The war against money-laundering is being lost
economist.com
economist.com
Prosecute the actual crime (be it illegal drug distribution, illegal weapons dealing etc) and do old-school police work infiltrating such networks, or even work on the tax evasion angle if needed... instead of increasingly orwellian surveillance on everyone for increasingly small value transfers.
The whole AML/KYC experiment has completely failed and has caused billions of damage in added costs for small businesses and people excluded from banking system all over the world [1]
Similarly to the war on drugs... it's time to give up on all that craziness and get back to the basics of prosecuting and investigating the actual crimes, not the money transfers...
[1] https://www.tandfonline.com/doi/full/10.1080/25741292.2020.1...
What you do is to create a process for KYC where you check against lists of threats like known terrorists or sanctioned persons, companies and governments.
For example you check if your client lives in Crimea or Cuba, if so the dealings with them need to be limited in accordance of the jurisdiction trade in.
You also need to look out for suspicious transactions and block or maybe report those, for example if a local barbershop business is moving a lot of gold, you are supposed to catch that.
There are a lot of companies and startups in the area who make tools to streamline this process. Since there’s no standardization across the globe, you need to build systems that can catch names that went through multiple transliterations or create statistical models to detects unusual activity and so on.
Source: I know people in the business.
I'm sorry to disappoint you but the governmental organisations don't have the thigh grip on citizens that Facebook or Google have on their users.
This citizen control business is made of thousands of organisations that often work against each other. Significantly more vibrant space than the internet of 2021, a lot of userbase shifts are happening all the time. Lock-ins are softer than those of Google, visas and migration agreements give space to a lot of user flow between those.
There's no monopoly or central organisation to stream peoples lives to.
Anti-money laundering laws 100% turn the presumption of innocence on its head. You are presumed guilty, and forced to surrender your privacy, until you prove yourself innocent.
The western world is a bureaucratic hell for people from Syria, Iran, North Korea, Cuba, Irak etc.
If you are from country A that doesn't share data with country B and you want to live/work/do business in country B, the bureaucracy can also be heavier since it's going to be harder asses your situation. You might be asked to explain what you do, why do you want to use their services and even prove your claims if you want to be accepted as a customer.
That's something that no one likes. Banks like making money and yo don't make money by refusing work, so they will do the bare minimum to cover their asses but sometimes the cover needed can be quite large.
From reports from other crypto investors, I would also suspect that the investment also wasn't limited to buying on a mainstream exchange, but buying crypto from people directly with cash transfers or trading back and forth directly between less mainstream currencies.
Crypto trading is high-suspicion for two reasons - its very easy to claim a windfall has come from off-book crypto-trading when its actually profits from crime.
It is also very easy to be caught up with illegal transfers of money from other countries or to proscribed organisations when transfering money directly.
Clearly OP isn't involved in either of these illegal activities, otherwise they wouldn't have passed KYC, but it seems reasonable that they would have had to jump through some hoops to demonstrate that their activities were indeed legitimate and above board.
I would suggest that their personal experience is not representative of the thoroughness of the KYC process most people would go experience.
Unacceptable in a free society. Probable cause is not reasonably construed based on these types of crude generalizations.
Due process means only a court can judge there to be probable cause, and that a search can only be done after it issues a warrant. A court would never rule probable to exist based on the type of formulaic rationale you're using.
The kind of KYC scrutiny innocent people are subjected to, based on much flimsier bases than even you have speculated existed in my case, is obscene.
When the private financial interactions and investment strategies of every one become privy en masse to a self-appointed class of surveillance agents, it creates information asymmetries between the general citizenry and those close to the state/regulated-industries. And information asymmetries lead to wealth and power disparities.
The surveillance state you are championing will inevitably lead to wealth and power concentrating into the hands of a tiny cadre of privileged insiders and that will lead to massive economic waste from rent-seeking and social instability.
There is no future for a liberal democratic society if the trend toward unchecked surveillance powers for the state is not arrested and reversed.
Except they can (in practice and in contradiction to rules), and have done similar things in the past. The system really doesn't care about people's rights, mistakes are endemic and ignored, and it is more interested punishing people or collecting money than actual justice. At least that has been my experience.
The benefits that society provides (roads, money, safety) come at the cost of not being anonymous (car registration, passports, KYC).
AML/KYC causes massive collateral expense and frustration to small businesses. This vastly eclipses the crimes it is claims to help thwart.
Of course if you're a gigantic business like Amazon or Paypal, this is a Good Thing.
However, I learned with time that it's not as ineffective as it looks. Governments around the world have adopted AML laws, and with less pressure from the US than is commonly believed. They aren't all stupid. These laws are not a total failure and do raise the bar for organised crime significantly.
If you look at the stories of some of the world's highest profile crime lords, they do in fact struggle significantly to launder their money, often in ways that make it appear unclear what their planned end-game was (perhaps they didn't have one). Here are two examples:
1. Ross Ulbricht, poster child of the AML-free world. Ran a major drug market online. When arrested he was Bitcoin-rich and dollar poor, living like a student in San Francisco. He had been able to convert very little of his gains into real-world wealth that a crime lord might want, like houses, planes, boats, or whatever it is people plan to do with the proceeds of crime.
2. Paul le Roux. A much more successful gang leader than Ulbricht, yet when finally captured it was discovered most of his wealth was in the form of balls of precious metals under guard. He lived in fear of his guards turning on him and stealing his wealth. IIRC there was some evidence this happened, and he reached a point where he couldn't physically reach the safe houses anyway. Again, although powerful, he was not actually living the high life in the ways that might make doing such crimes attractive to most people. And there is no really good way to convert large amounts of precious metals into more useful forms of wealth without attracting a great deal of attention.
Money laundering is like any form of crime fighting. It raises the bar. Ransomware exploded after cryptocurrency came on the scene because cryptocurrency makes AML much harder. You didn't see people regularly being held to ransom via PayPal, did you? In fact blackmail/extortion for physical cash is quite rare because obtaining the money always involves walking into a police trap. One of the many reasons I eventually got tired of the Bitcoin community was their absolute and total refusal to consider the physical safety issue: having lots of crypto just is not safe, in the sense that kidnapping your wife or kids to extract the coins from you is an actually viable strategy, whereas trying to extract money from a rich guy via a credit card or wire transfer is just a joke, it will never happen. You'd be caught immediately.
I will though second you on this point:
> I used to view things exactly like you did. I was a big Bitcoin user as well. I read Treasury's War and it sickened me. AML is indeed a parallel quasi-judicial system except without the good bits of the actual judicial system, and poses many civil liberties concerns.
AMLKYC is the free world's equivalent of all what STASI wanted to become. But just like the original, STASI got largely useless for its nominal purpose the bigger, and more powerful it became.
