Isn't Credit Suisse the bank that laundered and legitimized all the money from the drug cartels? They kept getting slaps on the wrist for a bunch of atrocities and bad choices and now finally they are seeing some repercussions of those choices?
Drug cartel money, strong ties to the Russian oligarchy, forex manipulation, corrupt dealings with African governments, destruction of records, tax fraud.
The list is extensive to say the least.
People willing to take part in criminal activities are almost definitionally less risk averse. You're risking fines, loss of reputation, prison, unemployability, destitution.
Not then surprising that those same people would be more willing to take undue financial risk, all the while maybe closing an eye to some red flags.
HSBC is just as evil, and is doing well enough that they just acquired the UK branch of SVB
https://www.icij.org/investigations/fincen-files/hsbc-moved-...
Acquisitions != health
Another (usual) reason is when a company lacks clear avenues for growth so they are looking to buy some growtg
I was just confirming the notion that they're a very shady bank. I'm not qualified to say whether the shadyness is the primary cause of their downfall, but it doesn't seem outside the realm of possibility to me.
And sure, anyone can reduce any view down to a laughable caricature. Good job, I guess.
Sounds like HSBC
They need to protect their laundering clients.
HSBC is an extension of the UK laundering fraud arm of Yee Olde Kingdom.
Expect much fuckery afoot.
Edit: Somehow managed to write "nationstate" instead of "city-state"
How do I know this - I work for one of those, not (and never) CS. Since I started ours is rather spot clean from what I can see (but IT is very far from those who make similar decisions), what I see is regulatory downfall from their fuckups 15-30 years ago. Some of it was outright amoral criminal behavior, but most was due to bad processes and way too much incompetence in ie KYC checks. Too much focus on current cash flow, way too few questions about where the money came from. That's thing of the past in regulated markets (but then you have the whole universe of tax havens, some also in US or conveniently around)
Of course CS is in a tax haven, and their dirty laundry generally seems much fresher and much more deliberate than negligent. E.g attempting to help cover up assets of Russian oligarchs under sanctions after the Russian invasion of Ukraine.
And the Credit Suisse leaks last year revealed just how much dirty money flows through the bank still to this day.
Sometimes I wonder if the Swiss newfound love for a weirdly biased neutrality, which goes to the extent of destroying their own military gear instead of selling it to Ukraine, is rooted in appeasing certain Russians who stashed their fortunes in financial institutions such as Credit Suisse.
What?
It's kind of easy to be neutral when you're landlocked inside NATO, I guess. No reason to even join. Neutrality didn't quite work out that way for Norway in WW2...
Great cheese down there though, gotta give them that.
I guess you think that NATO is why the Swiss people added a neutrality clause to the constitution of the Swiss Confederation during the Restoration in 1815?
No, the NATO part is only commenting on current events.
The reason they weren't invaded during WW2 was mainly that they had a strong military in a very mountainous country with next to no strategic or material importance to Hitler. Just not worth the trouble. If Hitler saw a strategic reason to invade Switzerland he would have; he had no reservations about ignoring neutrality.
I figured all this was obvious given knowledge about basic history and geography, and that it didn't need to be spelled out that I know NATO didn't exist during or before WW2
Are you sure? I was told in history class that it was because too many of Hitler's cronies stored massive amounts of money there. Which would obviously have disappeared to the allies before they could capture the whole country.
I've never investigated that in detail though so perhaps this was just wrong.
Either way it's still true it was quite easy for the Swiss to remain neutral since they're a pain in the ass to invade, and there was no reason to. I can definitely see them being more useful to him with their neutrality intact, but in some sense that only reinforces my point. If Switzerland had, say a bunch of oil, the equation might have changed.
Norway on the other hand had no realistic hope of remaining neutral once Hitler laid his eyes on our iron ore and massive, honkin' coastal line.
Whereas Sweden managed to maintain their neutrality partially by continuing to sell iron ore to Germany throughout the war as well as allowing them to move troops through them en route to Finland. And Hitler was more interested in the Soviets at that point, so Sweden would have been a distraction.
Finland was also neutral originally and they ended up in all sorts of wars theoughout WW2.
It seems pretty clear that neutrality in WW2 was respected by the large powers only to the extent it was convenient, and ignored otherwise. Most of the countries that remained neutral were city-states and the aforementioned countries + Spain(aligned with the axis powers though still neutral), Portugal(insulated by Spain) and Ireland(insulated by the British).
