Debanking (and Debunking?) | Hacker News Reader

Debanking (and Debunking?)

bitsaboutmoney.com

258 pointswmf344 comments

I'm not sure I got the gist of it right, but not willing to go a second time.

This was specifically about banks and their regulation, and I think it misses the more vague and less accurate sense that financial institutions can remove players and customers from the market basically at will, which would be the reason given by people going to crypto IMHO.

To his point it doesn't fit "debanking", but if tomorrow VISA and Mastercard decide your online business is stinky, holding a bank account won't help you in any useful way.

That's basically what happened with Porn, where even if you had a very tightly managed and stricly lawful business (let's say you produce clay stop motion porn movies), you'd still be kicked off payment platforms.

Sure there can also be interesting discussions about actual bank account closures, but I think it's a lot more of a minority, there's better recourses, and most decent countries will be willing to guarantee citizens can get some form of banking whatever their situation.

You missed the point, banks have costs, banks are companies, banks must be profitable otherwise they collapse, crypto is very expensive to bank, banks have difficulty making profits on funds sourced from crypto, a responsible business you must prioritise (queens English) profitable customers.

My understanding is that crypto is expensive to banks because crypto is expensive to any legal entity in general.

And crypto kings not being able to hold their coins in their bank account doesn't sound like "debanking" to me, because it never was banked in the first place (some banks sure did handle it, but not the ones they're crying about).

I also can't get my bank to hold my beany babies either, and nobody calls that being debanked.

It's not about storing crypto - it's about storing fiat currency for crypto companies.

Thanks, I wasn't getting it and it's a bit clearer.

Same problem for marijuana companies.

The difference is that marijuana is illegal at the federal level while crypto is (nominally) legal.

It is not about legality. It is about the costs exceed the ability to make a profit, it all has to do with liquidity and capital requirements to mitigate the risks. If you want to blame anyone, blame all the scam artists and criminals that targeted crypto. The banks cannot profitable mitigate the risks. If a bank cannot make profits they will collapse.

Yes it is, crypto is wanting to use banks for the storage of funds, but the banks cannot afford the cost of doing so, because it costs money to manage the massive risk.

That pretty much depend on country. Here in Europe, it is common to pay online by bank transfers, not by payment cards.

There's quite a lot of variance across the country of Europe.

Bank transfers are indeed common but implying that payment cards are not is a bit of a misnomer - and the (buyer) protection offered by the card networks is much higher.

I guess my point is, that even in Europe, accepting only Bank transfers is going to limit your client base fairly significantly and to a sizeable number of people will be considered a signal of how much they can trust the vendor.

Yeah that stuck out for me too. Europe consists of a huge number of different countries.

And what the GP was saying is not at all my experience in my country, which is also in Europe.

Broad statements about Europe as a whole are often going to be very inaccurate for many of the countries in Europe.

You don't deserve to be down voted for your comment, because what you wrote is true. Depending on what kind of product you're selling online, you can expect about half of Europeans to pay by card and half by bank wire, if given both options.

Removing the ability to pay by card, I'd estimate the business would lose a substantial share of clients, maybe in the range of 25%.

> Here in Europe, it is common to pay online by bank transfers, not by payment cards.

UK here. I pay my window cleaner and my tree surgeon by a bank transfer (from my bank's phone app app). If I buy a thing or service online or in a shop I pay using a credit card. It's almost unheard for medium to large companies to offer their bank details for a transfer.

> Sure there can also be interesting discussions about actual bank account closures, but I think it's a lot more of a minority, there's better recourses, and most decent countries will be willing to guarantee citizens can get some form of banking whatever their situation.

I think you're just speaking form your personal point of view as an entrepreneur. Losing access to the payment system would be the end of your career, yes. But losing the ability to hold a basic checking account would be a death sentence for most normal citizens, including you.

Think of everything that is primarily paid in checks or bank transfers. Think of all your income that you receive primarily in checks or bank transfers form.

Now think of using cash for those use cases. You'll quickly find that it's untenable and sometimes plain impossible. Cashing a personal check your grandma sent you? Forget about it. Cashing a pay check? Go to one of those cash-for-check places that keep 20% of it!

"death sentence": about 5 million households in the US do not have checking accounts. Although it's a great inconvenience, and in many cases may be an injustice, it doesn't seem incompatible with life.

Note that a "normal" checking account customer poses basically zero risk to a bank - money goes in via direct deposit, comes out via debit, ACH, and withdrawals, and the bank is never left holding the bag.

From the article: Employees of crypto companies are not "normal" bank customers. Recent history shows that there is a significant risk that they may deposit commingled funds from their employer, which (a) puts the bank at risk for huge money-laundering fines, and (b) puts it at additional risk (I think?) if the crypto company fails.

If you have a credit score of 300 and complain about not being able to get a mortgage, I won't have a lot of sympathy. If your employment history is spotty and you're not a full-time employee, I might have more sympathy but I'll still understand why it would be hard to get a loan.

It turns out that if you work for a crypto company, you're a bigger risk to the bank than someone with bad credit is to a mortgage lender, as the possible losses are far higher than the amount of money they'd ever make off of you, and the fraction of crypto companies that have gone down that route is uncomfortably high. Oh well.

BTW, Walmart charges $4 to cash checks less than $1000, and $8 for $1000-$5000. If Grandma's check is $200 or less, it will cost $6. Your local post office will sell you a money order (up to $1000) for about $3, and you can get prepaid credit cards to pay online bills at your local 7-11, again for prices in the single digits.

This bit is downright scary: "the bank cannot explain why SARs [Suspicious activity reports] triggered a debanking, because disclosing the existence of a SAR is illegal. 12 CFR 21.11(k) Yes, it is the law in the United States that a private non-court, in possession of a memo written by a non-intelligence analyst, cannot describe the nature of the non-accusation the memo makes. Nor can it confirm or deny the existence of the memo."

Absolutely, it's one of the most undemocratic, potentially violative of 1st amendment laws that is out there.

This is from the point of view that money laundering as a law is essentially thoughtcrime. The police state has done an orwellian job of normalizing not privacy, but instead telling the government the reason you are doing every transaction. Then, any attempt to not tell the government is "money laundering".

Of course, if you are the state, the powers of this tool are alluring. Imagine if the state could compel citizens to write down what they're thinking, and compel justifications for everything they do in life. Think of how many crimes we could solve! Think of how many bad folks we can catch ahead of time!

> ...is essentially thoughtcrime > The police state has done an orwellian job... > Then, any attempt to not tell the government is "money laundering".

Exactly.

But the really most shocking is the number of people that'll find excuses for such a dystopian system.

Now of course very few bite the hand that feeds them: when you literally work on software facilitating the handling of SARs, you need to do post-fact rationalization of your acts and life choices.

I hope the new administration burns that profoundly nightmarish system to the ground.

I get why this is insane but I also get why the law is there which leaves me in a wired spot. Part of me wants to say something along the lines of "make SAR's disclosable / viewable to American citizens or legitimate users" but you can't really do that because the bad guys will quickly exploit any escape hatches like this.

What do others think about this? Because I'm kinda stuck in the middle about them.

The middle ground seems to be allowing SARs (which are analogous to tips to police officers), but not requiring banks keep them secret from the customer. The bank could decide to do so, but also could decide not to, like any other speech.

What is the incentive to divulge the information if they don't have to? Customer service? "We're the one bank that will tell you why we are dropping you as a customer"?

Probably some amount of customer service. Banks are at their distrection then on whether they want to tell you or not -- just like for any other reason for dropping you as a customer.

I guess more important than empirically whether banks tell you, it's that it should be their right to tell you if they want.

When a case is brought to court, they have to outline the methods used to determine the perpetrator. Why is it okay to do that for things like murder and other crimes but not for banks?

SAR's can be discussed when criminal charges are filed.

The most famous case I know of that stems from a publicly available SAR is former Speaker of the House Denny Hastert (R-Il) after his retirement from the House, when he was a lobbyist. He was being blackmailed by someone for his previous sexual assaults from his days as a high school teacher and wrestling coach three decades earlier, before he went into politics. He went to a bank to withdraw a bunch of cash to pay his blackmailer, and the bank started to fill out the form they do whenever you withdraw over $10,000 in cash (not a SAR, just a regular form). He saw the form being filled out, and decided he didn't want a paper trail with the government showing he was being blackmailed. So instead he stood in line hundreds of times at the bank, withdrawing $5,000 each time. This was why a SAR was filed, because he was clearly doing something called "structuring" which is setting up transactions deliberately to avoid those disclosure rules. After the FBI investigated, they decided that they couldn't get him for child sexual abuse, because it had been so long ago that the statue of limitations had expired. But they could get him for structuring, to which he plead guilty and served 15 months in jail.

Besides the fact that knowing about when they are filed would tip off criminals, there is also the fact that oftentimes they are filed for perfectly innocuous reasons, and are never investigated and don't go anywhere. Not ideal to have publicly available "this guy did something suspicious" flags that have not been investigated further looming over you and haunting the rest of your life. Since SAR's are not shared with other financial institutions, they won't follow you the same way.

If there is evidence against you, you surely have the right to know of it and to contest it! That's pretty fundamental to any reasonable justice system.

You have no right to a banking relationship, so there is no justice involved.

It's not scary until everyone stops accepting cash.

It is already scary, many governments mandate that large purchases are only made through the banking system. Not to mention the private-sector pressure (how do you get paid for work?).

But then we have to pay taxes on any amount of cash money above ~650 EUR in the Netherlands. They WANT to steer us towards cash-less, and MANY shops in the Netherlands have already stopped accepting cash. It's where we're going - ultimate control. No right on banking, but also it's a necessicity soon. So.... Too bad?

I leave my cards at home and only carry cash.

Maybe that was a true when a bank was a private business and you could reasonably live without it. Today they are effectively a branch of the government and your life would be seriously impaired.

For example, where does your employer setup direct deposit? How do you apply for a mortgage and demonstrate assets?

If society relies on technology then you need it to participate. Yes you can still breathe without access to transportation, but you can’t work in the economy. In 1940 car or bus access was a luxury because normal people got along fine without one. That’s why it’s misleading to say increasing car access is an better standard of living. It’s actually an increase in the cost to participate in life.

So yes banking must be a right. Or alternatively we could strengthen cash rights (reduce technology) with legal protections to qualify for loans, etc. But that won’t happen.

In the EU, there is a right for a bank account. But this right does not cover anti-money laundering excuses to debank a person.

So it’s effectively a jail sentence, and that’s fine for people who break social rules, but we have built up a whole justice system for applying them. When government pretends taking away your bank is anything less serious, they just want to sidestep due process.

It's not government taking it away. It's a bank taking it away because they do not want to spend time and money to resolve the situation. The legal risk is high where as there is very little upside for retaining the customer relationship.

So what would happen if were in that situation and then went to another bank?

Banks can only share sars in very limited circumstances. If you went to another bank they, in almost every case, would not know that your previous bank filed a sar.

The bank will however ask why you are switching to them and telling “my account was closed without explanation“ will make them think twice

We don’t need to invent a mechanism for banks to share bad customer data between each other. There is a whole ecosystem like credit bureaus for bank accounts.

But sars being secret has nothing to do with that.

FINCEN (and others who have search access to it, which rounds to most Federal Government criminal investigators) can see all SARs filed. Banks (and other financial institutions obligated to file a SAR- like casinos!) don't get to see what any other institution has filed. The point of a SAR is to provide a data point for an investigator, not to create a black-list of unbankable people.

There is a right for a personal bank account only.

Which is already a big improvement over the situation in America.

Being cut from the savings/investment/loan system would certainly suck and be unfair if you did nothing wrong, but much less than losing your basic bank account. That's where you receive/cash your pay, tax refunds, any government benefits, write checks (for things that are still paid that way by default), make transfers, etc.

That's true, and it's certainly better than nothing, but engaging in some legal business activity is also one of the basic personal freedoms in the Western value system, one that is trampled on very badly by the recent rise of draconian banking regulations. For businesses, the banking situation in the EU is actually worse than the US right now. It depends on the country, but in some places small businesses basically have to go begging around, hoping that some bank will take on the "compliance risk" of opening an account for them.

I disagree. Bank accounts aren’t the solution; regulating the end use cases (ie businesses that don’t accept cash) is a much better option for society.

If anything, the government out here discourages using cash and not the other way around

There are thousands of banks hungry for your business. Just because one doesn't want to do business with you doesn't mean another one won't.

That is not true. All the banks must satisfy the same regulator. None of them are going to take a risk that invites audits from the big cheese to get your 20k in savings. The legal term to avoid here is “unilateral action” - don’t do what the other banks aren’t doing.

The list of problematic people is even shared between them by the regulator.

Due to the savings and loan crisis there is no longer a plurality of banking businesses each with their own independent thinking. There are 10 marketing corporations for the same government service. Same with mortgages.

Not just seriously impaired, but outright impossible sometimes. For example, It is illegal to pay in cash above a certain amount, where I'm from. That means having a bank account is not an option, it is practically a requirement. If you don't have a bank account you simply can't buy a house, or a car.

Which is the root problem, and the solution is a constitutional amendment guaranteeing an inalienable right to an electronic money account one can send and receive money from.

“Banks” don’t really have a point in a cashless society (the government can operate a database just as well), but it seems the government wants to the ability to persecute selected people or populations with plausible deniability. So they use the ability to get banned by big business as a proxy.

Who would provide credit and do maturity transformation? Maybe you end up with duration matched funds everywhere but I think that's unlikely for regional banks.