STASI started to finding people to prosecute for the sake of finding people to prosecute, and keep ever expanding need to grow its manpower, and political clout.
At some point, they got to see a large double digit of DDR population as potential spies, and terrorists, and it was then when the system started to break down.
STASI agents were running after people for they suspected of revolt for storing too many food items, while mass agitators were kind of overlooked for their "banality." That few month window was what allowed for DDR protest movement to materialise seemingly overnight.
I agree maybe if they could use money freely they'd invade the system more, corrupt more people, buy a police station, whatever. But that's not what you said interestingly. The incentive might be lower for others, true, but there are already so many incentive to live an honest life, rationally, that we need to accept crime is more than an incentive tension. It's a bit that, but more, too.
I work on the other side, in a large multinational bank in Hong Kong. KYC and AML, we eat it for breakfast, lunch and dinner. We talk about it, we're trained about it, we fight each other about it, in the damn elevator people strategize about how to report this or that transaction/client/colleague for breach of compliance. It's a HUGE work, we prevent tons of people to partner or work for us, we have entire teams of engineers building systems to monitor trades, we have armies of young people wasting their youth browsing databases trying to find who would be having round-number transactions, things like that. All this, to piss off a drug dealer trying to buy a Ferrari while kids die in the streets under the batons of the Police.
I don't know what to do better, I like order and I will never commit crimes, even if it's against my very immediate interests. But it feels like such a lazy solution to work the banks like that because they're an easy evil to point a finger to, while closing your eyes to the cause of crime. Maybe it's financial incentives, maybe it's more than that.
I guess I felt that was implied. Making crime harder does reduce the amount of crime. That's pretty obvious. Like I said, ransomware was possible for decades but only became a big thing once Bitcoin made it easy to anonymously extract money from people on the internet and then launder the proceeds. Tor markets had no new tech in it except cryptocurrency: Tor and sealed envelopes had been around for many years. It took a breakdown in AML and the instant it happened those sites mushroomed.
Now, you might say, drugs, ok, so what. There are other sites where you can get worse stuff, of course. In the very beginning Silk Road had no rules about what you could sell. Very quickly ads appeared for nuclear material and slave girls. I remember that back then; nobody was quite sure if the ads were real or if they were very convincingly done trolls. Nobody wanted to find out either, Ulbricht didn't waste any time in deciding his site was maybe not quite the absolutist free market he had planned. From then on it was restricted to certain kinds of goods.
All this, to piss off a drug dealer trying to buy a Ferrari while kids die in the streets under the batons of the Police
One of the difficulties of evaluating a system for blocking abuse that works well is that after a while all you have is the false positives and bad activity that isn't blocked. So it's easy to get down on it and say, well, look at what we're stopping: huge efforts and there's hardly anything there. Well, yeah. That's what happens when a system is working - people realise they can't beat it and give up. Of course it makes it really hard to evaluate, but sometimes the system breaks and then you can see the difference.
The practice of somebody shady needing just to buy a bank to hide his money is still very much around.
I believe it is still the primary mean which at least Russia criminals use. Baltics, Cyprus, much of South-East Europe, even Germany are places where semi-morbid micro banks are sold in weeks for symbolic amounts of money.
Also it doesn’t cost countries much to pass these laws (they do have to pay people to enforce them). The majority of the cost is an invisible tax on consumers and shareholders.
It should be noted that many legitimate (democratically elected) government agencies and political figures are deemed "terrorists" by the US gov
I had to wait until I went on vacations to exchange Mexican pesos for dollars so I could buy some PS cards and then think hard about the songs I wanted to download.
It puzzled me that I was able to buy stuff on Amazon (back when they only shipped books and DVDs directly to Mexico), ship it to an importer who would take care of import taxes and other stuff, and import the products while paying with my Mexican credit card, but I wasn't able to download songs directly or through PayPal for a game.
This was mainly because Sony didn't allow migrating your account to another country, so if you had created your account in the US, you were out of luck and would have to lose your nickname and trophies.
As a consumer, I want the least amount of friction to buy stuff... As a gamer, I care---if I spent time and money in 'unlocking achievements'---that that history and identity is portable (also friends, guilds, etc.).
Also, this might be a pet peeve of mine, but because I know other languages, I prefer to hear and listen to the original voice actors in both movies and games.
Back then, I also owned an Xbox (US-bought), and I had also played the first couple of Halo games in English... so I wasn't really interested in the translated versions[0].
So, now that I have moved to a third country, I haven't considered buying any gaming consoles, as I feel that they were trying to pigeonhole the things I was able to buy with my account (that can't be migrated to different countries).
[0] https://youtu.be/Zt8JABbwoHQ?list=PLav7HQ457Pc9rIIjMe0fUzJ7G...
It sounds great to say, why not just go after the criminals? The practical reason why not is that people who launder money create an incentive for crime. Every thief knows how much they are likely to get from a fence. As an ethical matter, why shouldn't we punish people who knowingly profit from people committing crimes-- often horrible crimes?
I really recommend reading "The Billion Dollar Whale" because it is a good book and shocking. It is about an individual who really just stole billions of dollars from the Malayan government and then tries to hide it. Every year his fund has a reputable auditor, but every year it is a new auditor, for example.
Goldman Sachs facilitated the crime by making huge transfers with very little diligence. They asked for huge fees, not just relative to the amount, but on a percentage basis. Probably because they knew something was shady and they figured they would get sued. Also, they were aiding a crime but as you say, it all will be just a fine no charges.
GS admitted guilt and is paying almost a $3b fine for this. And IMO they should.
I also think this is an extremely dangerous thing to be wrong about. Look at how international war is waged these days: it's primarily economic. Consider the carnage that defined human existence before WWII[1].
I would argue that a big part of the reason all of our lives are so violence-free now is that nation-states fight over abstractions for power rather than physical power. If it becomes impossible for countries to sanction each other because we've torn down the AML/KYC apparatus, will the world plunge back into physical warfare?
Unfortunately, I believe this idea has really taken hold lately because owners of crypto are incentivized to believe it. It's pretty hard to convince someone of the dangers of something they're benefiting from financially. I don't think this is an exception.
https://en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe
But yes, US dollars are a reasonable currency.
That carnage would have still existed today if not for WMDs. There just isn't much you can do when countries can just nuke each other.
That's because in the same way the war on drugs isn't really about making people do less drugs, this isn't really about regulating the banking system. They are both generalized systems of control and data collection that have a wide array of benefits to the parties that enforce them. I don't see them going anywhere unfortunately.
You don’t need conviction numbers to set examples around unacceptable bad behavior. Add enforcement and regular independent audits by regulators with strong regulatory capture protections, and you’ll have a better run system.
This refers only to going after shareholders. Employees can always be held responsible for their actions.
The flip side is that shareholders don’t get to make any material decisions about running the company; that’s the job of the directors (who might not be shareholders). Directors are, in theory, legally liable for the actions of the company they manage.
