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Comment by miohtama | Hacker News Reader

The problem is that usually anti-money laundering laws give the operator and the compliance officer an infinite protection even on a suspected money laundering. As long as the compliance process is followed, no matter how stupid the process is, there is no legal basis to go after account freezer and the company is protected. Thus, the company has no incentive to be reasonable with account freezes.

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PayPal has worked hard to not be a “bank” so they are long overdue for being sued about this. I know countless vendors who have had their funds stolen.

It's really and outrageous that this open stealing of customers' hard-earned cash for minor perceived user agreement violations is so freaking rampant, with PayPal. I wouldn't be surprised if it turned out that this literally was a strategy cooked up by the higher-ups at PayPal to buff up the company's gross profits.

I was thinking of that too. It’s gotta be quite profitable for them.

It’s probably one of those things which is never explicitly written down. Like, the CEO says ‘we have to double down on our “fraud” account seizures’ and they smile when they say “fraud”.

Or simply those that understand and play along get promoted and those that start asking questions are pushed out due to “restructuring”.

Freezing the account or booting the user from the service is one thing, but seizing the money as a result without any due process seems pretty messed up IMO

AML/KYC laws are a travesty to a free society. Wealth transfer shouldn't be illegal. Prosecute the underlying crimes and let the judicial process seize proceeds of crime after due process. In the meantime, various electronic systems continue to provide adequate avenues for those seeking minimized exposure to KYC/AML.

I agree, which means electronic money transfer should be a utility offered by the federal government.

That reminds me on how ironically the shipping company with lowest exposure to having your package snooped on is probably USPS. Since they are bound to 4th amendment, generally probable cause is necessary to open your package.

agree with the overall conclusion, have to ask for some reason in the expression of it. That is, there are legitimate reasons to Know Your Customer, yet, those the least in control are unendingly required to jump through ever more hoops. It is easier to exert control on the defenseless, and they do it. Meanwhile, professional money handlers are seriously considering negative interest rates, since there is just that much money being moved around. A requirement for cell phone numbers closes the connection graph, and a reporting requirement of "every transaction USD$600 or greater" (less than one month rent in most places), to my mind, is the straw that breaks the camels back.

I consider KYC violation of 4A. It's an unreasonable compulsory search to ascertain my identity devoid of probable cause or warrant of a crime.

What are legitimate reasons? Other than to ensure your money is yours?

AML/KYC is just the financial version of global mass surveillance. They're bad for society and freedom for exactly the same reasons. I truly hope that some cryptocurrency like Monero will succeed.

ZKs, bulletproofs etc are going to be working their way into btc and eth in the next year or two and i would expect to be ported to competitors. it will be impossible to prevent strong anonymity in transactions on any of the major chains in short order. even LND offers very good privacy advantages.

Yeah, that's totally cool. I'm doubtful that something like this will ever make it into Bitcoin but I'm really hopeful for what Ethereum could achieve in the long term. If these solutions prove to be better, I hope Monero will adopt them as well.

yes, i didn't mean this in a way that was dismissive of monero, only trying to convey my excitement about privacy tech becoming an intrinsic part of crypto as a whole

I didn't read it as dismissive. It's totally exciting to see privacy technology spread all over the cryptocurrency space. I think this should be the default.

Monero is pretty amazing but I've read some fair criticisms of it's privacy guarantees. New technology is always good and we'll get to see first hand which one is better.

> Prosecute the underlying crimes and let the judicial process seize proceeds of crime after due process.

At least a basic identity check (that's the "KYC" part) must be part of bank account onboarding for that to work though. Otherwise, how would a government be able to seize the bank account of a convicted criminal if they had no way to tie the bank account to a criminal?

As for the anti money laundering regulations: these are a very fine line to balance. Personally, I'd like for these to go away the earlier the better since I agree with you that the potential for dragnet-style abuse is way too high, but on the other hand, terrorism financing is a present and clear danger worldwide.

I'm supposed to give up my anonymity because of an entirely different person's crime? No thanks, I'm not a criminal. I'll keep using monero or whatever other systems limit my exposure to these unreasonable search without probable cause/warrant of my identity. I believe KYC is violation of 4th amendment, and that the government's ability to seize proceeds of crime is a lower priority than civil rights.

Congrats. You and your provider of conversion from Montero to fiat are criminals for not adhering to Electronic financial services regulations! If you don't report the income, you're a tax evader!

Isn't having so many selectively enforced laws grand?

ha, yeah. Fortunately there is at least one FinCEN registered money business in US trading fiat/XMR pair, so there's plenty of plausibility it was obtained in a way adhering to regulations.

On top of all that (with which I fully agree), it's not even effective, in any plausible sense of that word.

If this analysis[1] is to be believed, AML laws recover less than 1% of estimated laundered funds, at an explicit cost at least an order of magnitude higher than what is actually recovered.

That's not even including the implicit costs, e.g. when innocent people get caught up and lose their accounts or even their funds.

Travesty doesn't even begin to cover it.

[1] https://www.ledgerinsights.com/anti-money-laundering-has-les...

> an explicit cost at least an order of magnitude higher than what is actually recovered.

The goal is not to make money with AML laws, but to deter and prosecute crime (which has huge externalities itself). Is it effective at that? Your comment doesn't address that.

If it's only capturing 1% of the dirty money it's not effective at deterring nor is it an effective part of the prosecution.

That poses the potential problem of circular reasoning. How do we arrive at this estimate of 1%? Maybe it is more than 1% of the actual value because the estimate is wrong.

Consider this scenario: current AML practices catch 1% of laundered money, but deter additional money laundering 100x. In effect, this means nearly all money laundering is stopped because of these practices.

That seems extreme to me, but it does seem possible.

KYC laws are a tragedy that perpetuate the unranked I the digital age. without an ID you don't exist to the global financial system. Nevermind that some countries are too poor or lack the infrastructure to provide all of their citizens with IDs. Not to mention poor citizens in wealthy countries who don't have ID.

Am at paypal this is every year in compliance videos, there must be terrible and inept bureaucracy - not sure what is that side of the story. but i can see them no wanting to invite ire of regulatory punishments. go to small claims court if its a small sum. you should not keep large sums at any online outfit, paypal, coinbase or others. Even bank account is a suspect space, better stow money in money market funds for quick liquidity, its super easy to defraud it.

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