Why is credit and maturity transformation needed for electronic payments?

If people want to borrow money to pay for something (credit cards and the like), that can be its own thing that the government is not involved in.

It can be incredibly stressful even right now. I had my bank freeze my accounts because they believe I deposited a fraudulent check (I hadn't). They were incredibly unhelpful during the entire process necessitating hours on hold, going to the branch multiple times and eventually they threatened to close all my accounts. Took about a week to get sorted while I had no access to my funds, including direct withdrawal bills like my mortgage payment.

And you are correct... I had no rights. They had all the power, and they knew it and acted accordingly.

Countries in EU have a hard limit on cash transactions. Buying a car for over a few grand and it has go through bank. Renting a flat, even if you pay monthly, the tax man considers the whole duration as one big business deal, so the rent has to go through a bank

But the SAR itself, from how it sounds in the OP, is not the trigger that makes a person/business unbankable across the entire banking system - only at that single bank.

The OP article makes a reasonable point that administration officials can and do exert pressure on banks to withhold services to certain industries like debt collectors. And there indeed is a slippery slope there, and one that VCs with significant exposure to crypto are motivated to highlight.

But “withholding evidence,” and the SAR secrecy specifically, doesn’t seem to be a mechanism by which that happens. I’m far more concerned with what might cause an individual to lose access to all banks than what might cause them to lose access to one.

We are headed towards very few monolithic banks in the near future. I imagine that if one debanks a client, they will all do so for the same reasons.

But debanking is not a criminal charge. The US has thousands of banks, surely one of them would take your business.

You should see the rules about discussing SARs you are asked to respond to, as an employee of a bank, with your colleagues and managers...

You’ve stipulated that the debanking was ok but that not disclosing why was problematic?

How about this:

1. Corporations are highly regulated legal constructs. Being given an extraordinary right (immunity for shareholders) they should be expected to return significant value to society. I propose that value should be “lack of freedom of association” - eg I don’t think corporations should be allowed to stop doing business with, or refuse to do business with, anyone citizen, except after conviction in a court of law for behavior directly related to that business.

2. Government should not be able to use their secret monitoring to prevent anyone from doing anything. No lists, secret orders, etc. If government wants someone debanked, take it to court.

Finally, if corporations can’t debank people, how do they handle unusual cost/risk? With pricing, of course. If porn and crypto transactions pose extraordinary financial risk, then allow pricing based on actual financial risk.

>Finally, if corporations can’t debank people, how do they handle unusual cost/risk? With pricing, of course. If porn and crypto transactions pose extraordinary financial risk, then allow pricing based on actual financial risk.

And you're absolutely certain that powerful and vocal crypto people won't claim that this special pricing is discrimination as they're doing now with debunking ?

Look at the mortgage and credit card markets.

Most lenders don't discriminate via pricing - they accept or deny individual applications. The market discriminates via pricing, as higher-cost providers are willing to loan to customers who pose more significant credit risks.

Mortgage market works as you describe.

Credit card market works very differently - if Visa and Mastercard debank you, then you are effectively excluded from the market.

> I don’t think corporations should be allowed to stop doing business with, or refuse to do business with, anyone citizen, except after conviction in a court of law for behavior directly related to that business.

I would quit contracting on the spot if that became the law.

Some clients deserve to be fired or avoided.

Don't incorporate. Make an LLC.

LLC is a type of corporation. Google is an LLC for example.

An LLC is absolutely not a form of corporation. Corporations and LLCs are both business entities, but are distinct from one another.

Can't you elect to have an LLC treated as a corporation for tax purposes, or am I mistaken?

An LLC May be treated by election as a disregarded entity (p&l flows directly to your own person just like a sole proprietor), sub c (if you’re anticipating going public), sub s (if you’re not), sub k (good for capital intensive stuff where you can get loans that are no recourse to the partners) or other sections of the code (think 501(c)).

LLCs are extraordinarily flexible from a taxation point of view, but without shareholders or a board of directors and lacking articles of incorporation, they are distinct from corporations.

The law seems to be punishing people based on secret judgements over sealed "non-accusations".

Sorry, but no, I can't see why a country would want a law like this.

Honestly, my country had a dictator impose a Constitution that made sure every person had access to banks over 200 years ago (we haven't had a democracy at that point, but nobody even discussed it since, because nobody disagrees). I also can't understand how come the US treats that system so frivolously.

This is all tied to the war on drugs and laundering of drug money (post-9/11 it become about terrorism as well, but again, more on drug money being funneled into terrorist groups)

There are enough people in the US that think that the mere existence of drug users is an indictment of society, so any action taken to limit the ability of people who sell drugs is justified. You also see this with asset forfeiture laws.

So the reason these laws exist is the people against drugs, unable to see that the war on drugs has been lost for over 20 years at this point, want to impose more and more draconian restrictions around them which just fuels the power of cartels and criminal gangs selling drugs.

If the war on drugs worked then why can you get them in every high school and prison in the US?

You fight money laundering by letting people use the banks, have the banks record everything, and using the records on court to get the money back.

You may have something about limiting international transfers, but forcing people out of the banks is contrary to the goals of a criminal investigation.

> What do others think about this?

Stop with the Al Capone, totally dumb, angle: instead of arresting him for his actual crime, they arrested him because he didn't pay his taxes. Something dumb like that. And everybody applauds as if it was so brilliant. It's not.

What I think is: arrest people for the actual crime they commit... and leave honest people the fuck alone.

I have a friend that is constantly being debanked and his wires getting lost because he has the same name as politically exposed Russian person.

Banks do not negotiate. They just kick him off and sometimes even lose his money.

There is nothing he can do, even though everyone who would look the issue would figure out it's just a shitty automatic system flagging it because of an unrelated person 's name. It would cost too much time and money for banks to fix this mistake, so giving a boot is cheaper.

I’m surprised there is no redress number like for plane flights.

Sounds like a big inconvenience, did he try to change his legal name?

Edit: I have no idea why this legitimate question is being down voted. I'm not suggesting that he should change his name or even that such a solution is an acceptable state of affairs. And the replies received re:past names are furthering discussion.

Apparently AML/KYC programs do consider past names so that people can't simply change their name to avoid sanctions. But one would think if they were going into that much detail they would be able to tell that you aren't the same person as the sanctioned entity.

KYC is a joke.

Source: I worked on a KYC system.

How does that not violate the due process clause? It's pretty clear they're acting "under color" of the state.

Due process is related to legal proceedings - this is a commercial relationship.

"No person shall ... be deprived of life, liberty, or property, without due process of law"

A SAR does not deprive you of life, liberty or property.

It de facto describes you of property if you have to carry all your wealth as cash, which is then (at least stochastically) subject to civil forfeiture and/or everyday crime.

Of course it is scary. This is totalitarianism plain and simple. Secret laws. Secret rules. All these do exist (not necessarily only for SARs, where the law is not necessarily secret) when they definitely should not.

The excuse "(but) This is very much the law." isn't much of an excuse.

Last I checked the numbers estimated that, worldwide, KYC/AML costs on business where more than $180 bn while only $12 bn of funds were frozen. And frozen do not mean confiscated: a part of these are unfrozen and rightfully returned to their owners.

So that whole totalitarian, dystopian, system is a gigantic net loss.

And for what? To please bureaucrats who can do nothing else but push papers, create laws and rules and put ever more burden on everybody else.

But the worse of it all is that it gives a perfectly valid excuse for banks to debank anyone they don't like: seen that they don't need to justify anything they can just say "we're sorry we cannot say anything".

Wait, no, that's not the worst of it all. In several countries in the EU like France and Belgium the local IRSes do basically run ads explaining how you can denounce your neighbor.

I've heard a number floating in floating (devs in charge of these systems do talk): 25% of all the self-employed people have had at least one SAR.

On my LinkedIn I see people proudly posting 3rd-reich stuff like "The previous chief compliance officer said there were weeks where they had zero SAR". Basically implying that the previous dude was not filling enough reports and that he was so happy to get the job so that he could run those numbers up.

Burn that entire system. Just burn it to the ground.

There is no moral justification to freezing the bank accounts of truckers in Canada.

I don't care that "this is the law". Laws should be about justice.

This has absolutely nothing to do with being just.

What's more: if you exhibit knowledge of the SAR requirement to a banker, they're supposed to file a SAR on you just for this, even if nothing else about your transaction trips the SAR threshold.

I don’t think anything was truly debunked here. Debanking is indeed a side-effect of AML laws and regulators, but as the article highlights, these laws are largely ineffective at stopping actual money launderers. Meanwhile, the vast majority of debanked customers are innocent. AML laws should be repealed entirely. Law enforcement should do their job and investigate crimes, rather than outsourcing this responsibility to financial institutions and effectively forcing them to be the "judge, jury, and executioner."

>Law enforcement should do their job and investigate crimes, rather than outsourcing this responsibility to financial institutions and effectively forcing them to be the "judge, jury, and executioner."

Think there have being big pressure from banks and financial institutions to centralize power. AML laws seems just a way for the regulators to do it.

> pressure .. to centralize power

Social law and order rests upon consent of the governed.

Social contracts are abrogated when legal power is hijacked.

Indirection of motive via narrative, math or physics is not consent.

Banks and financial institutions see AML as a necessary cost center to continue operating as a business. They would gladly fire 90% of their compliance department if they didn't have to write hourly memos to FinCEN and join conference calls with the Fed. Power and money correlate, but money is ultimately what does the talking.

I didn't read the article but I do agree with you completely. I've noticed this repeatedly where if I've to move a small sum of money in/out of my country I need to fill 20 letters and 50 if it's a business. But if I have to move say $100MM? Banks will roll out a red carpet, no questions asked.

If it's left to the banks they are all too happy to serve anyone with money, we have quite a few examples[1] of that. Regulators want banks make examples of anyone which banks do by harassing small businesses which won't have monetary impact to banks' bottomline. My gut feeling is even regulators don't care much, they just want to pretend to the voters that they are trying to do something, anything.

[1] https://www.icij.org/investigations/fincen-files/hsbc-moved-...

[1] https://en.wikipedia.org/wiki/World_Jewish_Congress_lawsuit_...

> if I have to move say $100MM? Banks will roll out a red carpet, no questions asked

What are you basing this on? Every nine-figure wire I've seen issued was far more involved to get authorised than anything sub-million. (For obvious fucking reasons.)

From personal experience trying to open a crypto related bank account, one of the most important requirements was to deposit a substantial amount of money in the account.

    > I've noticed this repeatedly where if I've to move a small sum of money in/out of my country I need to fill 20 letters and 50 if it's a business.

More HN bullshit! Please explain the first 10-25 letters, then we will judge!

> these laws are largely ineffective at stopping actual money launderers

Money laundering could be the "think about the children" relying cry of the financial world. If international entities want better control over financial exchanges and a window into people's money, playing the money laundering card is a guarantee to get it passed without having to justify it that much.

The degree to which it has affected regular/everyday banking is pretty astounding, and is probably exactly what the regulators wanted from the start.

> Money laundering could be the "think about the children"

My hyper-liberatrianism is showing, but I've always been slightly irritated with money "laundering" being a crime in the first place. It's pretty far removed from the actual harm: money laundering is illegal because drugs are illegal and drugs are illegal because when people do drugs they do things that actually cause harm (to others and themselves). Like... I get the cause-and-effect chain there, but there's no evidence that these laws help anyway and they definitely hurt.

The reasoning is very simple: You want criminals (no matter what crime) not to be able to enjoy the fruits of their "labour". That strikes me as eminently reasonable.

The goal is no doubt reasonable. But AML regulations largely fail to achieve that goal and come at a high cost.

> these laws are largely ineffective at stopping actual money launderers

This is a non-goal. Taking it at face value is extremely naïve, and no one in the fintech world thinks this way.

AML laws exist solely for the purpose of enforcing the American grip on the world's politics via financial means.

What about Europe/Japan/Australia/NZ? They don't care about AML? This is really a stretch.

Every financial system in the world that remotely matters is a member of FinCEN and adheres to the same rules.

Except the US of course.

> these laws are largely ineffective at stopping actual money launderers.

Let's think about what the purpose of money laundering laws is. Nobody really cares about people concealing the source of their income in the general case. There's no purpose for money laundering laws just for that purpose alone.

The reason that money laundering laws exist is that one way to discover and prosecute crimes that people actually care about (human trafficking, drug dealing, various kinds of fraud, terrorism) is to "follow the money", and if criminals can successfully launder their money, it makes it easier to get away with their criminal activity.

The second reason that it exists is that money laundering _itself_ is often a much easier crime to prosecute than the underlying offense is. What KYC and AML laws do, and are extremely successful at is _not_ preventing money laundering. That would actually be undesirable for prosecutors! What KYC and AML laws do is allow people to money launder while creating a wonderful paper trail for prosecutors to follow and build a case on when they take an interest in someone from crimes they actually do care about. Chances are if you are money laundering, you have at some point lied on a banking form, which is a prosecutable crime, and a lot easier to prosecute than drug dealing and other crimes are, sometimes.

Yep. AML and KYC laws are unconstitutional.

>This is not the world you live in. [A world where people get debanked for political reasons.]

I know quite a few people, and entities affected by it in Europe. Some of them even personally, individual accounts, not just their companies and organizations. I would elaborate, except I suspect that will be counter productive. Please read site guidelines. Let's agree to disagree.

The idea that the debanking of individuals on political basis has only happened in Canada is wrong. Furthermore, this also only happens to, let's say one side of the political dialogue.