Those systems are 'unsupported', they are like iphone 4 - noone produces spare parts or ammunition any more for them. Theybare basically useless
Source (in French): https://www.rts.ch/info/suisse/13861370-les-systemes-de-defe...
Also I’m not American, why would you think so?
If the world supports Ukraine, but Switzerland refuses to support them, no matter who the opponent is, then that is neutrality.
Knowing the Swiss system very well, it would surprise me if there have been nefarious intents and ideas behind this.
Do not underestimate their cleverness.
Small country, suddenly rich with no worthwhile exports, all the big corps incorporated there because they feel the rule of law is given and functional and the money safe and the institutions work.
Small country, if you go from the centre of zurich, you will see one corporation after the other for a 30 mile radius, shoulder to shoulder. Its a remarkable amount of the liveable territory.
Really, do not underestimate their greed and cleverness.
The confidence with which people spout easily disproven nonsense is incredible: https://oec.world/en/profile/country/che
Also agree with the Swiss being very clever, motivation being making money.
Completely disagree with you on no worthwhile exports.
As a matter of fact, Switzerland is one of very few European country that has managed to not only preserve but even grow their native manufacturing in the last 20 years instead of moving everything to China.
They moves to eastern europe whatever they could. This started over 20 years ago.
"The world" is a hard over-statement. Europe excluding Belarus and Russia itself, but including Switzerland introduced real sanctions Russia, as well as the US, Canada, Australia, NZ, Japan and ROC, while BRICS, close to half the global population, can be considered actively cooperating with Russia.
> Small country, suddenly rich with no worthwhile exports, all the big corps incorporated there because they feel the rule of law is given and functional and the money safe and the institutions work.
Swiss manufacturing is very highly regarded globally, and some of the largest chemical, pharmaceutical and food/drink companies in the world are Swiss. "Greed and cleverness" is a weird way to phrase "hard work and intelligence".
They are incorporated there because of tax rates and such.
Switzerland has always been aggressively neutral to the extent of annoying the rest of Europe, not just during WW2 but all the way back to the Hundred Years War.
No, I don't buy it. This time around they went to the extent of refusing to sell ammo for their own weapons arguing they'd be used in a war.
They are outright destroying their arms industry by arguing that they cannot even be used by their owners to defend themselves.
This goes way deeper than this neutrality scapegoate.
Well, we can read it up. The "hundred years war" date is of course wrong, they have neutrality since 1814/1815. If you cannot read german, use google-translate or DeepL: https://de.wikipedia.org/wiki/Neutralit%C3%A4t_der_Schweiz
> This time around they went to the extent of refusing to sell ammo for their own weapons arguing they'd be used in a war.
Well, even Germany did this before 24st February 2022, and it never was neutral.
In the case of Switzerland, the neutrality is in their constitution. Neither the government nor the parliament can change it. It needs a public vote of the ca. 6 million people large electorate. Germany had it much easier, the "don't export to crisis regions" wasn't in constitution. And, truth be told, it was never followed through 100% (e.g. why would one export military ships to Saudi-Arabia, which is in war with Yemen?).
> They are outright destroying their arms industry
Yes, they do it. For me, this sounds that they like their neutrality more than money --- however, people usually assume more sinister motives. Like that Switzerland is somehow getting black money from russian Oligarchs.
To me, this sounds entirely implausible --- or if it happens, than in a similar scale as in EU countries. First, as said, the neutrality is in the hands of the electorate. Russian Oligarchs cannot smear 6 million people. Second, it is well known that Switzerland implemented all 9 sanction packets of the EU. They even seized russian assets, about 8 billion EUR. That is more than can be said of some EU countries!
So, if they still do business with Oligarchs, then only because these Oligarchs aren't in one of the 9 lists of sanctioned entities the EU created. In that case, we should blame both Switzerland and the EU.
Apropos "swiss liking neutrality": i read that in May 2022 there was a representative poll. It turned out that 85% of the swiss liked the neutrality and don't want it to change.
As we leave the post-Cold War era into a more uncertain and conflict prone[1] future, it's entirely unsurprising they'd retreat. Or perhaps another way of looking at it is that it's been awhile since Swiss neutrality was truly tested, and perhaps people had assumed more of a change than there really was.
[1] As between major powers and also, at least regarding immigration and trade, within the West. Conflict never really dissipated much across the rest of the world.