All this would be fine with me, and directors certainly have gone to jail for crimes committed by their company, but it’s incredibly rare, and in Australia where I live, is generally related to trading insolvent, tax avoidance, or other clear and simple legal issues. But go ahead and let your company illegally blow up irreplaceable ancient cave paintings in the outback, and you’ll be fine.
In fact, in Australia at least, the corporate regulator ASIC is so toothless that there is no straightforward way to enforce director’s breaches of company constitutions or other governance agreements other than directly with lawyers. This makes enforcement of the governing documents of a company (the documents that the shareholders sign up to) incredibly expensive and intimidating. Even clear breaches of the Corporations Act, the governing law of business in Australia, must be dealt with through civil law.
So if you are a minority shareholder in an Australian Pty Ltd company and the directors decide to break their agreements with you - say an agreement to use green energy or to use ethically sourced labour - you’re screwed unless you sue them. If you’re a small time investor or if a significant portion of your wealth is invested in that company, you’re shit out of luck. The directors can do what they like.
That’s messed up, because it means that directors can get away with almost anything, even if the minority shareholders disapprove, and there is zero recourse in the justice system.
I presume that, as with many things legal, Australia follows the US in this regard, but I don’t know this for certain.
If you give your neighbour some money and he goes and buys a gun with it and kills someone, you can be held liable in that scenario(depending on the intent, on how well you knew what he was going to do etc etc etc).
If you give a company money(investment) and they go and destroy the Amazon illegaly.....your hands are clean?
I mean, obviously I understand what you mean. I own some shares myself. But there has to be some middle ground between "100% responsibily, straight to jail" and "give money to people who do bad things, have 0 responsibility".
All four of those companies have made my life better and I’m glad someone invested to make them happen.
All of which could perhaps be avoided if the investors were afraid to be associated with such scummy business practices, and instead pressured aforementioned startups to stay fully above board while realizing their vision.
Without those protections it would be far too risky to invest in companies that people weren't intimately involved with. The scope of human activity would be limited to things that could be achieved with a small business. While not necessarily the end of civilisation, it would be a huge change. And quite likely knock down one of the ladders (a well balanced stock portfolio) that people use to move up into the middle class.
I'm not a fan of the idea. It entrenches class divisions and probably shrinks the middle class. It raises difficult questions of how retirement would be set up too, it would be much harder to organise an independent retirement without access to the share market.
If you combine that by making should have known the company was doing things illegally an good enough reason for the shareholders to sue the responsible executives into bankruptcy and you might see a change in behavior.
The problem is that when all of the costs comes out of the operating budget there is very little reason for the general assembly to hold the board responsible and if the board is not held responsible neither will the executives.
Several problems remains however.
Simply knowing that the company was breaking the law isn’t sufficient for a shareholder to be able to do anything about it. If you own <5% of a company’s shares[0], you have basically no way to change the behaviour of a company even if you know it’s wrong and want it to stop.
Also, the value of a privately held business is difficult to compute. Although setting fines as a percentage of issued capital rather than a dollar value would ameliorate that.
Finally, what would the government do with those shares? If the government simply destroys them then the actual value of the remaining shares won’t change. And the market for privately held shares isn’t huge.
Still I love the basic idea. Can’t imagine it happening though, nobody wants to be held accountable.
[0] if you’re a shareholder with less than 5% of shares in Australia you basically have no right to access anything other than the annual reports, so your ability to even know what’s going on is extremely limited. Don’t know if it’s the same in other countries.
The shareholders should be held financially responsible for any fines not levied directly at the board or the executive team, hence why their liablity should be capped to the value of the shares.
The point is to force the large institutional investors to really care about the integrity of the boards they elect, so it might be worth putting in an lower limit to exclude retail investors with trivial amounts along with holders of non-voting shares from liability.
The government would not be holding or owning the share they would be paid their fine in USD raised by the company from either newly created shares, or fresh investment in the case it's not publicly traded. And if they cant it's up the current owners to either pony up loose all of their investments. It should be up to the company fined to market those shares not the goverment.
Remember that issuing shares without generating investment money devalue the existing shares, which is the point of the operation.
IT might not be the one true solution but letting fines be paid from revenue disincentivize the owners from caring that much about legal fines.
The fact that directors and CEOs have so much control over a business, but that it’s extremely difficult to hold them to account, is very bad IMO. But changing the law won’t fix anything if the law itself is not properly enforced.
Imagine I'm the CEO of FooCorp, I own 5% of the shares, and FooCorp have $10 million in profit. I'll make $500k if I pay out that profit as a dividend - but I'll make 20x as much if I pay it as a 'pension contribution' to myself.
The problem there is that the government has no need of their 'tax revenue' because no such thing exists in sovereign currency areas like the UK and the US. (As explained by Beardsley Ruml decades ago: http://home.hiwaay.net/~becraft/RUMLTAXES.html) If they don't get it from the fraudster, they'll get it from the next person in the spending chain. It all happens anyway. (And if they divert it, then the downstream doesn't happen and they lose 'tax revenue').
For the integrity of the tax system, tax evasion must always involve significant jail time. It's the most valuable thing you can take away from the people who undertake these sorts of frauds.
But there's multiple levels of government and not all of them get to print money; the US federal government does a lot of payments but doesn't give states whatever they want.
So if it caused inflation then we'd have loads of it, and we don't.
Whether a bank ends up holding reserves, or holding a government bond is just a difference between a floating rate debt receiving the base rate, or a fixed rate debt receiving the bond rate. Just an interest rate and term difference - nothing else.
The last year has completely debunked any question that 'creating money' is inflationary. Believing otherwise is up there with anti-vax thinking.
If the state creates $100 and you stick it in a drawer, or just leave it in your bank account, where's the inflation coming from?
It's 'not spending' that causes deficits in the first place. If everybody spends and never saves then there can be no deficit for any positive tax rate.
There is no magic in bonds. It's a myth.
Even in crypto, Bitcoin is still in its inflationary phase until mining runs out.
What are some examples of this or where can I read about how to do that?
Many times the settlements allow them to avoid making any admissions of wrongdoing.
It would look the same, we already know that harsher sentences do not provide effective deterrence.
Do it also hold for white collar greedy banker type crime?
You have these criminals. Drug cartels. They sell their drugs and send the profits back to Colombia where they own the government and are immune from prosecution. The theory is supposed to be that you prevent them from getting the money or using it to pay their operatives in the US, since you can't actually put them in jail.
The problem is that it can't make their business unprofitable. It can't because the demand is relatively inelastic. Heroin addicts gonna buy heroin. You make it less convenient, the price goes up, the drug cartels make more money and use the money to bribe whoever they need to or buy submarines etc. And all the AML rules can ever do is make it more inconvenient to launder their money. Can't ever actually win that way.