That blog has a lot of choice quotes along the same lines. Another favorite:

https://www.bitsaboutmoney.com/archive/money-laundering-and-...

> This [KYC/AML] will affect the typical user of the financial system precisely zero times during their lives.

I've been affected by this nonsense, and so have friends and family. Quite inconvenient when you're trying to buy a house and trying to keep things moving on time. I may not be "typical" but my mother certainly is. I can tell that patio11 is highly invested in the finance industry, not wanting to burn bridges, and I think he is incentivized to try to make people believe that KYC is beneficial and highly effective, but it's just not the case. It reminds me of the people inside Google working on their auto-banning systems who won't admit that it doesn't always work perfectly.

Per the article:

"Debanking will also not infrequently swiftly cascade to accounts in the same household, regardless of title (non-specialists can round this to “name on the account”; industry can’t). Banks institutionally consider those accounts in the same household to be highly likely to be under common control, regardless of what paperwork, account holders, or politically influential subcultures believe."

My parents live 1000 miles away and we haven't been in the same household for 20 years. Either our troubles were independent and uncorrelated events, or banks are crawling through people's family trees like they're 23andMe. Maybe my cousin who I haven't seen since we were kids did something shady and tainted our whole family tree in the eyes of the banks, who knows anymore.

> or banks are crawling through people's family trees

I work in securities. Our KYC screens aren’t as sophisticated as the banks’. We absolutely see family relations. (They’re typically gleaned from public records and social media. It's unfortunately not uncommon for kids to open accounts in parents' names and vice versa, even after a long time.)

this 100%

Umm, what does social media reveal?

> what does social media reveal?

“Family relations.”

Of course they are crawling through people's family trees. They have no idea who talks to who, but see formal relationships.

Same here. I think one must be occupying very nice couch in a nice house in a 1-tier country to say that AML/KYC doesn't affect 'typical' users

If people have actually read the article, they will have spotted the bits where patio11 himself has been adversely affected by this at least twice!

> I think he is incentivized to try to make people believe that KYC is beneficial and highly effective

I don't think the article is arguing that at all. It's describing the "system", not endorsing it (and explicitly complaining about it in several places).

If nothing else having to do more paperwork is very common.

British banks tend to not open accounts for people abroad because of the cost of KYC, and they even close accounts if you move abroad. Difficult if you have assets or a pension in the UK but live abroad. As you say, it makes it very hard for people who move around.

There are definitely political biases in closing bank accounts in the UK, and many cases of accounts being closed because banks did not like someone's politics. Not even fringe political views, associations with the previous government's part has caused problems in some cases, and definitely association with smaller but significant parties.

People also avoid taking on jobs that might make them "politically exposed persons" because the rules are too broad, and that (although it affects only a few people) does a great deal of damage because it reduces the number of people from outside in organisations, which worsens governance and corruption.

> If nothing else having to do more paperwork is very common. British banks tend to not open accounts for people abroad because of the cost of KYC, and they even close accounts if you move abroad.

How are their so many non-dom retirees if that's the case? They have to have some sort of income.

As patio11 made abundantly clear in his article, banks are not homogeneous in their preferred customers, their ability to serve specific needs or their tolerance for risk. It may well be true that some banks don't like non-resident customers, but many banks offer products specifically tailored for these customers.

https://www.expat.hsbc.com/international-banking/products/ba...

https://www.santanderinternational.co.uk/international/produ...

Not any non-resident customers. You need to deposit £75k or more with them or have an income or over £100k.

i.e. you need to be far better than a British resident customer to cover the extra KYC costs (its less automated if you are abroad).

People have had accounts closed: https://www.telegraph.co.uk/money/banking/barclays-to-debank...

The term "non-dom" usually means foreigners in the UK making use of the tax dodge. In that case, British banks are happy to open accounts for them, especially as they are rich.

Some accounts will be opened for other foreigners in the UK - sometimes the "basic" accounts .

Lots of British people who have retired abroad on more modest incomes have had their accounts closed: https://www.telegraph.co.uk/money/banking/barclays-to-debank...

Also happening in Japan. Quite a number of big-name vendors like DMM, DLsite, and others are getting heavy pressure from Visa and Mastercard to censor certain merchandise for no justifiable reason (as in no legal basis) and in some cases have been blacklisted outright.

The Japanese response, and this is after placating the first round of censor demands, has been to reverse-blacklist Visa and Mastercard because Japan realized that giving an inch only means they will then demand a mile, then a league, and so on.

I feel like you are omitting the content that visa and mastercard find particularly objectionable that is commonplace in japan but not elsewhere.

This reads like an American, once again, deciding to enforce American cultural norms on other nations

I'm not defending or condemning any of the artwork in question, just pointing out that American corporations have been forcing through their own cultural norms for decades, even in countries where that may not always be welcome

In turn, this makes American corporations the arbiters of what is de facto legal, despite not being the ones elected to write the laws

Your feelings as a non-Japanese have absolutely no bearing on what flies in Japan.

Whether the content concerned is tentacle hentai, or goth lolis, or genderbent King Arthur and Leonardo Da Vinci, or whatever else, that stuff is legal under Japanese law and Visa/MC are violating Japanese rights ordering Japanese creators and merchants to censor them. Visa/MC are quite literally engaging in foreign interference and subversion of democracy and Japan's very culture.

That's a, uh, rather overheated statement and ironically, a very Western point of view. Japan is one of the richest nations in the world, they can (and do) run their own payments systems.

Also, it's risible to call that stuff Japan's "very culture". It's not. Otaku culture is fringe there, too. Japan is not anime.

Also, there are plenty of legal things that are (rightly) publicly shamed and ostracized.

For example, I don't want white supremacists to go to jail for what they say, but I want their lives to be as annoying and lonely as possible.

> For example, I don't want white supremacists to go to jail for what they say, but I want their lives to be as annoying and lonely as possible.

Do you want e.g. electricity companies to refuse to do business with them? Do you think that's a private business decision that doesn't need any particular right of appeal or evidentiary standard?

(The author deliberately presents the notion that a bank account is something different from a utility as though this were an objective, immutable fact of nature, rather than the product of choices that the financial industry makes because it finds it very convenient to think of itself that way)

The idea of making people with 19th century views actually live in 19th century conditions is extremely amusing. We could try it, sure.

On a more serious note, I don't think it's accurate or fair to say it's merely because of industry choices.

The US stretched the idea of the common carrier (ie everyone has equal access to send freight on the railroads) to things like oil pipelines and telecommunications lines. Utilities offer services under license from the government and have special rights and subsidies.

I don't think a bank account is that similar. It's essentially floating you a loan - you can cash a fraudulent check and skip out with the money, for example, and the bank eats the cost.

>Japan is one of the richest nations in the world, they can (and do) run their own payments systems.

Indeed. JCB and certain western credit cards contracted with them for access into Japan (namely AMEX and Discover) have no problems (and why should they) with what Visa/MC want to censor.

>Also, it's risible to call that stuff Japan's "very culture". It's not. Otaku culture is fringe there, too. Japan is not anime.

Tentacle hentai goes back at least as far as Katsushika Hokusai[1], so you are mistaken. Otaku culture is very much a part of Japanese culture and inseparable.

>Also, there are plenty of legal things that are (rightly) publicly shamed and ostracized.

When legal tender cannot be used for legal transactions, there is a problem.

[1]: https://en.wikipedia.org/wiki/The_Dream_of_the_Fisherman%27s...

> When legal tender cannot be used for legal transactions, there is a problem

Why? Something being legal for you doesn't make it compulsory for others. With limited exceptions, nobody is required to do business with you.

Also, I must stress again that Japan is a real country with real people. It is not anime, and it's even more risible to point to famous historical porn and say it's analogous to modern porn.

That's like gay slurs are deeply central to American culture because the Roman poet Catallus lost his cool once at some critics.[0]

[0] https://en.wikipedia.org/wiki/Catullus_16

>Why? Something being legal for you doesn't make it compulsory for others.

Money is legal tender for all debts public and private, money has value precisely because everyone can and should use and accept it.

If banks or payment processors inhibit or prohibit my ability to conduct business by refusing to transact my money with no justifiable basis, then that is violating my and the other party's rights to free association as well as destroying the very essence of money.

If you truly do not see the very serious problem here, I'm not sure what it will take to enlighten you.

>Also, I must stress again that Japan is a real country with real people.

You are literally talking to a Japanese man, I probably know about Japan more intimately than you will ever do.

>It is not anime

Otaku culture is an inseparable part of Japanese culture and attacking it like Visa/MC are doing is attacking Japanese culture, what part of that do you not understand?

>it's even more risible to point to famous historical porn and say it's analogous to modern porn.

Kinoe no Komatsu[1] is quite literally a doujinshi-equivalent[2] from its time. Classic Japanese eroges are sometimes featured[3] as a symbol of Japanese culture of its time.

>That's like gay slurs are deeply central to American culture because the Roman poet Catallus lost his cool once at some critics.

Whitewashing histories and cultures is nothing short of reprehensible. Whatever happened to diversity and heritage?

[1]: https://en.wikipedia.org/wiki/Kinoe_no_Komatsu

[2]: https://en.wikipedia.org/wiki/Shunga

[3]: https://x.com/Ian_Fisch/status/1820897232746594354 - The lower screenshot (it is SFW) is from Words Worth[4]. The dialogue translates to English like so: [Astral]: Hey Katra... Are you always peeping at Sharon when she's naked?

[4]: https://en.wikipedia.org/wiki/Words_Worth (Link is SFW.)

  >> When legal tender cannot be used for legal transactions, there is a problem
  > Why? Something being legal for you doesn't make it compulsory for others.

Because this undermines soverignity. Nation monopolizes violence. There can't be a private police with its own laws, that's a mafia. Once an entity has powers comparable to that of the nation it resides in, within few orders of magnitudes, that power must to be destroyed and transferred to the government of the nation.

Credit card brands has it.

In this case, the US government, as well as the governments of other nations, will tacitly impose its monopoly on violence against banks, processors, and merchants to ban content it doesn't like. So it was with Wikileaks, and so it goes with ero-manga. The only mafia are the ones prodding the credit card companies into a financial dilemma between legal liability and cutting off a market.

VISA isn't doing it in compliance right now. It's doing its things using "global standards" as an excuse. That behavior is not democratic, and such functions need to be regulated out.

I remember seeing people debating who's the kingpin and where the orders are coming from, as it'll change which of anti-monopoly laws, financial transaction laws, trademark laws, outsourcing laws, etc. would apply or has to be amended.

Whoever it is, it's kind of obvious that the mafia isn't a US or European official government entity or employee. Last I've heard, people doing this research-activism seem to have largely excluded direct involvement of VISA Inc. in US as well as its Singapore subsidiary, and was poking around few specific VPs in VJA or something.

What is a white supremacist?

That's overblown.

In any case, you can't force a private entity to do business with you.

Sure you can. Power companies etc.

Omitting that tends to result in more productive discussions. Most people are much more principled when discussing in the abstract than when it comes to something that they have been two minutes' hating for their whole lives.

> I feel like you are omitting the content that visa and mastercard find particularly objectionable that is commonplace in japan but not elsewhere.

At this point, I would argue that the reasoning isn't even cohesive or unified. Some sites lose all processors (e.g., Amex bails too) whereas others lose only Visa and MasterCard, and the distinctions aren't made clear to end users.

Sure, DMM and DLSite end up offering a large variety of pornography, but it's not just that -- Niconico Douga's premium subscription service was also blacklisted, despite the fact that it's basically just YouTube Premium for Japanese livestreamers (i.e., not pornography).

A lot of people argue that the reason is specific genres of pornography, but the practical reality is that it can be basically any type of content of reason. Stripe considers pornography an industry that's too-hot-to-touch, for example, despite the fact that some processors do work with pornography, and end up charging much higher processor fees for the hassle. A lot of user-generated content, which is wildly uncontrolled, combined with a relatively high risk of refunds, can lead to this type of action without necessarily transgressing a general rule like "this specific variety of pornography is bad".

>DMM and DLSite end up offering a large variety of pornography

What's really twisted is these same payment processors seemingly have no qualms about Steam's large variety of pornography[1], some of which are Japanese eroges[2] (with less/no censoring![3]) that DMM, et al. are demanded to delist.

Banks and payment processors really need to stick to just doing their business, which is securely storing money and facilitating the transfer of money between two parties regarding legal business transactions.

[1]: https://store.steampowered.com/adultonly/ (Warning: NSFW!)

[2]: https://store.steampowered.com/app/1073440/__Koikatsu_Party/ (Warning: NSFW!)

[3]: https://store.steampowered.com/app/955560/Evenicle/ (Warning: NSFW!)

It's clearly Japanese amateur content publishing economy that they are after. They're leaving professional comic/porn sections of same websites as-is, while cutting off multiple amateur bookstore chains[1] altogether. This is not even double standards.

Their intent is undoubtedly to throw wrenches into Japanese manga ecosystem that incubate and train authors rather effectively through out-of-economy feedback mechanisms in social media and self publishing, massively supercharged in the past decade through Twitter; it had proved immune to foreign replication attempts, financial incentives, leverages, even generative AI tools[2]. Those tools don't do much, other than raising barrier to entry by raising expectations and bolstering Japanese dominance.