Switzerland - https://en.m.wikipedia.org/wiki/Switzerland founded 1291
If they take a side, they lose the fortunes of more than just Russians. Anyone who is controversial and has money in Switzerland will realize it’s no longer safe in the event the world exposes their bad deeds.
How did you get to this conclusion?
* Switzerland has neutrality since the Vienna Congress 1814/1815, more than 200 years
* they weren't really rich back then
* instead, big powers of Europe feared that Switzerland will join one of their opponents, so it was dictated to Switzerland originally
* later, when Switzerland saw how the countries surrounding them got demolished again and again in each war, they actually adopted it. It is now in their constitution, article 185.
* the consitution can only be changed by the electorate of Switzerland (about 6 mio people), not the government or the parliament
So why would these 6 million people add / keep neutrality "to appease the rich" ? Not all swiss people are rich. In the southern french parts the risk to sink into poverty is even higher than in some parts of Germany!
Maybe a not-so-swiss centric view can shed more light on your (wrong) hypothesis:
In Europe Switzerland isn't the only (current) neutral country. We have Austria, Ireland and some smaller ones, like Liechtenstein. We used to have also Portugal, Sweden or Belgium in the neutral camp. Are they all known to "appease the rich" ? I doubt. Except if your idea of not appeasing rich people is having a government form like Soviet Russia, GDR, or Yugoslavia.
I’m not implying that is where Swiss neutrality comes from, more making a counter point that IF they are staying neutral (currently) to protect fortunes then it’s not just to protect Russians.
I wasn’t making a statement about its history. Banking in Switzerland I realize is fairly recent. I am not even saying that’s definitely what they are currently doing.
It's been some correlation between "neutrality" and "money" for centuries. They go hand in hand.
Sometimes it's really hard to tell the effect from the cause.
Also, it's easy to imagine "Neutrality brings us moneys! Let's stick with it.". Not saying if it's 100% true, of course.
You state still this falsehoods after I pointed out that
* other swiss pecularities (e.g. their banking laws about anonymous number accounts) might be more to blame
* other european neutral countries didn't exhibit any correlation between neutrality and money?
If you talk about correlation, then you need to take in the full data set. You speak general about neutrality, so take in ALL neutral countries. Malta, Ireland, Austria, Liechtenstein. And maybe even neutral microstates like Vatican.
Only THEN can you come to a conclusion. But not by only focusing on one single country, and extrapolating your observation to all of neutrality.
Wasn't it you that stated the hypothesis "neutrality is to appease the rich"?
Can't you see that I tried to refute this hypothesis? But maybe you have arguments to back this hypothesis?
Pharmaceuticals exports are highlight of Swiss exports, but as only 25% of the GDP is attributed to industry[0], this can't be a significant part of the economy.
Now how much of the 74% of the service revenue is banking is up for grabs, as tourism for instance is also a potentially big part. But even if it was only half of that, it would still be bigger that the pharma I guess ? (except if patents and/or IP was also counted as "services" ? but would it be that big either way ?)
[0] https://www.eda.admin.ch/aboutswitzerland/en/home/wirtschaft...
It very much did indeed.
And probably a lesson the rest of the world should finally learn.
1 - https://www.bloomberg.com/news/articles/2023-03-07/swiss-arm...
I don't know exactly, maybe you tell me?
If it were because of Neutrality, then surely Ireland, Austria, Malta must have become equally rich. But ... they aren't. So certainly other factors than just neutrality contribute to it.
You might want to look at some recent GDP growth charts for at least Ireland and Malta ;-)
Like, Austria was in both World Wars; the Swiss weren't.
The sanest political system in the world, where power is only ever reluctantly relinquished to the higher authorities (individual -> city -> state -> federation), unlike - say - the US, where the power that still remains in the hands of local govts is nothing but a joke.
[1] https://eresources.nlb.gov.sg/infopedia/articles/SIP_1457_20...
[2] https://www.worldscientific.com/pressroom/2022-05-25-01
[3] https://en.wikipedia.org/wiki/Albert_Winsemius
[4] https://thekopi.co/2019/09/02/albert-winsemius/
So, not sure your point carries much weight.
And just to drive home the point why citing unbiased sources is important: According to the early fascists they were a movement lobbying for democracy and women's rights, among other positive sounding demands. That was right on their manifesto in big letters. It didn't quite turn out that way, and in fact looking back with the power of hindsight people like Mussolini had questionable motives from the start.
