or their principals, immune to US civil or criminal sanctions.

I know, I said as much in my last sentence. I just meant it was less impactful on them than it is on PayPal. There is still some impact of course.

Banks form an important part of it as KYC is designed to cut down on Money Laundering. Globally KYC/AML rules have gotten much stricter in recent years. If criminals can't access their money it ought to curb some of the incentives.

That idea behind the rules mostly just annoys legitimate users and only curbs an insignificant amount of criminal activity because alternatives exist (and have always existed). It's somewhat like piracy warnings on digital media; piracy will ignore it but people that consume the content legally still have to sit through the nonsense.

>It's somewhat like piracy warnings on digital media; [pirates] will ignore it but people that consume the content legally still have to sit through the nonsense.

Not quite correct: the pirates actually have or enjoy a superior product; they don't have to "ignore" anything. The legal product has annoying anti-piracy warnings that legal purchasers are forced to sit through, while the pirated versions don't have these warnings at all, so the people who use these versions enjoy a better viewing experience.

On top of that, the format is superior. Legal viewers are restricted to DVDs (very low quality), Blu-Rays (high-quality, but inconvenient and bulky physical format), or streaming (varying quality, subject to problems due to transmission path), while pirates get to have a simple digital file on their computer which is whatever quality they want (i.e. they can choose to download a lower or higher-resolution/bitrate version) which is now local so it can't be suddenly restricted by studio executives who want to make it exclusively available on their streaming service, and it won't be unavailable because your internet connection is slow or down.

It can of course curb illegal activity, as all surveillance laws tend to do, but at enormous cost to privacy, the ability to escape unjust laws, and the ability of persecuted minorities to protect themselves from tyrannical majorities.

It's a civil law suit against Girls Do Porn.

https://www.thedailybeast.com/she-was-18-and-tricked-into-do...

And, believe it or not, it is. Patriot Act helpfully provides mechanism for various LEOs to send requests to all FI in US to search for accounts they indicate. Add to that BSA and various KYC requirements that ends up sending data about suspicious customers to FinCEN and you have an easy way to identify undesirables.

And the list grows longer every day.

I understand from a corporate perspective the need to step away from potential scandal and public outrage, but this decision only creates more obstacles and misfortune for the people actually being abused.

That just seems like profiling at that point, since they’re basically rejecting service to an individual just because of their profession. Sure they might say that there may be a higher probability of a someone in the adult industry being involved in illegal activities, but is it fair to outright deny service on such a wide scale?

Profiling isn't illegal unless it's profiling against a protected class, right? It's like how I can't get cheap life insurance because I took antidepressants like seven years ago during a rough patch in my life.

profiling is illegal when the service is necessary to live. in germany for example, it is illegal to deny someone access to things like a phone line, electricity or water. (that is, even if you don't pay your bills, they are not allowed to turn of your service. instead, if they want the money, they have to sue you)

i believe at this point, access to a bank account is also included in this. as things progress, more things will be added to the list. soon (if not already) internet access will be included.

That’s not related to profiling.

so I think what you mean is that profiling is immoral if the service is necessary to live, and in Germany (and other progressive parts of the EU) it is also illegal.

I'm pretty sure these banks doing the profiling were in the U.S

The cop out for "protected classes" is one of the serious failures of the New Left in the US and past generation progressive attempts to wrangle with social issues. It's one of the reasons you have things like clamoring for representation in small dwindling influential places (the meme is "more trans women drone pilots") whilst ignoring systemic issues like how Flint, Michigan still doesn't have drinking water.

I've made this argument before and made Americans (obviously) mad, but this cop out of protected classes allows you to actually discriminate against said classes, you just have to prove there is no malice in your heart, more or less. That is, you did not because they are black or not men, but because of the sanctioned reasons, then it's okay.

Definitely a gigantic failure. Why not offer protection for everyone and treat them the same? Praise your literacy all you want, doesn't matter if the performance and strategies of political representatives are abysmal. And the concept of treating people equally seems to be beyond comprehension.

> Why not offer protection for everyone

That is how protected classes are defined. Everyone is in multiple protected classes.

Huh? How so? I'm pretty sure I'm not in any.

All sexes are protected classes. All races are protected classes. All national origins are protected classes. etc.

Except when you're in the majority, being white and male and a US citizen (in the US) isn't something you ever get discriminated against for. So this "protection" you talk about is pretty useless; if someone wants to discriminate against someone like me, they find some other convenient factor that isn't protected.

They're also likely to do that if you're in the minority.

The problem is the effectiveness of the rules, not that they don't cover everyone.

German electricity and phone companies can definitely cut you off for not paying. Don't know about water, but I imagine it's similar.