It even makes it worse, because higher barriers to entry induce market consolidation. You get bigger, more violent cartels. Because AML drives some producers out of the market, but the others figure out how to evade AML and keep the higher margins from the reduction in competition, and increase their production to satisfy the demand left by the exit of the weaker producers. It puts more money into the hands of the cartels. It's a dumpster fire and should be utterly dismantled.
The answer is to solve the underlying problem. Do the opposite on the supply side; increase competition so much that nobody is making any money at all. Decriminalization. And then address the problem on the demand side through regulation and treatment programs etc. rather than prohibition.
Are bigger cartels actually more violent?
I thought a lot of the history of the Mexican cartels was the Government almost collaborating with some of them because having one dominant cartel resulted in a lot less violence than multiple smaller ones.
On top of that, the merge to monopoly plan has the further disadvantage that then the monopolist drug cartel will be long-term stable. So their operation remains profitable and they never get shut down, which means their power grows over time as they use money to buy more power ad infinitum. You end up as a narco state. Very bad.
Honestly, I think we'll only solve it via legalisation as anything else just leaves the money in the hands of the drug cartels.
One would have hoped we'd have learned the lesson from Prohibition and organized crime in the early 20th century.
A lot of the history of Mexican cartels was the government renting territory to all the cartels and actively supporting them as long as they played ball, because because that maximizes the ability to extract revenue from them and play them against them against each other when they get out of line.
Agree for drugs. Disagree for tax fraud.
Money laundering is a consequence, not a cause. You have to address the cause.
The causes are embezzlement and fraud (tax and otherwise). The drug trade is a flashy source of money laundering demand. But it is one of many.
even white collar crime would face the problem of explaining where the money for purchases came from if that income hasn't been declared. money laundering is part of the strategy for anyone who does crimes and wishes to not get caught (otherwise why give up part of the profit for the laundromat).
That kind of addict is already spending 100% of their available money on heroin. Worst case the price going up means they take less, which seems like a somewhat positive outcome.
> And all the AML rules can ever do is make it more inconvenient to launder their money. Can't ever actually win that way.
You could say the same about every law. All you can do is make it more expensive; murder still happens despite all our efforts to prevent it. But you can make it rarer, make it a less profitable business. Eventually it becomes non-worthwhile for most of the people currently involved in it.
You can say whatever you want, but what matters is the evidence, and there's no evidence AML laws have reduced illicit drug use.
No, it means my car gets broken into.
I beg to differ. I definitely think we could do a whole lot more to stop serious crimes like murder, assault and rape. Hell, we're not even solving domestic violence properly when we could be doing so much more. Instead, the cheap and I guess politically-easy steps are taken, whilst the more drastic options are ignored.
No, worst case they get violently sick, resort to crime, lose their house, try risky new suppliers...
That, and there’s a lot more addicts and users who aren’t spending 100% of their income on it than you’d think. It’s extremely addictive, but it’s still not 100% addictive after all.
That's already addressed by demand inelasticity. When price rises, the quantity demanded falls at a much lower rate. It's the same demand curve we see for healthcare. In a scenario where there is ample competition, the price equilibrium is not as skewed, but when supply is severely limited or suppliers collude, the price equilibrium inflates needlessly, which is exactly what we see in both controlled substances and healthcare.
Yes, they end up taking less heroin and more fentanyl.
Sure, but it happens more in some places than others. We can nudge people to situations where they are more likely to murder or we can take care of society and have fewer.
Drugs aren't quite like murder, and laws regulating food additives aren't like drug or murder laws, and each of these have different impacts.
Problem with this statement is it's not only about drugs. Yesterday it was heroine/cocaine, today the cartels are laundering avocados, tomorrow it can be whatever else high-demand product of the western world that is available in Americas. The mafia cartels will always find a new field to profit from.
Only if they are finding people to work for them. Mafia and other organized crime thrives in areas of weak and/or authoritarian government and poverty since they can lure young people, most often men, with the promise of luxury and riches while at the same time being certain they won't get into too much trouble with the authorities (or can bribe them off if need be).
Remember that mafia started in Sicily (Italy) back in the 19th century when the central government was not much a thing and feudal landlords organized "security" on plantations in exchange for protection money from small farmers.
The solution to get rid of the mafia or at least drastically cut their influence is to strengthen civil society, democracy and governments in plagued regions. Unfortunately, the general trend is exactly the opposite with many governments that have been weak before corona hit now getting absolutely destroyed.
Would that be bad though? That's just the market at work. If crimes are being committed (such as stealing the to-be-resold goods, etc) then go after it but otherwise I see no problem with cartels reinventing themselves as somewhat-legitimate businesses.
This may be the case if you're looking from a first-world standpoint.
There are too many shithole countries with governments so corrupt or tax system so disfunct that any money generated could not be legalized in the eyes of US regulators.
Someone who's not me lives and works in one of those countries doing 100% legal and clear business (think software development or furniture manufacturing). This person is forced to acquire money laundering services.
Do you have any problem opening a company in Singapore with bank account in Switzerland? For a US citizen this is a matter of days if not hours and with no problem whatsoever.
This used to be possible for people of my country, albeit it took weeks. Now it is impossible. Banks all over the world refuse to open accounts for companies whose founders come from my country, no matter how good is the reputation. Opening a US company? Not even on the table.
Can someone open a local company and bank account? Sure. But nobody in the world is going to wire money there just because of the same reasons. And even if they did, this someone would have not much less problems legalizing the incoming wire transfer in the eyes of the local banks and would be eventually fucked up by local financial monitoring authority anyway. They want you to be in the dark.
At this point you may be imagining some african desert with dust in the wind and eeries silence around with rare beaten up toyota pickup trucks passing by on the lone road. But that's not the case. If you google "<my city> skyline" you would find pictures looking no different than Manhattan.
TL;DR: AML/KYC laws not only make criminal transactions hard, they make small business lives outside of the US even harder. These laws deepen the trench of the Global Digital Divide[1].
https://ngm.com.au/money-laundering-human-trafficking/
https://www.state.gov/report-to-congress-on-an-analysis-of-a...
It is elastic if you can regulate the number of heroin addicts.
If you really thought that supplying drugs was actually evil at a conceptual level, e.g. sex slavery - which also exists, and benefits from money laundering - then its profitability would be irrelevant. I'm not "fixing money laundering" by legalising sex slavery. And "fixing money laundering" was the topic, not "fixing idiotic drug laws".
But you're right in that AML also includes things like terror financing which wouldn't be fixed by... legalizing terror???
Terror has a pretty sizable portion of the pie... maybe... the lines get blurry really fast when say a state level actor is terrorizing its own people.