Singapore is primarily characterized by... none of those things???
> So, not sure your point carries much weight.
It's not "my point", it's reality on the ground.
The neutrality is used for propagating "you and your money are safe here", which is true at first glance. They are ready to take it from you as soon your seat gets a bit too hot for your liking.
The 1814 neutrality was granted after Napoleon invaded the confederation and made it a republic, only to be saved by Russia, no less, so a different solution had to be found.
They were dirt poor back then.
No country was afraid of Switzerland doing anything, they had no military might whatsoever, the current militia model was introduced in fear of a Nazi invasion.
Your statement about constitional changes is vastly incorrect, omitting many things, see here https://www.parlament.ch/de/%C3%BCber-das-parlament/parlamen...
There is no poverty is switzerland, even the worst off are better off than us citizens on food stamps. The treasury returns so much money to the cantons, they could build a socialst utopia if they wanted, so long the economy as a whole is fine. They already have such a thing on a federal level, its just not called guaranteed minimum income. Its been in place for a while. This all is before corporate and income taxes and vat.
Say what you want, but soviet russia and yugoslavia and such, exepct for the communist elite did not give an iota about appeasing the rich. Not saying it was the best way, but they stood their ground until they sank. Switzerland will sell out 1000 times any day before that happens.
Swiss mercenaries were famous and feared enough to be regularly employed by the French royalty and also the Pope.
Okay. But ... isn't "me and my money" not save in Malta? Or in Ireland? Or in Austria? Or used to be it unsave in Belgium, Portugal, Sweden? All mentioned countries are (or were) neutral.
> Your statement about constitional changes is vastly incorrect,
I stand corrected.
> There is no poverty is switzerland
Here you are vastly incorrect: https://www.swissinfo.ch/eng/society/poverty-in-switzerland-...
They have things like "Tafel" like in Germany, they have students that pay lots for their flats but have little income, they have homeless people ... the idea that there is no poverty, or no risk-of-poverty doesn't make sense, even when you don't know reports like the one I posted.
Oh, and not everyone can drive to Italy or Germany to enjoy 50% cheaper prices for groceries.
> even the worst off are better off than us citizens on food stamps
One doesn't exclude the other. You can be poor, and still be better off compared to some dysfunctional state.
[0]https://medium.com/@weeklydoseofhistory/the-burgundian-wars-...
I don't know about the validity, but I love how Germany (as one of the richest countries in the world), is used in this comparison.
Many people regularly oppose this, as being inexact.
Maybe this is correct ... but: the mean income level also influences prices, e.g. for flats or groceries. Swiss prices here are exceptional. What costs 1 EUR in Germany costs 2 swiss francs there. And francs and euro are more-or-less on parity, if you exchange them. Droves of Swiss people drive to Germany (or Italy) to buy groceries. But: some people don't have a car. They can't do that.
I saw a map of Switzerland with different colors on how high the risk of poverty is estimated in which region, and clearly the french speaking parts around Genevre had a worse risk assessment than e.g. the italian or german speaking parts. You couldn't really see the Röstigraben, but you could still see a stark difference.
I think it’s much older than that, though. The Swiss confederacy had been trying to be neutral since the 16th-17th centuries.
Also Austria does have some significant pro-Russian tendencies for some reason..
Austria is a lot smaller and easy to influence.
It's also not in NATO, and there is strong public sentiment to stay out of NATO -- which means there is a vacuum Russia can enter in ways that it cannot with full-on NATO members.
Neutrality though made it a good place for exchange and safe-keeping. e.g. https://en.wikipedia.org/wiki/Nazi_gold
These days, I don't think Switzerland really fears an invasion, but it's true that the financial incentives have taken over. At the level of the population, the neutrality culture runs deep, and as Switzerland is one of the richest countries in the world, there's really no reason for the average Swiss to be upset about it.
But knock out the UK or the Soviets, lower the pressure, and there is little doubt the Nazis would have made a go of it eventually.
Being Swiss is a good reason to want a Swiss bank account. Rich foreigners might be a little suspicious?
It's somewhat similar to who really needs cryptocurrency, except you don't get the enthusiasts or small accounts, either.
Maybe look at who unmoderated "free speech" forums become popular with. Or who needs to use Tor.
* the neutrality isn't "newfound", they have it since the Vienna Congress 1814/1815
* back then the big powers of Europe feared that Switzerland will join one of their opponents, so it was dictated to Switzerland originally
* but later, when Switzerland saw how the countries surrounding them got demolished again and again in each war, they actually adopted it. It is now in their constitution, article 185.