Some crazy person somewhere must be on a cultural crusade trying to "solve" that problem, not understanding that trying to deny financial incentives just widens the cost-performance gap between Japan and the rest of the West by suppressing market valuation of Japanese manga and anime, allowing it to be more heavily subsidized by authors' dayjobs. They never made money in manga. Introducing money to disinterested then refusing it achieves nothing. Otherwise it makes no sense.

1: as in small videogame-shop-like franchises that specialize in casual self-published books - yes, that's a thing in Japan.

2: AI is completely useless in manga, I mean, there's no way copyright flamewar and watermarking movement existed if it worked. Pornographic voice drama authors[3] are loving it for generating cover arts for free. But even they don't look interested in AI content generation, they just love free covers.

3: yes, it's a thing in Japanese language, seem to be steadily growing even among English speakers. They're picking up Japanese fast. The hardest language on Earth, not anymore.

Classic HN bullshit:

    > censor certain merchandise

Zero evidence provided. Zero examples provided.

https://x.com/fantia_jp/status/1792811477256343764

The following links are all NSFW because they are from Sankaku Complex, you have been warned:

https://news.sankakucomplex.com/2024/11/10/japanese-bookstor...

https://news.sankakucomplex.com/2024/08/19/japanese-politici...

https://news.sankakucomplex.com/2024/08/03/tora-no-ana-alleg...

https://news.sankakucomplex.com/2024/08/11/tora-no-ana-cuts-...

https://news.sankakucomplex.com/2024/05/11/japanese-video-si...

https://news.sankakucomplex.com/2023/11/14/japanese-netizens...

You may now crawl back to your throwaway den from whence you came.

You may now crawl back to your throwaway den from whence you came.

Their account is actually older than yours.

Be that as it may, he chose to call himself "throwaway<#>" instead of something more distinctive.

Why would that matter?

It's a throwaway account intended to be detached and hopefully untracable to whoever the owner/main account is.

What I'm wondering is what point you're trying to make here; account age has no bearing on whether it's a throwaway or not, though the longer a throwaway is used the more it accumulates an identity of its own.

It's four years old, how can you say that it's disposable when your name is younger? Doesn't that make your account a throw away too?

Yeah, you really need to elaborate yourself.

You can easily find me on Mysterious Twitter X, Reddit, and many other places looking up my username (might not necessarily be an exact match).

Account age has nothing to do with this, many people have alternative accounts and this guy literally named his account "throwaway2037".

I really am not sure what you're trying to argue here.

Something that lasts for 4 years isn't disposable.

The middle class and below live paycheck to paycheck so that's an issue they don't have. I suppose the author refers to this (ironically or not)

But debanking happens, or has happened, to _almost_ everybody who has some assets and cash, probably from the higher middle class until the ~1% .. as for the super wealthy, this class enjoys offshore private banking, has assets split into dozens of accounts and is mostly unbothered by AML.

You need to provide data behind your claim that debanking is so widespread as to use the word almost everybody.

Never ever heard any person I know being denied banking services, except for some unlucky (were they?) entrepreneur with very shady is-he-laundering-money situations.

I feel exactly the same. I tire of people on HN talking about their accounts being closed but providing 10% of the relevant information to their case. I have said it before and I will say it again: If your accounts are wrongfully closed, immediately: (1) Visit your your bank in protest and meet with the branch manager and (2) send physical letter of complaint to (a) local branch (b) head office (c) national bank regulator and make it clear you have CC'd all. I bet 99% of legit cases will be reinstated within 30 days.

Small VCs have this de-banking problem. Their patterns for cash and not conducive to want banks want and large banks will regularly close them down.

> debanking happens, or has happened, to _almost_ everybody who has some assets and cash

I don't think this is true. I know many people with assets and as far as I know, none of them has been debanked. Surely I would know someone who has been debanked if almost everybody with assets has been.

> The middle class and below live paycheck to paycheck so that's an issue they don't have.

You mean they answer surveys saying they do, according to surveys published in press releases from payday lenders.

They also answer surveys from the Fed saying they have median $8k in bank accounts and that they can pay 3 months of expenses in cash.

These two things are contradictory.

More likely different people are represented in the surveys and general trends are erroneously extrapolated from non-representative populations

Much more likely is that self-reporting is notoriously unreliable and "paycheck to paycheck" is a state of mind.

We're better at doing surveys than that.

If you look in the details of the "paycheck to paycheck" surveys, people reporting they make 200k+ a year also say yes to that, so I think it's just unclear what they think it means.

> But debanking happens, or has happened, to _almost_ everybody who has some assets and cash, probably from the higher middle class until the ~1%

Can you back up this claim? The wealthier you are the less chance you're going to be debanked. Marc Andressen and all the crypto bros will never have an issue with debanking. Banks are rolling out the red carpet for him and everyone else with his net worth.

What they (1%) want is to own the bank and own (and create) the currency without ever having to be an actual bank. They invest in crypto to make a massive profit, and it's foolish to play along with these things as some sort of benefit to society. Together these guys could end world hunger and still have more money than they would ever need, but no, they've decided VBucks are a pressing issue.

We live in a society. There were a bunch of pedos in the Netherlands who tried to start a political party to change age of consent. It did not go well for them.

I too know of such people in Europe. Including people in perfectly legal industries, and refugees from war torm countries.

Banks are a necessary evil, but evil all the same.

Very true, happened twice to an acquaintance of mine.

It's interesting that the idea that 'banks should refuse to do business with potential terrorists' is something that most people I know support, or don't care about.

Until it happens to them. Then suddenly they get quite passionate about the state that the world is currently in.

I don't have data on how many people are being debanked, but anecdotally it definitely seems to be some kind of 'line go up' number, and I wonder if cumulatively it will get to some kind of critical mass where we have a large enough percentage of people make enough noise that the laws are reigned in, or if they'll be 'that group of weirdos' forever.

(I almost got debanked once -- I had my account re-instated after many weeks of extreme stress https://news.ycombinator.com/item?id=37925678)

A few years ago in Russia, when protesting was still barely legal and possible, prominent opposition leaders were 'fined' for ~1M USD each for damages to businesses what happened due to some protest activity. Banks simply deduced every account balance by -50000000,00 RUB and have a nice day.

Whoever thinks that 'but that was bad, evil Putin's government and our nice, good government would never do such a thing' should think again. The government should not have such power at all, neither directly, nor via bank proxy that would 'independently' refuse you service.

When you happily cheer that in EU you can't pay with 500 EUR bill (because tax evasion, crime, etc!!!), you are basically helping the government create means to financially strangle anyone the government doesn't like. One day it might strangle you.

How could they not have the power? All power the banks have is directly derived from their ability to operate as they do within a currency regime that is directly controlled by the state. Best case is it's your state; plenty operate in a system controlled by a foreign state.

> How could they not have the power?

People in countries that are still free should take it away from them and legally protect direct money transfer between people. Cash, anonymous cryptocurrencies,etc, so that no middleman can ever take someone's money.

The problem I have with this debate is that it's targetting the wrong thing. Of course tyrannical states are a problem, but they are a problem because they can ride roughshod over your rights. Having a legal right to money transfers or whatever is only worth the value of the legal right. If the legal right is ignored or revoked, you're in no better a situation than never having the right in the first place.

The problem is a political one - if you want your state to be not shit, then you need to make your state not shit, not campaign for some magic work around to the state.

Everyone is a "potential terrorist". Actual criminals are people who are tried and convicted of crimes. Everyone else is, by definition, innocent.

all of the laws meant for terrorists are being applied to normal citizens at an astounding rate, things like border crossings and these unconstitutional laws like the patriot act have really undermined people's rights

And terrorist is a word created to deny enemy combatant a PoW status because we said so.

> It's interesting that the idea that 'banks should refuse to do business with potential terrorists' is something that most people I know support, or don't care about.

I tell them about the "terrorists" truckers who went on strike in Canada and who got debanked for going on strike.

> (I almost got debanked once -- I had my account re-instated after many weeks of extreme stress ...

You tell me. I had to fill nearly a PDF with nearly 50 pages justifying where and how I bought groceries and how I put tank in my car because they somehow thought I may not be living in the country I said I was living in.

Same things: weeks of insane stress but, eventually, they said things were OK.

You're not a weirdo. People don't realize we live in a Brave New World, complete with secret ESG score (assigned by banks to customers), etc.

Many simply have blind love for the state and they'll never question any rule made by the state.

So they'll state: "But banks are only following the law!". Which is precisely the problem: such laws shouldn't exist.

I live in a country where it's all about banking finance and most don't realize they don't produce anything at all. It's all about KYC/AML/compliance/SARs/fiscal lawyers/etc. A big, gigantic, void.

While you see SpaceX going from their Raptor 1 design to their Raptor 3 design, using the "idiot index", where things become more efficient and way cheaper, bureaucracy (and their banking following dogs) works the other way: everything becomes less efficient and more costly.

> ... [debanking] often gets conflated with declining to open an account for a person or a business ...

A reasonable perspective. But the obvious follow up is what one pithy word should be used to describe this activity? The proffered terms (offboarding, derisking) are being suggested by the industry with an obvious political motive to minimise the significance of what they are doing.

There is an ongoing war against the pornography industry that has been waged in part through payment processing. The entire thing is an intense mish-mash of poverty, wealth, politics, drama, technology and major social forces clashing with each other. It isn't appropriate to talk about that sort of action in bland terms. There is an attempt being made to sculpt society by leveraging the financial system. The implementation details of that isn't "offboarding" or "derisking" - it is much more in the spirit of a word like "debanking".

I'm with the activists on this one. It makes more sense to redefine the word debanking to cover politically motivated (or even motivated by business-logic) denial of a bank account. These are not bland administrative decisions.

What's the point of this windy article? An allusion to "debanking people is OK actually!"

Allowing the bank remove your financial lifeline via some opaque and kafkaesque process where you have zero recourse is not OK and we should not tolerate it.

There are many banks out there that aggressively complete.

This is a valid point. Banks should compete for customers by providing value. They should also be free to decline customers to ensure quality. However, debanking due to perceived or real regulatory risk is ultimately a political act. The banks may not be exclusively political actors, but they are incentivized to act outside of market concerns by state pressure.

Similarly, one of the alleged intentions of the cryptocurrency movement was to decouple the state from monetary control.

No it isn't political it's a "you guys are expensive and flighty and killed two banks that served you" decision. VCs pull money out of banks having a hard time while JP Morgan put money in.

there's really only a small number of banks in the US after the 2008 crash, they were all consolidated. what used to be thousands became like 3

At the end of 2023, there were still over 4000 commercial banks in the US.

https://banks.data.fdic.gov/explore/historical/?displayField...

This is specifically a response to Andreessen conflating crypto offboarding with "debanking" on Rogan. The goal is to inform you about the regulatory and political environment around banking and crypto in general, and to warn you to be wary when a crypto investor uses terms like "debanking" to rally favor for their cause, which is to integrate crypto into the banking sector.

> An allusion to "debanking people is OK actually!"

Literally the opposite of what he says. He says it happens too often to too many people, and that mostly it happens to people who are immigrants or don't speak english well or are financially illiterate, or just generally people at the margins, and not to privileged crypto bros.

>>> An allusion to "debanking people is OK actually!"

>Literally the opposite of what he says.

In that case the message is lost in the wall of text.

The point is that reality is more complicated than short statements (which often embed political assumptions) can express, and understanding the reality of the situation is useful, especially to people who want to change the system.

> What's the point of this windy article?

Ah, I had the same reaction (https://news.ycombinator.com/item?id=42387392).

Seems like an article meant to distract, or a someone nerding off on the nuances with no solutions offered.

Debanking isn't unique to the USA either.

In the UK, there is no concept of "universal service". if you look dodgy, your bank account can be closed. However unless there is strong evidence of fraud, you should be able to get your assets back, assuming that you can find a bank to take you.

But

Its more often the most vulnerable that cannot get bank accounts. If you have no fixed address, then you are not able to have a bank account.

If you work in stuff that looks like a prude to be sex work, you are also extremely vulnerable.

so yes, its great that this might be looked at in the USA, it won't however get reform, because its a very powerful and useful tool for the an administration to pull on when it wants to exert pressure.

>In the UK, there is no concept of "universal service".

The nine largest banks have a legal duty to provide a bank account to any eligible applicant under Part 4 of the Payment Accounts Regulations 2015, except where providing an account would be unlawful under other legislation (fraud, money laundering and terrorist financing) or where the customer has engaged in harassment against the bank's employees.

https://www.legislation.gov.uk/uksi/2015/2038/part/4

>If you have no fixed address, then you are not able to have a bank account.

The above legislation applies to customers with no fixed address. Two banks offer products specifically for customers with no proof of identity and no fixed address. Many others have significant flexibility in their identity and address requirements.

https://england.shelter.org.uk/professional_resources/no_fix...

Alas my edit time has ran out, otherwise I would update with your correction.

Thank you for correcting me with sources, it is appreciated.

The People I know who have no fixed address, told me how difficult it was to get an account. I know when I opened my account recently, I had to provide a whole host of information that wouldn't be possible to have if I was homeless. I made the mistake of projecting incorrect assumptions, confidently. I went full techbro, which is wrong of me.

In the Muslim community, we have a phrase for the phenomenon of many of us getting debanked: "Banking while Muslim"[0][1]. LaunchGood was debanked a few years ago and really had to struggle to survive[2][3].