Moreover, "terrorism funding" is a joke. It costs only a few thousand dollars to fund a major act of terrorism. You're never going to stop it by depriving them of money because the primary cost of doing it is that it's punishable by death, not that they can't afford the monetary cost of a plane ticket or some fertilizer.
So once again you have to use solutions that address the root of the problem. Which for terrorism would be things like putting terrorists in prisons and coffins, or not conducting foreign policy by propping up authoritarian regimes whose victims then get so pissed off that they're willing to give their lives over it.
Drug dealers can't harass the family of a peacekeeping soldier from the other side of the world. So all those intimidation tactics involving people's families get invalidated and everything that's left are the drug dealers alone against thousands of well equiped professional soldiers.
Unfortunately, the UN starts with the premise that governments should deal with their own stuff, something that in practice doesn't work.
If stability was the number one priority the proper thing would be to have the government provide the supply for too cheap to compete with. Fill the power vacuum to prevent the reincarnation of organized crime. It turns out economic fungibility also includes criminals.
If anything, this would be an improvement. It is bad, yes. But far better than the status quo.
CJNG for example lost all respect and now they have an army, with uniforms, vehicles, military grade weapons and all. They do not hide who they are anymore. It is a joke.
Under normal conditions, you can deal with an infection with an antibiotic. But when left untreated long enough, you have to amputate. That is what is needed here. A complete amputation of those clowns from reality.
That is what the US would do if an organization dared to pull off 1% of what these clowns do every day.
Blitz war on cartels with army, navy and air force, missiles, bombs, napalm, tanks, helicopters, armored personal carriers... leave no trace of them.
The prohibition era analogy argument stops working when you realize cartels traffic people too.
Freezing people out of the monetary system is less effective against criminals and more effective against business ventures the US doesn't like.
Anything linked to the Patriot Act is bad news; it was one of the 'rush stuff through in a crisis then refuse to unwind it' plays that the government makes when it wants unpopular law changes.
Selection effects on dishonest behavior
>Abstract: In many situations people behave ethically, while elsewhere dishonesty reigns. Studies of the determinants of unethical behavior often use random assignment of participants in various conditions to identify contextual or psychological factors influencing dishonesty. However, in many real-world contexts, people deliberately choose or avoid specific environments. In three experiments (total N = 2,124) enabling self-selection of participants in two similar tasks, one of which allowed for cheating, we found that participants who chose the task where they could lie for financial gain reported a higher number of correct predictions than those who were assigned it at random. Introduction of financial costs for entering the cheating-allowing task led to a decrease in interest in the task; however, it also led to more intense cheating. An intervention aimed to discourage participants from choosing the cheating-enabling environment based on social norm information did not have the expected effect; on the contrary, it backfired. In summary, the results suggest that people low in moral character are likely to eventually dominate cheating-enabling environments, where they then cheat extensively. Interventions trying to limit the preference of this environment may not have the expected effect as they could lead to the selection of the worst fraudsters.
Why do that at the end? Start by treating drug addicts as patients to be treated instead of criminals to be punished, set up comprehensive evidence-based well-funded programs to do so. First decrease the demand, then the supply will settle itself.
The executives have an attractive call option.
Get caught = limited downside (being fired, no jail time), and the fine is paid fully by the shareholder.
Don't get caught = unlimited upside (bonus).
The vast majority of ML is via real estate, all manner of fake businesses and fake equity deals, the "aaaaaaht" market, creative use of things like penny stocks, etc.
This is sort of like how they go after street dealers and small time drug "kingpins" while the real leaders of the industry (and there's a heavy overlap there with the major players in ML) aren't prosecuted. The real drug kingpins generally don't touch the product.
The fine just became a cost of doing business for the banks and corps, and a funding the gov budget, truly a vicious cycle.
a brown person and refugee who gets convicted with a few gram of weed AND for not having a registered address with the police (as is law in Germany) often spends more time behind bars than somebody like the above. Bavaria (CDU/CSU) is especially notorious for being tough on immigrants or foreigners.
Your outrage shouldn’t be focused on this. Instead demand that all justice for all crimes be evidence based, especially for crimes committed by normal people.
Governments are inherently the largest criminal actors, they have a monopoly on the enforcement of law. Corruption is a natural consequence of a world governed by profit. What happened when whistleblowers stepped forward on the true extent of international financial crime? Nothing.
The question is not how a government can hold itself or its citizens accountable for white collar crime, the question is why and how these structures exist.
Look at the money laundering records of the largest banks, their cooperation with organized crime. Look at the slush money and criminal activities of federal law enforcement, military, and intelligence agencies.
The answer is that profit governs our global society and holds the greatest sway in political power structures.
As long as our world is governed in this way, then the world can be looted and plundered without consequence. Money laundering is just a vehicle for legitimizing these activities.
Profit is no necessary for corruption to happen. Lenin and Stalin did prosecute profit(and millions starved as a consequence) and their country was extremely corrupt.
It is power that corrupts. Humans have a social hierarchy like other social animals and people want to be above and not down.
Power is inside our brains not outside. You don't need to teach anything to a horse or a Wolf, or gorillas, they will try to dominate the other horses, Wolves or Gorillas.
And Humans, specially dominant Humans want to dominate other humans, and most humans don't like being dominated.
Ask a Russian and they will tell you that profit seeking caused the Holodomor.
This Animal Farm logic has been digested by most Americans. Russians actually wanted democracy, but this was suppressed by Bolshevism.
Most of human history encompasses hunter gatherer societies, a social hierarchy in which the most vital resources are collectively owned.
Profit is but one of many ways to compete. You can't eliminate competition by eliminating the ability to profit:
Capitalism is not very old in the grand scheme of human history. Most of human history falls under a collectively owned economy.
Maybe much of human pre-history, or peoples with no history could be classified this way (although struggles for control of resources was still pervasive), but the historical period of humanity goes hand in hand with ownership and some of the first historical records were in fact to record ownership.
The principle of First Possession, where other animals have a tendency to cede control over a resource to the first animal that comes to possess it, is widely observed by behaviorally advanced animals, and game theory experiments suggest it reduces conflict, which would explain why.
For example the US financed its South America operations with drugs for a long time. US, Israel, Germany or Russia sells weapons under the table to other countries.
Venezuela's leaders are financed by drugs today, like Cuba and Bolivia.
US, Saudi Arabia, Russia, Turkey give money or weapons to people that destabilize other countries like Syria , Ukraine or Iran, Iraq or Afghanistan. Osama Bin Laden for example was paid by the US for a long time,like Hillary recognized.
In Iran and Congo or Egypt the US simply destroyed democracy killing their leaders in order to loot their countries, just like their predecesors.
Talking with Syrian refugees, it was usual for them to see some alien(no Syrians) group enter their villages with the newest weapons and Iphones and do things like killing all Christians or raping all women, they were financed by external powers.