What they can't do is deny you a contract in the first place. (Kontrahierungszwang – obligation to contract, concerns the local water company, the biggest local electricity provider and Deutsche Telekom)

i seem to remember a lawsuit some years ago that made cutting off services less straightforward, but you make a good point, the key is that they can't deny you a contract

The bank secrecy act forces you to profile. That’s why Caitlin Long repeatedly pointed out [1] how it is most likely an unconstitutional law and needs to get challenged in court. But it creates a moat around banking and therefore has not been seriously challenged.

[1] https://youtu.be/LQX0trzomxg

>found to harbor ill gotten gains

Ah yeah like they were on the hook for laundering Mexican drug cartel money?

Or the human trafficking?

Umm yes they were, even if they'd done everything right. Look at the HSBC case and tell me the bank did anything nefarious or even negligent. Nope, governments hit them both ways.

HSBC admitted negligence. The cartels liked working with HSBC so much they even had secure money boxes made that were specifically designed to fit through the hole in HSBC branch teller windows.

There are tons of references online, but these are some:

https://www.bloomberg.com/news/articles/2012-12-12/hsbc-mexi...

https://www.theguardian.com/business/2012/jul/17/hsbc-execut...

https://www.foxnews.com/world/hsbc-knowingly-helped-mexican-...

First link is paywalled.

Second link: they kowtowed to Congress because it would be worse if they hadn't. Look at what they actually did: they complied with the law and advised their clients on how to comply with the law. That's their job.

Third link appears to be all about allegations in a lawsuit rather than anything that was proven.

If you actually read my post, I do imply that when it is worth it, the banks will overlook things, but an individual sex worker's business is not worth the risk (probably, I'm not a banker). They'll help you launder $100 million, but not $10000.

They'll help you launder $100 million, but not $10000.

Actually, no; they won't.

That is unless you find a crooked banker (probably a number of them), which is willing to help.

While it's a nice illusion that a bank will do anything for money and this may have been the case 30 years ago this has massively changed.

The reputational risk and the risk of criminal prosecution, including loss of the banking license in critical markets, is much too big as that a reputable bank would willingly engage in such shenanigans nowadays.

That's not saying that it doesn't happen (see recent examples), but if it happens it's virtually always under circumvention of risk management and compliance departments at a bank.

That's just mincing words. Fine, so it won't be a bank that helps you launder $100 million, but an employee of the bank. Ultimately, it is a human that makes the decision, not some abstract entity. I thought it would be obvious (and won't require the addressing of every irrelevant technicality) that banks don't provide money laundering services in their catalog, but above a certain sum, you can just shop around until you find willing individuals. Happy now?

Wouldn't it be better to have them in the regular financial systems subject to the "know your customer" laws, so the money and customer can be more easily tracked?

If it's about all sorts of illegal activities, shouldn't law enforcement use these things as a resource, rather than driving it underground?

It is not law enforcement that is driving them underground. That is private corporations, who decide to rather not know those customers.

It's been happening on social media sites too, so it's not just isolated to banking. It seems to be a political trend to censor non-politically correct things.

Are you implying that you need to punish an entire industry because of the wrongdoings of some companies?

I guess we should close all the bankers accounts because of Lehman Brothers. Politicians also.

I suppose that is it, that if the volume isn't there then even the smallest risk is too much for the bank to bother with. So they just terminate.

In a previous life I administered websites for a number of different businesses. One was a dating site that opened a small business account at a bank and then a couple weeks later the bank abruptly terminated their account, stating that they were not equipped to service "entertainment" business accounts. I guess their real reason was they considered there to be some risk that there would be soliciting going on and it wasn't worth the bother for the bank. The bank was very brash about it, stating that they can close an account at anytime for any reason.

UBS and other bankers catering to major drug cartel money though... crickets and maybe a small percentage fine.

No crickets, they fully embraced it for survival.

https://www.theguardian.com/global/2009/dec/13/drug-money-ba...

HSBC in Mexico.

UBS and HSBC aren’t US banks.

I doubt it's moral choices and more fraud and dispute levels, ie the cost to service a customer.

I am not convinced it is just that. PayPal also refuses to do business with online gambling which is an industry with low fraud levels (in the early poker days they were high, but that was a long time ago). Thankfully there are a bunch pf credit card processors who know how good customers online casinos are and most banks are fine too, so that industry is not deplatformed.

Most of the online gambling operators in New Jersey take PayPal, though you usually have to use either a bank account linked with ACH or a balance you already have in PayPal.

European gambling operators don't. It is pretty much impossible for a European operator to get PayPal (there have been a couple of exceptions).

The big UK gambling sites all accept PayPal.

And I can guarantee they all had to go through a long, painful process with reams of paperwork to get there.

This is definitely true.

what bunch, exactly?

I would imagine gambling sites would get a lot of chargebacks. Consider a user that transfers money to the site and loses it all. That user might initiate a chargeback to get their money back.

> PayPal also refuses to do business with online gambling

Not in Australia.

Reply on news.ycombinator.com