My own startup was threatened to be kicked off Stripe with just 24 hours of notice. It took an exhausting effort and connections with employees inside Stripe to escalate our case to get our case re-reviewed. Google Payments for the Play Store halted payment processing randomly and sent me a message demanding to get copies of my passport and other details. When I sent it, they said they'd respond in 72-96 hours and just came back saying they needed the same document again even after I sent it. This repeated several times. Every time I contacted them, they came back with an automated response saying that they'd look at my message. After I asked for escalation to an account specialist, the specialist said they'd get back to me in 96 hours. That situation also took escalations with friends at Google to get sorted out in the end, but not until we spent two weeks churning subscribers and losing revenue.

[0]: https://ispu.org/banking-while-muslim/

[1]: https://twitter.com/search?q=%23bankingwhilemuslim&src=typed...

[2]: https://www.thefp.com/p/debanking-america-melania-barron-tru...

[3]: https://web.archive.org/web/20190430201629/https://tinylette...

I was debanked by a California bank for selling holsters, a product that is legal nationwide and protected under the Constitution. While the bank has the right to choose its business relationships, it’s concerning to see decisions driven by political positions. This sets a troubling precedent for the direction we might be heading as a country.

I'm sure that the Bakersfield regional credit union would have a different idea about the bankability.

it should have been a central point of the election, it's crazy that this only came out afterwards. we need a basic right to our own banking with due process

The PEP part of the Rogan interview was when I understood Andreessen was most likely bullshitting. Funny how this is not clearly stated, most likely because of who Andreessen is.

I wonder why Andreessen needs to use disinformation to shape opinion if the actual problem is so bad? I find it very unlikely that he does not know how PEP actually works.

It is so demonstrably false. Anyone who has worked in an finance adjacent industry likely knows the definition of a PEP.

Seems to me that he has crypto-related goals but involves more people to gain political support. The OP article's last paragraphs make it quite clear IMO.

what was BS about it specifically? people were in fact getting debanked, outside of crypto too

It is explained in the article.

The concept of Politically Exposed Person has nothing to do with views in US politics.

It’s really about foreign officials and their families. And, in spirit, it’s really about officials from countries with high corruption risks.

And Andreessen knows it. That’s the bullshit.

people were debanked, this is a fact. it was also a viewpoint from the left-wing establishment, spearheaded by elizabeth warren, that crypto should basically be blocked from operating in the us

the biden administration was going after their political opponents in many ways (prosecutions of trump and his lawyer, targeting multiple of elon's companies & the delaware courts going after his salary, peter navarro not being allowed executive privilege, eithan heim intimidation and prosecution for whistleblowing trans surgeries on children), this is also a fact

whether they used the PEP terminology selectively, or didn't use it at all, is sort of missing the point. there's a political persecution going on the background and the debanking, which was 100% happening and should not be, was done on a purely political basis. the entire process of debanking was basically invented for political reasons so they could debank gun manufacturers. there's nothing non-political about this

I guess he did succeed into enrolling more people into his narrow crusade.

does your entire argument hinge around the definition of a pep? i really don't care. wanting to stop people from getting debanked is a legitimate cause and you're making really weird comments while trying to pretend that you're not arguing the opposite

His argument seems to boil down to a the financial regulator equivalent of the trolley problem.

In Operation Choke Point, the regulators were actively moving the lever to debank morally repentant industries. In "Operation Choke Point 2.0", the complex system of regulatory guidelines and actors seemingly self-coordinates to debank crypto, and the failure of anyone to intercede is painted as a willful neglect. Those on the regulator side say, "I didn't do anything", and those on the crypto side say, "you have every power to do something".

Seems to me that what Andreessen was really mad about was the CFPB forcing his portfolio companies that committed consumer fraud to return money to their customers. He also lied about the CFPB doing debanking, they don’t have that power.

While debanking may be a problem, there’s a false populism in these disingenuous VCs, pretending that their troubles are the same as everyone else. These guys want to operate in grey areas that enable laundering, illegal gambling, buying/selling contraband, and straight up rug pulls, and not be subject to any risk or oversight.

The point is that Operation Choke Point was an actual operation, but Operation Choke Point 2.0 is not; it’s just a label that someone started using to try to generate sympathy for their private business goals.

And a smart reader should recognize the difference and adjust their reaction accordingly.

I used to respect patio11's opinions, and obviously he has a lot of valuable knowledge and there are things to learn from him, but some of his takes on crypto have led me to heavily discount his writings on the topic.

On the face of it, this writeup is reasonable.

I'm a crypto founder, and I struggle with banking. We've had two banking applications rejected in Singapore.

Here's the thing: we're not doing anything remotely like what Patrick describes. I think he strawmans a lot.

We're a crypto-focused IT consultancy, but closely affiliated with an upcoming blockchain. The business is set up to be super boring: we bill the client for work and that's it. The company doesn't handle a token, doesn't get revenue from onchain activities, ... The blockchain in question is not anymore risky than any other and in many ways less. Not that the banks know or ass.

They just say "you're rejected and we can't tell you why".

Now this is Singapore, not the US. It's not a targeted plan but just general policies: "crypto is potentially bothersome for us, let's not bother". In the meantime we don't have a bank account. Though I do believe US attitudes and (lack of) regulation probably impact these policies a fair deal.

I’m one of the few people who can truly say I’ve built a bank from scratch—starting as a single individual in a small office and eventually obtaining a full banking license in one of the most highly regulated financial environments in the world, Australia.

I invited Marc Andreessen for a conversation on X (formerly Twitter), after the Joe Rogan interview. It is no surprise I didn’t receive a response when he’s one of the wealthiest and most influential figures in tech, and I’m certainly not even the richest person on my street.

At its core, a bank’s business model is straightforward: you act as a caretaker for depositors’ money. Your primary obligation is always to ensure that depositors can withdraw their funds in full, whenever they need them, within the terms of the contract. Profitability is achieved by carefully managing risk—both in holding deposits and lending them out—while making sure that, at all costs, you can make every depositor whole.

In practice, this means thoroughly understanding and mitigating risks. To do so means we identify every possible scenario, assess its likelihood and potential impact, plan how we’d mitigate the risk, and determine the residual exposure. Our regulators then review this work, probing relentlessly, testing our assumptions against extreme hypotheticals: floods knocking out our data center, hackers encrypting our backups, simultaneous runs on accounts associated with crypto exchanges—every remote yet plausible crisis is considered. We then refine and repeat this cycle until the regulators are satisfied we understand every angle of our risk profile.

Every mitigation strategy we implement has a cost—whether it’s the liquidity we must set aside or the capital reserves we are required to hold. If the regulator believes any exposure is excessive, the bank must increase its capital buffers, making the business more resilient but also more capital-intensive.

From a traditional perspective, stable term deposits or mortgages are ideal for banks. They’re long-term, predictable, and well-understood, with minimal servicing costs. In contrast, servicing the crypto industry poses unique challenges. While there can be mutual benefits, the costs and constraints imposed by regulatory and liquidity requirements often clash with the crypto sector’s expectations.

Ultimately, it’s a cost/benefit analysis. Crypto-related accounts tend to require holding large liquidity buffers, limiting profitability. Banks must maintain extremely high-quality liquid assets because these crypto accounts can be called upon at any time, as they are generally setup as an on-ramp or off-ramp for the exchanges' customers. If a bank is required to hold 100% of those deposits in liquid form just to meet potential instant demand, the profitability of such relationships diminishes. Once you factor in operational overhead, compliance, and the capital required to ensure depositor safety, the margins shrink even more.

Capital adequacy is another critical complication. The bank must have sufficient Tier 1 capital to cover all depositors in the event of a collapse. This includes provisioning for winding up the bank and ensuring depositors remain whole even if certain assets become illiquid. The instability and occasional outright fraud we’ve seen in the crypto domain (e.g., the FTX/SBF scandal) means that funds could vanish or become tied up. As a result, banks often need to raise even more capital or reduce shareholder dividends. This is costly, and that cost must be considered in pricing and strategic decisions.

Finally, the operational and compliance costs associated with handling crypto transactions—from specialised staff to advanced monitoring systems—can be prohibitively high.

The reality is that the associated liquidity, capital, and operational requirements often make it an expensive proposition with limited upside for the bank. At the end of the day, the bank must always ensure depositors are protected, and that priority imposes constraints that may not align with the crypto industry’s expectations.

I guess it is surprising that crypto service providers cannot come to an agreement with banks by just paying more money for the service or by implementing some rules for their users which would allow some portion of their bank deposits to be held in slightly less cash-like assets.

It's more than just money: A payment processor is not all that different from a crypto exchange in their relationship with the bank: It's a very special company that can bring real risk to the banks underneath, so they have to do a lot of regulatory work internally to keep working together. The Stripes and Adyens of the world spend efforts in regulatory because they have to keep the bank happy, but they find those efforts just cost money, not harm the actual goals of the business.

Many of the crypto services believe that no, there's no way they'll do what the bank tells them and still remain useful to their clients. They'd have to compete with the truly off-the-regulatory-world competitors, and probably lose a lot of business there. So they get unbanked, in the same way that I'd get un-bared if I decided to keep showing up at said bar with the same clothes as Donald Duck.

Maybe that's why Coinbase charges such high fees.

I think one of Patrick's points is that the real cost to the bank for providing these services to crypto companies is more than the entire profits of the crypto companies. So there is no mutually agreeable meeting point.

I think he only made that claim referring to the profits that the banks earn from their relationships with the crypto companies, not the total profits made by the crypto companies themselves (though both could be true).

These are pretty similar/related things. The maximal profit the bank can earn from the crypto company relationship is 100% of the crypto company's profits.

America's new dictator in chief is all in on crypto.

My opinion is that crypto leads to instability, corruption and tax evasion which is why they all got kicked out of China but good luck.

Given all the rightfully angry comments and descriptions in here about how easily megacorp banks and financial institutions can debank people on a whim with next to zero recourse, one wonders why nothing like some sort of cryptoraphically generated, decentralized token ecosystem doesn't exist by which people can send each other usable monetary value rapidly and via many avenues that are difficult to block...

We could call it, crypto... currency, maybe?

Wouldn't it be nice of something like this existed, at least as an option for those who don't live in bubbles of never having been the financial rape victims of a large bank, government or formal regulatory algorithmic system.

Estimated reading time: 134–170 minutes

Definitely not a casual Monday evening digest.

I think this was his best article yet - it lays out all the various things that have been conflated under "debanking" - some justifiable, some less so.

I have no idea where Patio11 sits politically, but as someone who tends right I would say it was a fair description of political debanking (and social media deplatforming), if North America-focussed.

And I think it would be fair to characterise Patio11 as a crypto-sceptic.

I don't feel like the article is particularly in favor of or against debanking in general. (I think in fact that his position as stated is that debanking in general is bad unless it's against people he doesn't like, which is a position held by literally everybody.) Rather, it's an examination of why debanking exists in general and why "bank everyone you're allowed to" isn't the dominant strategy, what factors go into influencing politically-driven debanking, and whether or not the current argument made by cryptocurrency advocates that "we are being debanked for political reasons" is true or not. It concludes that while crypto is being debanked (or equivalently but less provocatively, banks are declining to create new relations with them), it's primarily because crypto has historically been bad for banks. This in turn has created a(n arguably political) culture among those who decide who shall be banked or debanked to not service their industry. In other words, crypto isn't being debanked because people morally disagree with them per se, but because crypto is simply extremely risky

tl;dr of the tl;dr: the article is primarily about systems around debanking and only secondarily about whether or not crypto is being debanked (conclusion: it is and it's not necessarily for political reasons)

The main problem with the article is that, while patio is a very knowledgeable and even insightful writer, he has an extremely indirect writing style. It almost feels like a math textbook that describes "here's the properties of this mathematical construct; you can immediately see it has these properties" without explaining the connection to the other mathematical constructs that give it these properties. In his defense though, his writing is a more gradual progression between "here's a thing" and "here's the implications of the thing" than a typical math textbook. But he still doesn't explicitly point out the connections, which means you have to expend a lot of brain power to hold enough things in your head at once to make those connections yourself, which is exhausting. Part of that is because the connections are social connections that are far less clear, defined, and observable than typical STEM systems, and he doesn't want to ever tell you or imply to you anything incorrect. Contrast this to Matt Levine who will gladly tell you how a social system works in a step-by-step list, followed by how the example he's about to write about completely breaks that system

Even his tweets are often indecipherable...

His tweets are always perfectly understandable if you've done the reading.

For some reason many of his stories are long winded ways of saying "if you start a business, many of your customers will be literally mentally retarded or senile."

He recently did one where he linked an Uber driver asking a question on Reddit I thought was totally sensible, and then proceeded to write a long extremely polite explanation of how they were an abject moron from the underclass for having to ask it. I didn't believe him on that one.

(But I can't find it because it was written too indirectly so my first 5 tries at search keywords didn't pull it up.)

> debanking in general is bad unless it's against people he doesn't like, which is a position held by literally everybody

I don't hold this position. Should I?

Jeez, had the article been any more drawn out we could have connected them to a publisher.

The implication that Libra was killed by a letter from 2 U.S. Senators is hilarious. That’s not how businesses make major decisions.

A public letter from a couple Senators is not a leading indicator of a regulatory problem. Individual Senators have essentially zero regulatory power whatsoever.

It is a trailing indicator of a PR problem. The Hill staffer he quotes is trying to point this out, but Patrick misses it. Perhaps he does not have the personal experience to understand this aspect of what Congress does (unlike the regs he covers earlier in the article, which he clearly has working knowledge of).

If you are debanked can you not sue for defamation and slander? After all, only criminals and terrorists get debanked, and if that's happening to me that's a public statement by a public corporation.