If you are Chinese and have lots of money the UK will welcome you in any of their tax havens, of course, while the Chinese have made it illegal. Remember the British Empire financed itself with drugs(opium) and slaves for all its History.
If you are Germany Italy or Switzerland and the US imposes you ridiculous sanctions like those to North Stream 2 project, you will find a way to evade the control of foreign powers over your sovereign rights paying on alternative places than those controlled by the foreign power.
Do you have a source for this? All the reports I have seen point the opposite, modern current Bolivian Venezuelan govs have seen a dramatic fall on drug trade, there was even an apalling graph from US senate where it showed that the bulk of drug trade left LATAM through Colombia and the Pacific Coast vs Venezuela, but still US gov PR line has been insistent on tarnishing the global reputations of said countries because they oppose US hegemony in the region
That is just not true.
British Empire abolished slavery worldwide. They went into war with many countries that supported slavery. They even took huge loan to end slavery, that took hundreds years to repay (until 2015).
https://consideringausten.wordpress.com/austen-and-antigua-s...
That being said, I'm sad to see such a blob of unsubstantiated "facts" at the top of HN.
I'm also not sure it has anything to do with the subject at hand.
That's actually the most accurate description of the international narc-terrorism business I have ever seen in print. Very well put bumbada ..
My experience as a person who also was misfortunate enough to spend a big portion of my childhood in Russia, and get a Russian passport nearly mirror misfortune of this guy.
Speaking honestly, the "global mobility" for me is only possible thanks to very same people who enable rather shady people moving money around the world, and contacts with no-nonsense bankers for me probably rank as my most valuable contacts.
I am beginning to think that there is no tool more important to ending global poverty and exploitation than decentralized and permissionless finance.
Tragically, the process is treated entirely as a box ticking exercise. Incumbent AML systems are old and ineffective, and scores of investigators submit thousands of SARs (suspicious activity reports) to central policing authorities that 99.9% of the time are ignored until they help an ongoing case.
The process is neglected partly because it doesn’t generate money, it prevents fines, which are tricky to predict and a less obvious priority for upper management.
Launderers of any significant amount of money are savvy to the pitfalls of current systems. Best in class solutions can capture some money laundering schemes via watchlist screening and “suspicious looking”transactional patterns - but the limit is the data the company owns. The main issue is that money is spread across multiple institutions in multiple jurisdictions.
As systems to tackle money laundering become more effective, so too do the launderers.
Get someone to buy a piece of real estate at allow price who does it anonymously and set it up also to support the valuation of the same piece of real estate at a new inflated price. Tada! You have just laundered some Russian money just by refusing to ask money source questions.
And they real trick is make sure every single piece of real estate is a separate pass-through-LLC as than the IRS is hampered by not having enough audit staff to even examine it.
You think I am joking....not really ask an IRS return examiner.
World-wide one of the easiest ways to launder money still remains the real estate buying and selling.
He sold a $40m for $100m to a Russian oligarch, who promptly demolished it. The overpaying is the point.
Real estate is one of the primary means of laundering money out of a country that otherwise restricts it. See: FINCEN [0]
[0] https://www.fincen.gov/suspected-money-laundering-and-fraud-...
Certainly not anonymous in respect to the government.
A pass-through-LLC means everything is directly in your name and if you don't report it on your personal tax return you go direct to jail without collecting $200. If the LLC has its own bank account, this will also be associated with your name.
And once you're on their radar, I bet they can find enough auditors to check your other LLCs as well.
Please correct me if I'm wrong but I really don't see how you think this can work in reality.
I will not get into the Trump thing other than saying it's not like they're not already investigating him either (and possibly have been for years).
So of course many financial institutions would just do the standard due diligence, the one for which they have a justifiable cost of business.
It’s cheaper to pay one penalty that could or couldn’t come, than to scrutinize your customers and their transactions.
That’s why they are losing the war against money laundering. Because the only laundering that is being caught, is the petty one. The one that doesn’t matter. Paradoxically billions of dollars are invested in catching this type of money laundering.
It’s the exact same problems of tax evasion. Same reversed incentives, same functional behavior. You could almost say that the money laundering and tax evasion are symmetrical problems.
The tax office doesn't go after the worst offenders it mainly goes after the ones where they can get the most money out for the least effort. But the worst offenders often have all kind of fallback strategies and good tax lawers so it's costly to get them and you likely never see the money. So instead they go after small one/two/three people companies as they are most likely to make some easy to spot mistake when making taxes which you then can spin out of control. That this often will lead to less taxes earned on the long run due to small tax paying companies going out of business due to a small mistake being turned into a big thing no one cares.
This also leads to absurdities that certain kinds of businesses are seldomly tax checked and in turn often used to do massive money laundering.
There are no shortage of stories of small business owners that were kicked out of the banking system for dealing with so called "high risk activities" like the cannabis industry or cryptocurrencies and there are also no shortage of stories of rich criminals and politicians just getting away with whatever fucked up activity they do. Hell... they even put a literal criminal in charge of the ECB.
In Australia (at least) banks are given rather descriptive measures to check for by the regulator. Some of these are quite standard but leave some room for the banks to decide what hard values they set in their checks. Every so often the regulator comes in, does an audit of these checks and tells the bank if they think the implementation could be better or not, but it's very arms length.
You see, when the detection systems produce a result (live or historical) they are then investigated further by human analysts. How many human analysts do you need to pay? Well, it's a tradeoff between where you set those hard limits and historically how many results you get over periods. You don't want to have a massive backlog, processing time is also a consideration, but how do you know when you're picking up actual money laundering and not just weird human behavior? When you think you've found something, you send it to the regulator and the police who take it from there. You don't get any feedback. It goes into a blackhole.
This sounds inefficient but perhaps (not sure if it's been determined) it avoids the case where you start overfitting to particular types of activity at the risk of ignoring others.
All banks implement their own checks, so assuming other parameters (customer base, technology, enterprise risk environment etc.) are the same there must be one out of any group that's better than the rest, but the regulator is the only one that could possibly know based on outcomes. Any signal from them will be picked up on by those actors trying to get around this.
This is hard, but the transaction is just a record of activity (albeit one of the only ones available to enforcers) usually after the fact. Maybe to achieve any meaningful reduction, you have to stop the flow in the first place, I don't know.
I don't know you. Why would I lend you money.
1. Have a legit company/ies with sufficient revenue.
2. Bill for imaginary goods/services.
3. Receive and deposit dirty cash as payment for them. Any questions, just say "oh, they're foreigners who do everything in cash."
4. Remit clean funds to "investors" as "special profit dividends," minus your take.
However, running a single legit company large enough to launder the proceedings of a large criminal enterprise is impossible these days. A big successful company with sufficient revenue to mask laundering would draw attention to itself just by existing.
https://www.coindesk.com/money-reimagined-ugly-side-kyc-aml-...