* Switzerland is a direct democracy. The constitution cannot be changed by the government. And not even by the parliament. Only a public vote of all the electorate can change it.
* the swiss electorate is about 6 million people large
* the swiss banking sector only employs about 89'000 people
So, what can we learn from this? Your postulation is, in all likelihood, wrong. Why would normal people, like Carpenters, Farmers, Teachers, Nurses vote for neutrality to "appease certain Russians" ? They have no benefit from this.
Also, Switzerland isn't the only (current) neutral country in Europe. We have Austria, Ireland and some smaller ones, like Liechtenstein. We used to have also Portugal, Sweden or Belgium there --- is any of these current or previously neutral countries linked with money laundering? I don't think so. Therefore we can even dismiss that somehow money laundering is linked to neutrality.
If anything, then something else in the swiss law system is responsible: their banking secret laws. One can still open an anonymous "number account" at swiss banks. It's not cheap, but that is just one more reason why it attracts tax evaders and criminals.
And finally, that today Switzerland is specially linked to Oligarchs needs a proof. Why? Simply because Switzerland implemented all of the nine sanction packets of the EU. Despite not being in the EU. So Switzerland, like any other EU country, sanctions the Russian state, certain russian companies, certain russian individuals. Including some people one would classify as "Oligarch". All of them? Probably not. But then again ... this would be a problem of the EU, by not adding them to the sanction lists yet.
Given European history their options are neutrality or extream internal strife.
You are overusing your Ukraine conflict lens when viewing the world.
One of the highest in EEA.
They probably did not give away their military gear because the price or conditions they have envisioned were not right.
Make no mistake, Switzerland is right up there in the top 5 as far corrupt government and institutions go, they just have the better suits, camouflage and clandestinity.
Sure, life is good in Switzerland for most, the system is one of the best as far median income and level of wealth goes, but that did not fall from the sky.
This country had to ration food until not too recently, and before that, Russia had to save them from Napoleon.
https://en.wikipedia.org/wiki/Women%27s_suffrage_in_Switzerl...
About half because 1971 started with 36% of cantons, it rose to 52% of with the same election that made women able to vote nationwide, it was 60% of cantons when the first vote with women was held. It wasn't until 1990 that women could vote in every canton.
Cantons have vastly more autonomy than any us state, on any matter. The US system does not even come close. I am not sure which one has more pros/cons, though.
That reads pretty much verbatim like the enumerated powers in the US Constitution. And the idea of the federal government forcing states/cantons to abide by "letting people vote" is a common thread as well.
The major difference I see is that cantons (unlike states) can enter into agreements with each other or foreign countries without federal approval.
But I never lived in Switzerland! I'm probably missing something?
(but seriously, skim through the video. Switzerland's defenses are wild and beautiful.)
Certainly a novel take for an arms dealing country.
My type of impulse buy
The thing to know about money laundering is that the rules are basically set by the USA, and after the 9/11 attacks the US made money laundering a strict liability crime. It means you can be found guilty of it even if you didn't know you were doing it, made extensive efforts to ensure you didn't and even if the actual violations were made by someone else not yourself. And money laundering is defined as moving money on the behalf of criminals, or not doing enough to realize you were doing so. How much is doing enough? That's subjective, up to the regulators and they are allowed to do things like tell you you're doing enough then later change their mind and prosecute you for it.
Because it's impossible to successfully comply with such a moving target, every large bank in the world is constantly being fined for AML violations. It doesn't mean much about any specific bank to say it's been fined for that. If it was possible to actually comply, there'd be no crime that involved any financial component any more i.e. no drug trade or fraud, because the banks would always detect it, suspend the accounts, report the owners and seize the money.
Clearly these crimes do still exist because banks don't have enough information to reliably beat all criminals. They don't have police powers, so the most they can do is rely on heuristics. It's especially tough in parts of the world where cartels may have unlimited budgets to beat your systems, corrupt your employees, corrupt government employees or threaten your staff with having their arms chopped off if they don't help out. AML regulations don't recognize these problems as legitimate however, meaning you as a banker can be prosecuted and jailed for up to 20 years because someone, somewhere else in your organization, wasn't suspicious enough about some activity and report it in a timely manner.