There is also the problem of punitive action (debanking) upon suspicion of wrong-doing rather than the conviction of it, which is a violation of due process on the side of the government.

andreesen's comments on JRE basically said this:

there was no way to sue because the banks were debanking anyone involved in crypto as a "politically exposed person". this was a regulation forced on the banks by the federal government. any bank not following this policy would then be caught under a million internal investigations by the feds, which is excruciatingly painful for them. as such, the banks weren't liable for following procedures, and the feds weren't "responsible" for it as they were very passive aggressive in writing and enforcing rules in such a way that didn't expose them. it wasn't said openly but it was deeply assumed with an undertone meant to circumvent the law. the politically exposed thing had been done prior with gun manufacturers and weed dispensaries so it had some kind of precedence

he described it as a puppet with no master above the strings

i completely agree that's it's 100% illegal, but there were a number of people who apparently had this same problem yet had no real legal recourse. i don't fully understand it but i assume a bunch of well off founders would have been able to figure it out. their only solution was to apparently support trump because it was so heavily tied to the left wing establishment.

Incredibly informative write-up. I consider myself much more banking-industry literate than most, and I learned a lot.

In the US, there's not a lot (other than a chunk of cash and lots of regulations) to stop a private individual or group from starting their own bank.

In the past, large companies and high net worth individuals did just that.

Why is this article so longwinded? I understand that there are nuances to every subject but does the article it give clear solutions if one is 'debanked'?

The article’s refusal to acknowledge that there might be viewpoint discrimination going on makes it feel like the author is trying to do a Jedi mind trick.

Bleah this post was overly wordy by 10X and so meandering it was really hard to read. I gave up after 15 mins and realized I was only 1/3 of the way through. My suggestion to the author is to break this up into smaller essays and be more succinct with less meandering.

What's infuriating to me about this article is that bank "supervision," makes banks a direct proxy for policy via nominally private bodies but without any public accountability.

Well regulated banking is a national asset and source of soft power internationally, and having a bunch of anxious de-bankers at the controls is a hollowing out of the common wealth of the society as a whole.

Another perspective from Europe:

In Germany the political climate is so bad that the domestic intelligence publicly confirms on social media that they have person so and so on their radar. This had no consequences. Let that sink in. In such a climate it's sometimes enough to publicly scold a bank on social media to have blogger XY as their customer to trigger debanking. In one case, some blogger called a politician "fat", which caused the FBI equivalent to request the bank account history from the bloggers bank, which ultimately caused debanking.

So in Germany it's used more Stasi like, meaning protection of the government. They changed the objective so that the scope of the domestic intelligence is no longer groups of people who want to overthrow the system, but also individuals that "deligitimize the government and it's representatives". That is, criticism about the Covid measures can put you on the radar of domestic intelligence. An independent left wing journalist did a FOIA request and found out she's on the radar because of just that.

A perfect climate for debanking measures and some hint on what is going on with Germany in case you wonder...

> which caused the FBI equivalent to request the bank account history from the bloggers bank, which ultimately caused debanking.

I don’t know which person you have in mind but the situation in Europe can’t be directly compared since you have a right to a bank account. You _cannot_ be debanked. You have a right to a “base account” (under some conditions).

Debanking to me doesn't just mean "no bank account". It starts with closing of accounts without being given a reason and the constant fear that any new account will be closed as well. For businesses this has even bigger implications.

You a right: There is base account meant for refugees, homeless people, indebted people... This is nothing more than a safety net for when you are at the bottom of society. You can't do business with it etc... If someone where to be forced to register such an account because all banks closed the normal accounts without giving a reason, I'd still consider it debanked.

Why can you not do business with it?

Well I guess you can probably use such an account for sole proprietorship, meaning doing business in your own name with full liability etc...

I am sorry but the OP is writing a lengthy article to legitimize his claim?

Here is the point, as I see it and it is very simple: If having a bank account is a requirement to operate legally, a bank can NOT refuse any customer unless they have been barred by a court. It doesn't matter whether you are selling crypto, weed, porn or socks.

This is done in France, and many other countries by the way. The bank has an obligation to service, as your life's obligations requires such a bank account.

Pat went on a dozens of pages of non-sense to avoid this particular point explaining how the banking system work, the bank obligations and other crap. It's just a bunch of filler non-sense that doesn't address the core point.

That doesn't make any sense. As the article points out, it's akin to saying that a lender must loan to you unless they've been barred by a court. The accounts you are thinking about are all, under the hood, lines of credit, even though they don't look like that.

Since the Fed is the provider of the liquidity and also sets the rules on what is a collateral and what is not, I say yes, the bank must loan you the money as long as you satisfy the conditions of the loan.

The bank is roughly a re-seller of the Fed liquidity. They shouldn't be an arbiter of who gets to access that liquidity but rather an administrative entity that follows the rules.

That doesn't make sense. When your business account stiffs a bunch of customers who get their ACH transactions reversed, and you're insolvent, your bank has to pay off those transactions. It can't just go to the Fed and say "give me money to cover for this insolvent business".

Your bank is not in fact literally just a front end for the Fed.

No, it's not akin to that. You can live without loans but you can't leave without a debit bank account.

As the parent points out there's indeed such a law in France but from personal experience I can tell that it doesn't prevent the bank from closing your account without an explanation (the explanation I was given off-record was my citizenship). The law merely forces the bank to open you an account which can later be closed. So definitely the right direction but IMO not far enough.

A debit bank account is a line of credit. It effectively is a loan.

You're not participating in a good faith discussion. Yes, it is technically a line of credit but it's not the reason why you're being refused service. Overdraft risks for a personal account are small and can easily be accounted-for in the service fee or via insurance (which is the same in the end).

The reason for account closure is the fear of anti-AML laws and sanctions that have nothing to do with loans. Banks in fact love offering small loans and it's not uncommon to have your account closed while having a pre-approved loan at the same time — these are different bank divisions in action.

And in any case, turning personal debit accounts into credit accounts is not something that was asked for. I lived long enough to have used Visa Electron and Maestro cards that made most of overdraft scenarios impossible. It was the banking industry decision to get rid of them.

The entire article is about why that isn't true in the cases he's talking about.

What exactly isn't true? That compliance is the reason why accounts get closed?

As far as I understood the article this is the main reason he gives. Loans or other objective reasons that can make the interaction with the client unprofitable are only drawn as (bad) analogies and not as the actual explanation.

To be charitable, I think tptacek was referring to a variant of "accounts aren't closed because of credit risk" as not being true. The credit risk talked about in the article was ACH reversals with a bankrupt account owner falling on the bank, rather than overdrafts.

> the explanation I was given off-record was my citizenship

That seems fishy and can’t be right. The only way this would work is if you don’t have residence but not because you have the wrong citizenship.

I have a multi-year titre de séjour, the problem is the Russian citizenship. I guess banks don't want to figure out who's sanctioned and who's not, refusing service is safer.

The first wave of account closures in 2022 was absurdly wide and even affected some French citizens. It was a scandal that got some coverage in the news [1][2][3]. I suspect the filter was the birthplace which is known to the bank, even though some media speculated it was about names. IMO names would be insane even for a bank, however I can imagine a name being one of the inputs for an opaque ML risk-scoring model.

French citizens that I know of got their accounts reinstantiated, but foreign nationals continue to struggle to this day. There's a collective lawsuit going on but it will take years to achieve anything withhin the french justice system.

[1] https://www.lepoint.fr/societe/comptes-bancaires-bloques-en-...

[2] https://www.nouvelobs.com/entreprises/20220726.OBS61366/des-...

[3] https://www.lesechos.fr/finance-marches/banque-assurances/en...

Sounds like a case of being in the right is not enough. The law in theory prevents this kind of stuff, but it might not have done enough of a job here.

Since my wife is Russian and we have lots of Russian friends we're not blind to these checks, but in all cases they were resolved by submitting residence documents. Success rate was 100%.

Of folks that were not residents however or that did not manage to prove their residence, very few got their accounts re-instantiated. We also had a case of someone who was not able to keep their account until they stopped receiving a Russian salary.

Out of curiosity, which country are you in?

Based on my network of ex-colleagues who are now scattered all across Europe the best banking experience for foreigners is in Netherlands and the worst is in France, Spain and Poland. Germany is somewhere in the middle, for other countries I don't have datapoints.

The best part about Europe is the common market that includes online banking. Revolut and Bunq seem to accept all legal residents and that's enough for 90% of basic services. Life would be much harder without them.

Austria, but we both made personal and indirect experiences through friends all over the place. For instance my wife has accounts also in the UK and Estonia (guess why) and it was all pretty much the same thing. I have no experience in the Netherlands but friends moved to Poland and Spain (among other countries) and it all was absolutely fine.

The only people that ran into issues had monetary transfers in and out of Russia or folks who did not manage to actually immigrate properly. With regards to monetary transfers in and out of Russia, I even have that as an Austrian citizen, that to me is largely an unrelated problem to citizenship.

No citizenship is a major factor. For example, Syrians are a very red flag in many countries and many banks outright denies them service. If you are from North Korea, you'd be delusional to think that you can just show up at a "western" bank and walk out with a bank card.

patio11 himself has mentioned in many podcasts that the sanctions following the Russian invasion of Ukraine may have affected Ukrainian persons or businesses as they include territory currently occupied by Russia (perhaps more so than Russian persons or businesses themselves).

Many western financial institutions simply won't keep track of who holds Nikopol or Enerhodar and will close account held by Ukrainian people or business.

(and when you think about the possibility of the account holder lying, it gets worse)

The person I replied to is in the EU where rather strict rules exist that prohibit this kind of nonsense.

The basic account thing ?

Does that apply to US citizens (legally residing in the EU) that routinely get denied bank accounts because the bank don’t want to deal with the IRS ?

May be he probably could bank with LaPoste.

Beyond that, I wonder if you really believe that the EU has no Anti-Money Laudering / Counter Finance Terrorism laws.

> Does that apply to US citizens (legally residing in the EU) that routinely get denied bank accounts because the bank don’t want to deal with the IRS ?

Yes, it applies to every legal resident.

> Beyond that, I wonder if you really believe that the EU has no Anti-Money Laudering / Counter Finance Terrorism laws.

Why should I not believe this? I know it does.

>Why should I not believe this?

Because you don’t believe an EU bank can terminate an account because they’re worried it may trigger an AML/CTF regulation or similar without bothering to really check if it does.

*edit : AML/CTF and similar rules have to be exceptions to basic banking rights.

> Because you don’t believe an EU bank can terminate an account because they’re worried it may trigger an AML/CTF regulation or similar without bothering to really check if it does.

No, I questioned the particular situation given my personal experience with the Ukrainian war for account holders in Europe, the existing banking regulation around the basic account.

> May be he probably could bank with LaPoste.

For the record, I have an official denial letter from LaPoste. Which, by the way, is very nice on their part: many banks refuse to put that in wringing and without a letter it's hard to exercise your droit au compte with the Bank of France.

Ouch. If even LaPoste did it…

Given that about 10% of the US has no debit bank account and they aren't dying, that seems like an exaggeration. You can walk into a paycheck cashing service and walk out with a card that can be used anywhere a credit card is accepted without ever opening a bank account. You have to pay to do so, which seems rather regressive considering it's mostly the less affluent who end up in that situation, but it's not life-ending.

That previous comment is a "tell me you've never been declined for a financial service before without telling me" kind of thing; I had to shop for a week to find a bank that would give me a checking account.

Not sure what you mean, I got declined by a dozen of banks. And where I live (France) it's illegal for me to receive my salary in cash or to pay rent in cash: both are above the limit for cash transactions. Even if I personally was open to breaking the law, my employer and my landlord obviously aren't.

To compensate for that there's a "right for an account" law but it doesn't work that well.

This article is about the US banking system, and that's where my experience is. Nobody in the US with any experience of financial precarity believes a checking account is a human right, because checking accounts are routinely denied to people without established credit. Which makes a kind of sense: they are credit products.

I think the US/EU distinction is the main disconnect. Anyone in the US can take a (paper) paycheck to a cashing service and, for about 2% of the value of the check, receive the cash for it. They can usually walk into the office of their landlord (or property manager) and pay in cash.

I sold an RV for nearly $10k and the buyer paid in cash.

Other than my mortgage payment, I have never paid for something via a bank transfer. Merchants take credit cards and services provided by individuals (e.g. piano teacher) take check or cash.

> The accounts you are thinking about are all, under the hood, lines of credit, even though they don't look like that.

You present this statement as though it's an immutable law of nature, rather than a design feature of the US banking system that allows them to offer an excuse for closing accounts that's convenient for those banks. (The fact that someone on HN can read about it and feel smart because they think they understood the deep reality that lesser people don't get is also a convenient design feature).

As long as we agree that it's a basic feature of the US financial system I don't think there's much for us to argue about.

I haven't seen any proof that it's a basic feature of bank accounts.

Some specific services (checkbooks, embossed and offline-chip cards, visa/mc acquiring) can require a credit-worthy account, but these services can be denied without denying the account itself.

Does your envisioned product allow someone to direct deposit a paycheck? Then congratulations, it is a credit account, because a) we expect to spend paychecks including very soon after receiving them but b) payroll companies sometimes screw up payroll and can in some cases pull the money back.

Can you reference a law saying that the bank is obligated to force an overdraft on a non-overdraft account when the transaction is reversed? This was a screw up by neither the bank nor their client, I see all reasons to bounce it back and let the wrong party figure it out. Furthermore I saw that exact case IRL in another country and the payroll company had to settle it with the employee (not with the bank) in court.