>>At a 2015 blockchain event, Nairobi-based bitcoin pioneer Elizabeth Rossiello answered an audience question about the impact on Somalians of a recent shutdown in remittance inflows after the U.S. government had labeled the country a “high-risk jurisdiction.” The AZA Group CEO’s answer was blunt: “They starve.”
Meanwhile, there are some analyses that suggest they have very little impact on crime:
https://www.ledgerinsights.com/anti-money-laundering-has-les...
https://news.ycombinator.com/item?id=26788896 (the linked piece is sensationalist and sycophantic but IMO such concept will be irresistible for western politicians too)
So no anonymity at all.
Whoever thinks Bitcoin and crypto are the single biggest enabler for money loundering is obviously just falling for banking propaganda.
Bitcoin also enabled millions of people who are locked out of the banking system for whatever reason to transfer money in a safe and cost efficient way.
In my residential California neighborhood, there were constant illegal drug dealers racing around in loud mustangs painted with their phone number and web site to deliver orders made on an app, and when I called the police about it because they were intentionally crossing the road to scare cyclists, they wouldn’t even take my statement.
So if this KYC/AML crackdown stops those assholes, then great, but I only care that it is reducing the amount of drugs that come into the country, and the profits for individual street deals are getting wiped out, and the gangs are disbanding and violence is decreasing. Otherwise, it seems like it’s just being used to exclude Americans from Coinlist.
Money tracing is an extremely valuable tool for criminal investigations. But I think the strategy around it is all wrong. You’re supposed to use the money trace to find more criminals. It seems that all resources have shifted to hunting down financial crime itself. This is based on the kingpin theory, which is questionably valid. In crime and terror, nobody works for anybody. Kingpins are essentially getting paid to increase the efficiency of the network in the highest-risk job. The network doesn’t need them at all; it just works a little better with them taking that risk. And if you think about it that way, you see the futility of simply restricting their ability to spend that money. There will always be somebody ready to take that risk just for the ego boost. Maybe it increases the amount that that position demands, like a small tax on the network.
I have experience in this (CO-IN, not drugs, although that’s where a lot of the money came from), and I could easily quantify big statistically-significant drops in violence by going after the physical product, and by local police presence. These operations were simple, cheap, and safe. But all anybody ever got excited about was the person-targeting operations. These are extremely dangerous, and it’s always a risky bet on whether more intel will be discovered in forensics/interrogation, or lost due to the network reorganizing.
Another problem with financial crime enforcement is that it’s looking for the money on the wrong side of the violence cycle (right of boom). Crime starts with clean money moving up the pyramid to pay for physical product, and only the top portions are targeted. At that point, it’s nearly irrelevant how it gets spent. Physical seizure is preventative (left of boom), and disrupts the network with real financial losses. Possibly most effective, is physical presence of local police.
Story: Alice pays Bill for a legal job. Bill buys drugs from Charlie. Denise kills Charlie for the money. Ellen sells a house to Denise. Who should go to jail?
1. show the "contra" bank account details for every transfer in and out of an account (to show who oaid or who received the funds)
2. provide bank statements in a (standardised) machine readable format
3. provide the statements within a week of request.
Such bank statements would make following the trail a lot easier.
None of the enormous, listed, multi-national banks where I live can do all three. Most can barely do 3.
They are so bad, we have had to conclude that money-laundering is actually a tacit service they offer.
Or just a modern art?
The problem is not that a casino "makes a lot of money" suddenly. Sure, great for them. But then if that money starts to percolate into the other jurisdictions. For example the casino orders dry cleaning from a foreign company. The casino wire transfers the money, the cleaners send the receipts, but no actual cleaning happens (obviously).
And this is where banks come in, because they provide the wire transfer. And they are mandated to flag extremely successful dry cleaners and other providers, report it to various government agencies.
And ... it turns out that somehow they can't even do plausible deniability properly.
But in the Real World™, most money-laundering investigations are done by law firms after a theft of funds is discovered.
The frauds are typically insider-assisted procurement fraud where some known list of initial illegal transactions are identified and then attempts are make to recover it from intermediate and/or ultimate beneficiaries.
The bank accounts of a long list of intermediaries are subpeonaed and the transactions traced.
The entire point of money-laundering is to make the trail go cold.
The 'contra' bank account entries keeps the trail very, very alive.
So no. Its not modern art. It's money laundering.
The transaction that happens when the buyer then sells it for twice the amount to an offshore holding trust without any operational business associated with it is money laundering.
1. All economic transactions between parties are given to government and linked to a government-issued identifier. With this data, you can throw a bunch of smart people and algorithms to detect fraud, laundering and tax evasion.
But of course, "privacy". Such a convenient excuse to prevent us from stopping alot of crime and fraud.
Are you saying that law-abiding people should renounce their right to privacy because of a few malicious actors, especially when there's plenty of other ways to prevent such crime (money laundering is merely a symptom of another crime and that one needs to be prevented).
So yeah, you shouldn't trust them. But right now they are an inevitability with no alternative, so we need to figure out how to solve the problems plaguing us whilst reigning government in and keeping it from overstepping. Some element of "given" trust is necessary for that.
As a side note, seeing as this is a technical space. One reason you should trust their identifiers is the same reason you shouldn't use non-unique natural keys as primary-keys in your database. The identifier is essentially your surrogate key and government is in a very unique position of power/influence that aides it in being a custodian of citizen data.
You need directors and shareholders for all these companies (and nominee directors aren't really a thing anymore because of the obvious risks), you need to provide a lot of UBO paperwork (ultimate beneficial owner) and even more if you ever want to open a bank account (dummy companies without bank accounts are useless after all).
So while you, as a person, may be able to open a bunch of Ltd.s online (e.g. in GB) in an hour, this means that all these would be in your name and all your data publicly available for everybody.
Please correct me if I'm wrong, I'd like to learn more about this...
Any documents to the LLC goes to a POBox in Delaware. There is very little attaching my name to it that you could find without a court order.
(Not saying that you would do that but that's the subject of the thread ;-)).
You couldn't just set up a second or third Delaware LLC and move money back and forth between them with impunity...
What I was saying is that I don't see how money-laundering is all that easy anymore nowadays, at least not for any normal person which is not part of a criminal organization (mafia etc.) with lots of members willing to do illegal stuff for them...
KYC and AML departments have made it a little more difficult but not impossibly so. I would wager it's gotten even easier with cryptocurrencies.
When you make everything that's not permitted and highly taxed illegal, you find yourself in a money laundering war you can't win.
Seems extremely unlikely. According to a EU report [1], estimated market for illegal drugs in Europe is 20-30 billion EUR per year. That's not that much, compared to say market for fossil fuels.
[1] https://www.emcdda.europa.eu/system/files/publications/3096/...