That's why it feels like banks are always "getting away with it". Governments, even the US government, can't actually enforce the laws as written because if they did then the entire financial industry would collapse overnight from mass staff exodus. This was the very real risk that led to HSBC being fined rather than directly prosecuting the staff. There was apparently a big fight inside the US Gov about this between the Justice Dept and the Treasury, with (I think) the former wanting prosecutions and the latter pushing for no prosecutions. The Treasury knew that prosecutions could succeed and if they did, there'd be a very different and much worse kind of bank run.
To me, it doesn't seem reasonable to expect bankers to achieve what the world's police forces and intelligence agencies never could. But the public doesn't really understand these dynamics. Whenever they read about banks laundering money, they think it's bankers who are knowingly taking part in organized crime and so demand punitive action. Governments can then blame the banks for crime whilst simultaneously taking some billions of dollars from them for the general budget. In the short term it's a win for them. The true cost is somewhat subtle and long term, in things like innocent people being unable to get bank accounts, or finding it very difficult, and a general feeling of society being rigged in favor of the bankers who never seem to be punished for their claimed crimes. The fix would be a mix of changes to AML rules and the PATRIOT Act, transforming the system into something a lot more mechanical and objective. It might make some crime a bit easier, but that can be counterbalanced by e.g. increased funding to the police.
[1] https://www.learnsignal.com/blog/hsbc-money-laundering/#:~:t....
[2] https://www.theguardian.com/world/2011/apr/03/us-bank-mexico...
[3] https://www.vice.com/en/article/g5bkyq/drug-cartels-used-aus...
[4] https://money.cnn.com/2018/02/08/news/rabobank-mexico-drug-m...
[5] https://www.newyorker.com/news/news-desk/the-fincen-files-sh...
Of course. But there's 2 big problems with that from a government's perspective.
1) Prosecuting actual criminals would require hard work: real investigation without having an automatic sneak peak into everybody's finances is hard.
2) This wouldn't give the government any extra power.
Thanks for putting the time to answer.
It boils down to "they can't do it perfectly so they shouldn't try at all".
And the exact opposite of defense in depth.
Tons of places people will cast a blind eye to things that they know are illegal if they can profit off it. Banking is absolutely one of those areas where there are huge incentives to do so, as it requires no effort and is easy to profit off of criminality.
This law says we're not going to allow you to be part of the broader global system while knowingly profiting off of criminality. Yes you may not catch 100% of it, but you sure have to thoroughly try to eliminate it. And there will be financial punishments to ensure you're not doing it just in name only.
This is exactly what we want in our financial system.
I really don't understand the motivation behind your post. "Let's eliminate a great law for crime prevention because it doesn't prevent 100% of crime?" That makes no sense.
After 20 years there should be a vast body of evidence to justify the second, third, and fourth order effects these pernicious laws have had on society. Rather than looking at the facts, we keep pointing to nonsense perpetuating the existence of a self-licking ice cream cone. It's easier to put your head in the sand and ignore or downplay legitimate grievances when the rules you impose on everyone (and enforced at gunpoint) objectively has zero positive outcomes and a litany of negative outcomes.
I'm sure the TSA confiscated a lot of leatherman multi-tools at the airport, but that isn't a benchmark for their success. Take a guess how many terror plots have been foiled by the FBI/DHS/TSA versus random people over the same time span -- or how many caught by random people were already a person of interest by FBI/DHS/TSA.
It makes no sense because that's not what my post says. In the final paragraph it advocates for a reform of AML law, not total abolition.
> This law says we're not going to allow you to be part of the broader global system while knowingly profiting off of criminality
No it doesn't, please read my post again. Your statement would be correct if you deleted the word "knowingly". AML laws can jail bankers if they provide services to criminals, even if they didn't know of their criminal nature and even if they did actually make extensive efforts to "know their customer". In fact it can jail them even if there was no actual crime happening at all, simply for procedural reporting failures.
Without a real suggestion of what to replace it with, all I'm really hearing is get "rid of it and magic some some other solution."
Transforming it into something more mechanical and objective? Taking a pop culture related concept (a bit contrived compared to what actually happens) of "banks must report all transactions over $10k." Mechanical and objective. So now criminals do transfers in $9k amounts. And we sit around waiting for a new law to be passed to catch this loop hole while criminality runs wild laundering. Then the new law passes, they spend 1 week to circumvent it and we wait around for another law to pass.