I understand that US banking can be very different here but neither googling nor chatgpt was able to provide any specific proofs.

Some people claim online that a bank can never refuse an ACH transaction but it's obviously false, they do it easily when the account is closed, blocked or overdrawn beyond a certain limit.

This is in the article.

https://f16c0eccd54007287fb794f9a3d05f2a.cdn.bubble.io/f1698...

I read that. It's an inverse of what you describe above: bankruptcy is ongoing, all accounts are already frozen. However the debtor asks the court to unfreeze them, resume the normal operation, resume all ACH operations except for chargebacks because they suspect fraud. It never says the bank was obliged to honor reversals with insufficient funds out of pocket, it's not even close. Accounts in question have sufficient funds.

Now here's a legally binding document that actually controls reversals and returns of ACH entries: NACHA: A Complete Guide to the Rules Governing the ACH Network [1] All newer versions are paywalled but for a question you claim is essential to the US banking the 2005 version should suffice. Here's what I see after reading it for two hours.

> Except as otherwise provided for in subsection 6.1.3 (Restrictions on Right to Return), an RDFI may return an entry for any reason.

I didn't find any restrictions that disallow immediate return of the REVERSAL entry with reason code "R01 Insufficient Funds". Reversal entry of a credit entry is a normal debit entry with a word "REVERSAL" in it.

Now the originator can potentially dishonor the return:

> An ODFI may dishonor a return entry (1) if it can substantiate that the RDFI failed to return the entry within the time limits established by these rules, thus causing either the ODFI or Originator to suffer a loss, or (2) if the return entry contains incorrect information, does not include all information required by Appendix Five (Return Entries), or otherwise fails to comply with the requirements of Appendix Five. To dishonor a return entry, the ODFI must transmit a dishonored return entry complying with Appendix Five to its ACH Operator within five banking days after the Settlement Date of the return entry.

However the possible reasons for dishonoring is very limited and doesn't include "we really need that money" reason. Besides filling errors the only real reason is the time limit that doesn't apply here.

So, I can't find any concrete proof that the receiving bank must always honor the reversal ACH entry, especially at loss. The topic of losses from erroneous entries is mentioned multiple times but never in such context.

It maybe a confusion of ACH network rules with Visa/MC rules that do have this requirement in some cases, don't know.

[1] https://archive.org/stream/gov.law.nacha.ach.2005/nacha.ach....

Allowing payroll companies to pull money back is a design choice, not an immutable fact of nature, as is pretending to clear instantly. Other choices are possible. (Obviously not crypto nonsense; RTGS settling in <3 days is boring, mainstream bank plumbing in many countries. You know this)

It is the design choice of the system we have now. The post doesn't claim that it is the only possible design choice. The post doesn't even claim that the banking system was never weaponized for political reasons; it makes clear that has in fact happened. What it is at pains to point out is that the complaints of crypto-magnates about the system being recently weaponized against them are dubious, because their complaints center around longstanding properties of our system that other businesses routinely trip over.

> The post doesn't claim that it is the only possible design choice.

Not explicitly. But it's set up to mislead you into thinking that, by pretending to be a deep dive into the causes of something, while spending great effort on some of the (minor) causes and quickly skating over other, more significant causes that reflect more negatively on the author's industry.

> The post doesn't even claim that the banking system was never weaponized for political reasons; it makes clear that has in fact happened. What it is at pains to point out is that the complaints of crypto-magnates about the system being recently weaponized against them are dubious, because their complaints center around longstanding properties of our system that other businesses routinely trip over.

The post is at pains to make it all sound normal and inevitable and unintentional. Of course when the bank sends a letter saying that its decision is final this is a bald-faced lie, everyone in the banking system knows that sending bald-faced lies to your customers is normal and expected, how deceptive it is of the crypto folks to pretend to believe that the letter they were sent meant what it said. Of course people should be cut off from the financial system and told vague lies and evasions about why, that happens to everyone, why would anyone complain about that?

The post acknowledges that the financial system is set up to secretly cut people off without review or recourse, that this ability is weaponised for political reasons, and then glosses over and misdirects around the fact that this is a deliberate setup that serves that financial system's interests. It may not be malicious targeting of crypto folks in a narrow sense, but it's indistinguishable from it, by design. "Look, it really doesn't matter that our system silently cuts off people who work with our competitors and lies about the reasons, because that's just our system behaving as normal and it does exactly the same thing to bodega owners" is not, once you strip away the flourishes, a compelling defense.

No, it isn't set up to mislead; no, the causes it's discussing aren't "minor" (they've blown up banks), no, the post doesn't write approvingly of US banking practices, referring to them at points as kafkaesque, not, the post doesn't skate over the "lie" that account closure notices aren't final (it spends a whole section on that), and it seems plain what parts of the system crypto companies are running aground against; they're the same parts that bodega cash transfer businesses have run into for decades.

> No, it isn't set up to mislead

> no, the post doesn't write approvingly of US banking practices, referring to them at points as kafkaesque

And yet almost everyone in this thread has somehow understood it to be a post against the crypto folks and in favour of the banks. And it's too skillfully written for that to be accidental.

> no, the causes it's discussing aren't "minor"

A company going bankrupt is flashy, but can only ever be a small part of an explanation of a bank failure. A description of a shell company with a vague name that does international money transfers is a "look at these clowns" anecdote when you tell it one way and completely routine when you tell it another way. And what actual money laundering exists is, as described elsewhere in this thread, far too small to explain anti money laundering laws.

> they've blown up banks

Only if you buy into his choices about which causes to dig into and which to skate over. Big flashy graph of how many wires were getting reversed (and, in a post that otherwise goes into great detail to excuse people saying things that are manifestly untrue, complete incuriosity about any reason for the bank to say what it did that might not just be gross incompetence), but a one-line dismissal of why banks were reversing them - and no questioning why the setup is like that in the first place. Detailed explanation that a bank's business model fundamentally relied on serving a large number of crypto companies, one-line dismissal of any question as to whether it's reasonable for a regulator to make up an ad-hoc rule, and not drawing the connection between these two statements and asking whether an ad-hoc rule that intentionally puts a single entity out of business might be a little different from an arbitrary rule in other contexts. Extended point and laugh at the bank that expected to be able to regard its portfolio of New York commercial property loans as being worth something, one-line shrugging off that it's completely routine for banks to have large portfolios of essentially worthless New York commercial property loans...

> the "lie" that account closure notices aren't final (it spends a whole section on that)

It does, running bloodlessly over the mechanics, making it all sound so routine and normal and reasonable that you almost forget that we're talking about financial institutions telling blatant lies in writing (and not just about the finality, but about the reasons for the closure and its consequences) to their customers.

> it seems plain what parts of the system crypto companies are running aground against; they're the same parts that bodega cash transfer businesses have run into for decades.

That's not an explanation, it's a curiosity-stopper. I agree that there's a certain amount of kabuki to the crypto companies purporting to believe the things the banks are telling them, but on an institutional level that's really the only reasonable response to a lie you can't yet prove. And again, fundamentally, having been screwing with bodega cash transfers for decades does not make it any better.

None of this is responsive to anything I've written, or, really, anything Patrick's written. You want to explore your curiosity about possible alternate banking systems, that's fine, but you've been writing here and elsewhere that Patrick was disingenuous to talk about the banking system we actually have, and no, you're wrong about that.

You cannot honestly explore the causes of a banking phenomenon (one that's distinct to a particular few banking systems, even!) while treating the "banking system" as fixed and immutable (or even wholly distinct from the banks), and to do so is to attempt to pull the wool over the reader's eyes. The choice of which contributing factors to write about and which to ignore is not a neutral one and not an accident. (And similar things apply to the choice to describe outrages in mechanistic, normalising terms)

You are off on your own thing here. You are free to be off on your own thing. But your thing is unrelated to the article, and you should stop trying to frame your thing as if it was a trenchant comment on the article; it is not.

I don't think it's a "basic" feature. I suspect it's one of those things that, like the ACH upgrade mentioned in the article, would be changed swiftly if the relevant parties were sufficiently motivated.

I don't agree, but even that statement concedes Patrick's point.

You can't make a bank account where there is no possible chance a transaction can be reversed. That's what you're asking for.

(Crypto doesn't do this. You can be taken to court and they don't care that it's decentralized and immutable and all that. That's much of the point of his writing.)

If account has insufficient funds to do a reversal the bank is not always obliged to step in, only in a few specific circumstances. Avoiding such circumstances is possible.

There's an example in the article. If the account is owned by a company and it goes bankrupt, the account no longer contains money even though your computer says it does. So if anyone reverses a deposit quickly enough your computer is going to let it through and you're paying for it.

Your example is interesting but I don't see how a bank can be held liable if the bankruptcy wasn't communicated to it properly, is there any proof it's a real thing?

The example in the article is different if I read it right: bankruptcy was already known to all parties, account frozen, but the debtor asked court if some operations can be resumed except for chargebacks.

It makes perfect sense because of the very bloody obvious point that your account isn't really a line of credit since you gave a full deposit equal to the funds you have available. If the bank wants to lend your money around as part of its fractional reserve process, that's their business, but opening an account with funds you expect to have access to at any time is not the same as asking for a loan. Please.

No, that's not even a little bit how a checking account works. Assume nothing moves instantaneously, everything has a settlement period, everything is reversible, and, apart from the bank's willingness to decline you for an account, none of that mechanism is ever exposed to you. You'll be much closer to the true nature of the system than your belief that, having "fully deposited" money into an account, the bank can safely assume it has custody of that sum of money.

This is the challenge Patrick is up against with a piece like this: most of his readers share the deeply broken assumption you've brought to it.

It doesn't matter how it works in the background. A checking account is marketed as a bank account in which your balance matches what you put into it and unlike a formal, named loan, it's necessary for many very basic transactions of daily living for even ordinary people who participate in no business banking. Thus, being frozen out by some bullshit regulatory "compliance" nonsense or some brainless, fearful risk assessment is at a whole different level than it would be if you ere denied a loan for similar reasons.

Banks that fear risk so much should organize their checking account system better for the full range of their customers, but that requires more effort than simply unbanking people and then communicating with them through grudging hostility about the reasons why as their lives take a major hit, and then being defended for this conduct by someone who gets mealy mouthed about how checking accounts are actually loans, as if they involved a major financial favor by the bank to you as a customer.

It does matter, because it is in fact how the system works, and that system constrains banks. You can be mad at the system and prefer a different system; that's fine. But once you recognize it as the system we do in fact have, you've conceded Patrick's point.

As the article points out, when you scale this problem up to business bank accounts, losses from bad credit decisions to customers can erase all the gains from the entire commercial account line of business at a bank; in other words: to factor risk and credit out of business bank accounts, you're essentially demanding that banks be insolvent.

Checking accounts are credit products.

Yes, I can easily imagine the tears of frustration and loss that bank CEOs and Boards would have to wipe with 100 dollar bills at having to deliver a simple enough product that it doesn't "require" them to debank people arbitrarily.

Why you defend this is beyond me, but it's obvious enough as to barely be worth noting that banks can structure, package and name their checking accounts, and their customer service, in such a way that you as a user can be sure of their reliability, especially after you already fucking deposited the exact funds that you're later hoping to use into said accounts.

Call them credit products if you like, they're not the same as a loan that's given on evidence of solvency but nothing held by the bank directly.

I don't know why you think I'm "defending" anything. I'm discussing the world as it is; like Patrick, I'm making positive claims, not normative ones. That those claims happen to falsify things crypto magnates are saying is a happy accident.

>I don't know why you think I'm "defending" anything.

I don't think so. Your statements about the nature of checking accounts as created by banks (at least in the U.S) paint the entire construct as if it were an inescapable part of how these banks operate, when it could be differentiated in certain ways, and could in either case involve not arbitrarily blocking people from access to their accounts or even funds. In no explanation of checking accounts is that defensible.

No, they don't.

It definitely happens for political reasons. Let's be honest here, this is a completely one-sided hunt. And it's the next step in provoking war of retaliation amongst a political populous from an establishment that's losing power. It's disgusting.

Anyone should be able to have a political opinion or open a crypto business without needing to worry about the sanctity of their bank accounts. Let's just all agree this is abhorrent behavior and to stop this immediately. It's happening all across the west and it needs to just stop. Political competitions should be fair, not insidious.

Wouldn't your argument be far more defensible if it wasn't dripping with a siege mentality and provocative, yet unfalsifiable claims? Youre a step away from claiming that the children yearn for the mines.

it happens in europe, canada, and did in the US, so it's not just not unfalsifiable, it's provably true.

it's definitely not a siege mentality to say "let's treat each other fairly despite political differences". i don't know what you mean, the rest is nonsense

It all just sounds similar to claims that Donald Trump was being prosecuted for too many crimes at once, and that's how we can all tell that it's lawfare, and that none of those prosecutions were legitimate, rather than having to reconcile the possibility that Donald Trump is simply a prolific criminal.

You'd like us to view this purpose built Ames room from the singular vantage point that presents your side in the best light, rather than the other various angles which reveal a seedier reality.

it doesn't sound similar to any of that, you're just baiting at this point, grow up

Why is the linked post so long?

This is a very strange read. My initial feeling was that it was an awful lot of verbal gesticulation aimed at simple gaslighting. Having read most of it at this point it almost reads like it's trying to confirm the hypothesis while saying it's doing the opposite. I really dunno what to make of the piece, but it's kind of an exhausting read.