Internalize the cost of carbon pollution and let the market price out wasteful usage. Demonizing specific energy usage is a waste of time and mindshare. It's little more than moral masturbation.
Obviously this is approximately the opposite of AML, but everybody keeps demonstrating that AML doesn't work. So we're better off to just give it up and take the advantage of a formal financial system with the properties that people will be able to get from cryptocurrency regardless, without the energy waste of Bitcoin et al.
Because then people will use the official financial system, cryptocurrency will be less valuable, and less energy will be wasted mining it. Which is more than we're getting from privacy-invasive and ineffective AML rules.
It's odd to make these claims simultaneously. That one, AML doesn't work. But that two, crypto's value statement is in circumventing AML. Which, per the first claim, doesn't work.
I get that the needle can be threaded by holding that an ineffective AML system can still be annoying. But if it's circumventable, that's just a cost. Which means we're comparing transaction costs versus fundamental aspects of differentiation.
At the end of the day, most people aren't money laundering. Having everyone who is money laundering self identify on a public ledger might be the solution the problem is looking for.
The trouble is that the baseline level of inconvenience doesn't phase a criminal enterprise, because to even exist it already has to incur the cost of operating unlawfully and risk being shut down and compensate employees for the risk of being charged with a crime, regardless of AML.
But the AML rules don't only inconvenience people who are really doing something wrong. There are obvious privacy problems with associating every purchase anyone makes with their name, and chilling effects for what people are willing to buy. It creates friction in things that aren't illegal. And since legal activity is so much more common than illegal activity, a little bit of inconvenience multiplied by the entire population is a lot, whereas a little bit of inconvenience multiplied by a couple of outliers is not. So the cost is more than the benefit.
Operating an illegal enterprise in such a manner that cash can make it past AML measures and eventually be spent by the enterprise's owners, and the concomitant problem of structuring the enterprise's bookkeeping and tax reporting so it has enough plausibility to avoid prosecution, is more than an inconvenience. It's the central business problem the owners of those enterprises face. Talking about their business costs and risks "regardless of AML" doesn't really make a lot of sense.
> But the AML rules don't only inconvenience people who are really doing something wrong. There are obvious privacy problems with associating every purchase anyone makes with their name, and chilling effects for what people are willing to buy. It creates friction in things that aren't illegal.
This problem, the effects of which you're wildly overstating, has little or nothing to do with AML measures. (You mentioned a chilling effect on things that aren't illegal - are we just talking about stuff that people don't want their spouses to see on the credit card bill?) It's true that every purchase you make without cash will have a lot of detail associated with it, stored electronically and held by the banks and credit cards processors. This all predates modern AML rules by decades.
You would have to do something very unusual for one of your transactions to "create friction" with your bank under the guise of AML rules. If it has ever happened to you, I'm super curious about the circumstances. Insofar as AML and other more modern, security-related rules might inconvenience ordinary people, they tend to affect people when opening an account, not when transacting.
Before 9/11 it was possible for a foreigner to open a bank account in the US. It's now been 20 years since it is required to physically travel to the us to open a bank account.
Do you think that increases crypto demand or decreases it?
One, why does a non-American non-resident need an American bank account? Foreign banks can hold dollars. And two, plenty of American banks open accounts for overseas non-Americans.
> Do you think that increases crypto demand or decreases it?
Why is this a bad thing? An edge case is being addressed through a novel product. Win win.
HackerNews "its just rsync" level comment
> And two, plenty of American banks open accounts for overseas non-Americans
Literally 0 without physical presence. But I'm very much welcome to be proven wrong here, can you give me a bank that opens accounts for non american non residents?
Youtube could be considered more wasteful than crypto (depending who you ask) and it is never mentioned when people talk about "wasteful electricity usage".
The conspiratorial part of me wonders why that would be? Is it because it is actually a threat to large payment processors that if crypto were to succeed would make them obsolete in the future?
I think that there is a lot of problems with the current crypto market, the electricity usage while concerning isn't the biggest issue with these electronic currencies.
I'm honestly surprised that literally every comment that is defending Bitcoin mining energy is always pulling out the same poorly though out argument as if knowing that electricity is being wasted is a recreational activity in its own right.
Please come up with better rebuttals. Here is a freebie:
The block reward goes down over time and thus the economic incentive to waste energy. The transaction fee goes up to compensate and the transaction fee is directly paid by users who derive value from the platform, otherwise they wouldn't pay the fee in the first place.
No. I never said that. When did I say that. I never said that? I get very bored by people that try to put words in my mouth. Hackernews (this isn't my first account here) is like this. It is horrifically boring.
> Please come up with better rebuttals. Here is a freebie:
It is a perfectly fine rebuttal. At the moment the only reason anyone is buying crypto is because they think it is going to be worth more in the future. Most aren't buying it for transactions at the moment. If you can somehow so that is false, please do so otherwise don't be an asshat.
God I hate this site. It is little better than reddit these days.
Going further, all data centres in the world use an estimated 200 TWh per year, and data transmission networks are estimated at 250 TWh per year [4], for a total of 3.2 times Bitcoin's energy use. Maybe it's just me, but the value provided by the internet is more than 3.2 times higher than that of Bitcoin.
[1] https://s22.q4cdn.com/959853165/files/doc_downloads/2021/03/...
[2] https://www.iea.org/commentaries/the-carbon-footprint-of-str...
[4] https://www.iea.org/reports/data-centres-and-data-transmissi...
Value is subjective. What you call actual value has zero value to others.
The energy consumed by Bitcoin is the entire value. Find a way to reduce the energy cost and everyone will mine more and consume more. If they don't the trust in the network decreases and the value of Bitcoin decreases. It is not possible to get a popular situation where bitcoin is valuable and does not consume a lot of energy. The valu of Bitcoin is strictly tied to the amount of electricity people are willing to waste for it.
Mining bitcoin is comparable to the US army? LOL.
How delusional are you, is that correlated with the amount of BTC you own?
Secondly, crypto is not wasteful. It is broadly breaking down the global walls put up by 1st world countries like the US and EU that have plagued every day people in 3rd world countries for decades.
It feels wasteful to us since most people near us have unrestricted access to banking and finance. Most of us are not journalists or activists who have to fear one phone call to Chase bank ending our entire operation. Despite recent events, the USG is not about to topple into a third world dictatorship that we would feel the need to flee from.
Crypto gives refugees a means of escaping with some of their family wealth. It allows journalists and activist insulation from governments and corporations trying to squeeze them out financially. And finally, it gives every day people across the globe the ability to start investing their money outside their own countries and begin accruing wealth.
Here is one example of the usefulness crypto can provide. https://www.reddit.com/r/MakerDAO/comments/de0sys/kyc_is_abs...
That electricity is being put to far better use than Youtube or Netflix.