It's like trying to legislate what specific exploits a company needs to have patched to say they prevented hackers. Then a new exploit comes out, it isn't in the law and that's used until the law catches up. It's useless.
The solution is recommend/require best practices and also require that companies are responsibility for the security of their systems. Meaning they need to stay on top of things in earnest, and not just say we have those 5 legally mandated patches so we did our part.
Current security is a mess - and I guarantee if companies did have the equivalent banking laundering laws applied for security, all of a sudden a lot of companies would be interested in "provably safe" technology. Instead of today's world of essentially "do what's convenient for security, but nothing that will inconvenience our profits too much."
Structuring is a good example of an AML rule that makes no sense any more. The goal was to try and build a database of transactions that might be vaguely relevant to crime (large cash transactions) but it was phrased in an odd way with a per-transaction limit triggering a report to the federal government, probably to deal with the limitations of paper based banking at the time. Due to this poor lawmaking - whether forced or not - of course criminals just started making deposits of $9,999 each time to avoid the reporting and this was addressed with yet more terrible law, specifying a suspicious transaction pattern whose only definition is "you should know it when you see it". Then they threaten bankers with jail if they don't see it. What if the two sides disagree on knowing-it-when-they-see-it? Well, the bankers always lose. This is hardly upholding the core principles of the justice system and only raised the difficulty for organized crime by a small amount, essentially just requiring the bring-up of front companies so they could deposit large amounts of cash without appearing to be suspicious.
Structuring rules could be abolished entirely. Since that time computers and databases got a lot more powerful, and so now in reality the US monitors all financial transactions of any size regardless of the SAR rules. They just do it via semi-secret programmes at the Treasury (TFTP), CIA and NSA. Arguably they shouldn't and an ideal system would abolish all those things, with FinCEN being folded into the FBI and it being the only agency that engages in financial forensics. Reporting in turn could simply be eliminated and replaced with a system in which the investigative agencies submit database queries to banks, and those queries are then approved by bank staff if they are complying with the rules that constrain police activity. This would bring it into line with how other requests for information (are supposed to) work in the modern era.
You could also go further and state that there's nothing special about finance and that as fishing expeditions aren't allowed in classical law enforcement, transaction reporting should be eliminated entirely. That would be consistent with other areas of law, but is presumably too radical for you.
> It's like trying to legislate what specific exploits a company needs to have patched to say they prevented hackers. Then a new exploit comes out, it isn't in the law and that's used until the law catches up. It's useless.
Yes, and AML is like passing a law that says "don't get hacked, if you do you go to jail for a couple of decades if a regulator thinks you didn't make enough effort". What counts as enough effort? What even counts as getting hacked? They won't tell you these things and in reality it depends on what the press says. If such a law were passed and then actually enforced you'd just see people refusing to work in the computing industry because no salary is worth that kind of risk.
This.
Treasury recently had to send a note via remarks to indicate to banks that 'derisking' resulting defensive SAR filing may be overdoing it. Naturally, some regulators will question every instance SAR was not filed so the banks are in weird "punching bag" position.
[1] https://www.occ.gov/topics/supervision-and-examination/dispu...
https://www.govinfo.gov/content/pkg/CHRG-112shrg76061/html/C...
Senator Levin. Did the OCC ever cite a violation of law for
noncompliance with AML statutes prior to 2010? Do you know, Ms.
Dailey?
Ms. Dailey. I do not believe we did prior to 2010.
[...]
Senator Levin. What about informal enforcement action? Was
there any informal enforcement action taken against HBUS prior
to 2010?
Ms. Dailey. There was not.
You can miss me with this banks are the victim. It has been shown over and over and over from the dawn of Banking that no matter who you are if you have a lot of money there is a bank willing to work with you.
Whether banks should be allowed to do this is a different question but they are absolutely not victims.
That's how people think it works but it's actually not the case, and one of the reasons why SVB ended in disaster. Read those threads and you'll see complaints that SVB was the only bank that "understood" startups, because they appear out of nowhere with millions of dollars. The word "understand" is euphemism for "startups trigger AML filters" because if you show up with lots of money from a single source, that looks like it might be corruption or drug dealing to the automated systems banks use. And then individual bankers aren't allowed to override the checks because they might become corrupt, and it's not just their lives on the chopping block if that happens, it's their bosses lives too.
SVB was built from the start to bank this sort of clientele, so their AML software was configured to allow it, but this led to a huge over-weighting of startups in their depositor base which then led to massive influxes and outflows of capital that they didn't manage properly. Other banks don't have quite the same sort of instability in their depositor base.
The great thing about everybody being guilty is that they can use nudges and winks to force people to toe the line about anything at all, far in excess of the power and authority granted to them by laws on paper. Get uppity and they'll send some goons around to smash up the place.
This not a case of the hapless simpletons in government having a good heart and the right intentions, and yet again bungling the legislation spectacularly, and now they're dutifully serving the people by doing their gosh darndest to keep the financial system from collapsing due to their prior incompetence. These laws and regulations are constructed and implemented by and for the ruling class, for the purpose of increasing their wealth and power.
Someone did it not too far ago in Canada.
It's funny most people accept this situation which can significantly abused by lots of parties (See: Operation Choke Point as an example). But if you live in a small village, and there is only one bank branch, the banker there not liking you means you being unbanked for no reason.
They have done so much more bad things, things not mentioned in this thread.
And after the US intervened, they carried on with the same, just even more sophisticated.
How Swiss banking has a good name should be beyond anyone. Assume it is all careful, decade long marketing and PR stuff.
I in details know about some internal things regarding employee conduct which is Holywood material worthy.
Banks don't have a good name, it's not just the Swiss. I mean they have a good name among the corrupt and the rich who love their help laundering money, skirting laws, and socializing their losses. Among the common person, regard for banks probably sits somewhere between politician and lawyer.
The historic reasons for the us taking a at the swiss have been the hidden, non declared tax moneys from american people and corporations. The Swiss had a cloaking system in place called banking secrecy, it was even codified into law.
America wanted whats owed to them and that was it.
Swiss bankers would fly to the us physically, in person, pick up funds and goods like diamonds and transport them to switzerland without declaring anything. All the little tricks like labelling the funds fraudulently, diamonds in a toothpaste tube, that was part of the service portfolio.
The us promised to sue and the whole decisionmakers knew they will be safe nowehere but in switzerland, a small country with sub par weather, and if the us got hold of them, they will spend a good time of their lifes behind bars. The swiss banking secrecy laws were thus burried for good. The swiss still had the cheek to blather about data protection and privacy and then agreed to hand over a portfolio of "suspicious" accounts.
How hypocritical this was was shown later on, when it became impossible in switzerland and europe for americans to open bank accounts unless employed in Switzerland and being residents.
You say banks have a bad reputation overall, but somehow the swiss banks had a better reputation, even though they are on a level with a carribean tax haven operator.
During world war II the swiss national bank took all of the gold looted by the nazis - these were astronomical sums, it's really a shameful chapter of their history which is not widely known.
In addition to turning back Jewish refugees at the border. Also the swiss government even requested the nazis to mark the passports of Jews, so that they could be better turned down at the border.
https://www.yadvashem.org/odot_pdf/microsoft%20word%20-%2060...
Also there was a big court case during the nineties, because credit suisse withheld the money of holocaust victims, while at the same time former nazi officials had no problems with their accounts - all at the same bank.
https://en.wikipedia.org/wiki/World_Jewish_Congress_lawsuit_...
https://www.ft.com/content/f80088e4-5f0d-11ea-8033-fa40a0d65...
Well, it's a question of scale: swiss banks took in hundreds of billions of swiss francs out of the loot - that must be an astronomical figure, in today's money.
But even that has apparently been squandered by the super competent swiss bankers...
No. I mean, some, sure, but “all”? Nah, Wachovia [0], HSBC [1], and, well, pick a major bank, really...
[0] https://www.theguardian.com/world/2011/apr/03/us-bank-mexico...
[1] https://www.investopedia.com/stock-analysis/2013/investing-n...
my comment here on switzerland during the second world war. these are really more than a bunch of atrocities, if you ask me.
Swiss banking privacy and their grey/black practices are sovereign decisions they have every right to make but it appears that countries are willing to turn a blind eye to it. We could wax on about morality but the real issue here is it's tolerated by the rest of the world so they have little pressure to change.
Alongside all the other banks that allowed trillions of dollars worth of illicit and laundered funds to criminals, drug cartels, etc. Unquestioned.
Seems like the crime on the banking networks pays more than the fines, since both the banks and the regulators get a profit either way helping process transactions from criminals.
[0] https://www.buzzfeednews.com/article/jasonleopold/fincen-fil...
[1] https://www.nytimes.com/2020/09/20/business/fincen-banks-sus...