I think you are exactly right. patio11 both wants to communicate a point and also understands that communicating certain points can lead to really bad outcomes for you and your family. Thus he often writes that way about topics where powerful individuals might wish to harm him for his opinions. Such is the way the world really works, regardless of whatever naive people were taught in school about freedom of expression. “If you give me six lines written by the hand of the most honest of men, I will find something in them which will hang him.”

We need a good name for this style of writing.

samizdat

perhaps, patiotic :)

Sounds like this: https://en.wikipedia.org/wiki/Aesopian_language

Indeed. Also linked from that article, https://en.wikipedia.org/wiki/Persecution_and_the_Art_of_Wri...

> prior to the 19th century, Western scholars commonly understood that philosophical writing is not at home in any polity, no matter how liberal.. In questioning established opinions.. pre-modern philosophers found it necessary to convey their messages obliquely. Their "art of writing" was the art of esoteric communication. This is all the more apparent in medieval times, when heterodox political thinkers wrote under the threat of the Inquisition or comparably strict tribunals.

As always, he moves the cup so flashily for so long that you forget that you never saw him put the ball under it in the first place. If you take it as read that Binance (the largest threat to his business interests) really are evil, then of course destroying any bank willing to serve them is perfectly justified.

I also love the impersonal gloss over the actions of all the bank employees, as though all the Operation Choke Point crimes were carried out by machines directed by the politicians and regulators, and not humans making the choice to be Quislings. Look at the quote from Zuckerberg where he expresses regret for the poor choices he and his company made, and note the conspicuous absence of anyone doing the same from the banking/finance industry.

Those of us who've been paying attention are not hearing about debanking for the first time now, we've been banging this drum for years. In a country with the US' asset forfeiture laws, denial of banking service is de facto denial of the human right to own property. The current situation in the US is shameful, and while part of that shame should fall on the politicians and regulators, much of it rightly falls on the banks themselves. (Nor is it that an alternative is impractical. The UK made it legally obligatory for banks to offer "basic bank accounts" to everyone in 2016, and the sky has not fallen).

I have no love for the crypto people, but they're fighting for the right thing here (whether they're doing so out of good motives or bad) and I hope they succeed.

So you are saying that a private company, i.e. the bank must service the crypto industry even though it is going to mean they will suffer massive losses in doing so?

See my explanation of why it is an extremely costly venture for banks.

My position is that banks (which are not "private companies" as normally understood, but heavily regulated entities whose status already involves a complex bundle of special rights and special obligations) should be obliged to provide basic banking to any legally operating individual or business, just as they are already obliged to offer various services that they probably would not if they had a free choice.

If they are unable to figure out a way to provide basic banking without extending credit in the way patio11 describes then this will of course be extremely costly for them, but I suspect they would figure out a way to not have to extend credit rather quickly (hint: look at what banks in virtually any other country do) if they actually tried. If not - i.e. if the current price of banking is only sustainable when banks are permitted to arbitrarily refuse service - then I guess prices will have to rise to something similar to what they are in countries where banks already have those kind of service obligations. Again, that doesn't sound like such a terrible fate.

I completely agree when it comes to personal accounts, but the restrictions required to avoid extending credit make such accounts impractical for any realistic business purpose. You can’t, for example, allow the customer to write checks.

I know this debate is about the US banking system, but I feel the need to point out that in most of the EU, cheques basically aren't used, and business purchases are generally made by wire transfers.

Without a chequebook or credit card, you could offer a bank account without any risk that the bank would ever have to pay out more than its nominal balance. Bank runs could still be a problem, but I feel an appropriate pricing structure could solve that.

Wire transfers can be reversed. It's rare, but when it rains it pours. Maybe this could be "solved" by holding all incoming funds for, say, 60 days but that would be extremely hard on most businesses.

60 day call accounts are a great solution for managing the risk not meeting the desires of the crypto community.

SVB has entered the chat.

Liquidity in crypto is extremely difficult due to the volatility.

Okay, now I understand, you know very little about banking. I started a bank so I will try to help.

Banks are mostly private companies (most are listed on stock exchanges) so public companies in that meaning, but in most cases they are not government owned. I was meaning private in the sense they are not public owned entities by the government.

Banks are highly regulated.

Regulations require banks to manage their risks mainly liquidity and capital risks plus operational risks.

There is no laws mandating banks must bank everyone and every business.

There are laws that mandate banks must not take on excessive risks.

Banking is a principle based regulation. This means the governments set laws based on guidelines of how banks meet the obligations.

Banks are managing their customers constantly and any customer that represents unmanageable risks mainly liquidity they must remove them from their balance sheets.

It is the crypto industry fault that they refuse to take the actions and accountability to work with the banks.

This doesn’t only happen in crypto.

Crypto is highly volatile and liquidity is unmanageable for banks. When I spoke to the regulators, we were told we had to hold 100% liquidity for deposits intended for crypto. There is zero ability to recover the losses of the liquidity obligations.

Like all businesses, banks have the right to refuse to service customers they don’t want to serve because the costs exceed the income.

On the flip side the crypto industry is refusing to accept the additional costs and refusing to derisk their platforms.

> It is the crypto industry fault that they refuse to take the actions and accountability to work with the banks.

Yes and no. Are there many bad actors in the crypto industry who would be refused service by a reasonable, rule-of-law-based banking system? Yes, absolutely. Is the banking system that the US currently such a system? No. The SEC spent two years pretending to come up with a system of rules for determining whether a cryptocurrency is a security or not, and they still can't - or rather won't - tell you whether Ethereum qualifies.

Think of a guy trying to buy a house in a redline district. He says "I met all their lending criteria, but the bank still denied my loan, and they won't even tell me why! I don't even know what I did wrong or what I have to do to get them to approve me!" Is he lying? Strictly, yes, he probably does know exactly why his loan was declined and what he would have to do to get approved. So his statement is disingenuous in that way. But my sympathies are still with him.

> Like all businesses, banks have the right to refuse to service customers they don’t want to serve because the costs exceed the income.

Not in general - the article already mentions how they are obliged to serve unprofitable zip codes. Again, this is the current state of the US system (partly the result of written law and partly of other things), not inevitable objective fact, not something that can't be changed, and not something that the banking industry has no input into.

Not familiar with the UK version, but these kinds of regulations usually apply to personal bank accounts and do not require extending any credit. So you'd only get a basic bank account that cannot be overdrawn, nothing more.

Not familiar with UK either, but in PL, you're mostly right, with the addition that you can also use this account for simple business, aka "one person company" for which you don't need to have a separate account.

The cost is here due to AML regulation. If government wants to outsource its duties (crime intercepting) to banks, then perhaps it should be government to pay for it (in the similar manner it pays telecoms for wiretapping).

I fully agree that the cost of the AML/CTF should be on the government.

However a bank still needs to work out if they will risk accept customers.

For example my CRO presented to me the cost of enhanced due diligence for Delaware companies. It was cost prohibitive so I argued that we should not bank customers who are too complex for the next 12 months.

Like everything related to politics it's about plausible deniability.

The founding fathers sold their ideas as freedom from the tyranny of the crown. While this was true, they probably didn't care as much for the freedom of the average Joe, but their own freedom and that of their rich friends. They just needed the freedom of the average Joe to get the masses on board without blatantly lying about their actual goals.

The rich people of crypto see themselves similarly, selling their ideas as freedom from the tyranny of traditional finance; and they have a point: There are millions of average people out there who suffer by the hand of financial institutions. However, the goal of the crypto "elite" is mainly the freedom of their own and their rich friends, they just need the freedom of the average Joe to get the masses on board.

Now, the only thing left to argue is if the rich people from back in the days had a better case against the crown as the rich people from today have against traditional finance.

>denial of banking service is de facto denial of the human right to own property.

Is property ownership a 'human right', or a 'human privilege' (nod to George Carlin)?

It's literally in the UN declaration, and widely accepted as a basic right. If some philosopher thinks there is some sense in which it isn't a right, so much the worse for their philosophy.

The UN is not a moral authority and utterances endorsed by it have no more moral weight than any other political organisation.

Imagine being a newcomer coming to this discussion and the two sides are "debanking is bad and hurts people" and "the Universal Declaration of Human Rights is garbage."

That the UN General Assembly endorses a document is no more valuable a signal than BRICS, the OIC or the Arab League doing so. If you want to point to a document for its moral weight better not to point to one from an organisation that has Saudi Arabia chairing its women’s rights committee.

All rights are unnatural. Therefore “we” get to collectively agree on what rights all people ought to be granted.

I believe almost anywhere you go you’ll find that most people agree to consider property ownership to be a basic right.

> Look at the quote from Zuckerberg where he expresses regret for the poor choices he and his company made

I'm sure Zuckerberg does have regrets, but I think it's a mistake to assume they align with actual human interest except by coincidence. The state of Facebook today, and for many years before, has nothing to do with any honest concern for human welfare, however misguided.

> The UK made it legally obligatory for banks to offer "basic bank accounts" to everyone in 2016, and the sky has not fallen).

This did not avoid https://en.wikipedia.org/wiki/Nigel_Farage_Coutts_bank_scand...

However there's a vital layer of ambiguity in that story which made it more confusing for everyone involved: Coutts is a long standing "private bank" which makes a point of not serving everyone, only HNWIs, and Farage fell into both the "not rich enough" and "too politically exposed" categories.

> The current situation in the US is shameful, and while part of that shame should fall on the politicians and regulators, much of it rightly falls on the banks themselves

Like the lack of consumer protection and public safety in the US, at some point you have to accept that the public are also ultimately responsible through the ballot box. US financial control systems are driven firstly by the catch-all "war on terror", which since 9/11 has been used to justify any and all authoritarianism with public support, war on drugs ditto (despite state level legalization!), and thirdly evangelical support for Operation Choke Point.

The Farage situation hardly applies as an example, if at all.

From the linked Wikipedia page:

> NatWest, the owner of Coutts, initially claimed that he failed to meet the Coutts eligibility criteria of holding £1,000,000 or more in his account, following the expiry of his mortgage. NatWest instead offered him an account with the retail side of the bank.

So it's hardly a case of debanking a random Joe. It was only a higher-end account that was closed for not keeping the requirements for keeping it, and Farage was offered a normal account.

From the same Wikipedia article:

> It was later revealed that Farage's account was closed in part as Coutts felt that his beliefs and values did not align with theirs. In an internal dossier, Coutts wrote that he "is at best seen as xenophobic and pandering to racists" and considered a "disingenuous grifter".

> initially claimed

Oops, you "forgot" the rest of the quote:

"After Farage went to the press about the closure, it was discovered that Coutts had closed Farage's account as they deemed him to be "at best seen as xenophobic and pandering to racists". Following media attention, the NatWest CEO, Dame Alison Rose, resigned."

And of course, debanking is not used against any "random Joe", it is a weapon to make sure the random Joe stays nothing more than a random Joe and does not express his opinions or reaches for any political influence not sanctioned by the bankers.

> This did not avoid https://en.wikipedia.org/wiki/Nigel_Farage_Coutts_bank_scand...

I almost wrote about that case, but my post was getting long enough already. He was denied the fancy account he had and offered a basic account. Obviously you can have concerns about that (and note that this was a scandal, and ultimately brought down that bank's CEO), but it's certainly orders of magnitude less bad than being denied access to the banking system entirely.

> at some point you have to accept that the public are also ultimately responsible through the ballot box

Up to a point. Abusing some small minority is a well known failure mode of democracy, especially if you can paint that minority as bad people. And arguing that the public shouldn't be outraged about this because the public obviously approved of it is circular and backwards. Who do you even vote for to express outrage at debanking? It seems like the sort of thing that the CFPB should be stepping in to stop, so you vote D, but if you believe what the article wants you to believe (you shouldn't) then the problem is FINCEN so maybe you vote R and hope they dismantle it? IDK, flip a coin?

> and not humans making the choice to be Quislings

What is with the obsession with calling people quislings? Have all the nationalists transferred their hyper-patriotism to more socially acceptable targets, instead of just learning not to be like that?

It's dehumanizing language that encourages violence.

Maybe this is a minor quibble, but Quisling was a person. Thus, drawing parallels between Quisling’s actions and those being characterized is not dehumanizing.

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

How so?

If it's a current trend then, much like with complaining about debanking, it's one that I was years ahead of the curve on. Humans should not blindly follow orders, and that you were following orders from the legitimate authorities does not absolve you of responsibility for your choices.

For the benefit of people who come to the comments first: If you want a comprehensive debunking or substantiation of the claims about crypto debanking, then this is not the place to go.

If you want to read 23,000 words on banking regulation, its uses, abuses, the incentives faced by both the banks and their watchmen, and an explanation for how we ended up where we are, then go ahead and jump into it. Personally, I think the latter is far more useful than the former. I enjoyed it, at least.

Bear with me; the free market seems to think that history isn't a very useful area of study, and lots of people agree. At least some of this probably comes from bad experiences with history classes. I like to think of history instruction as having three levels. The lowest level - the one you'll hear people complaining the most about - is presenting history as a dry series of facts. At it's worst, the entire course can be reduced to a hashmap; event -> date. Rinse, repeat.

The second layer presents history as a narrative. Most people like stories, so this is much more compelling, and makes it a lot easier to enjoy history. But the highest level of teaching is about systems. It's not enough to colorfully explain that King so-and-so was furious at the offense given by King the-other-one. You have to try to make students understand the world that these two kings existed in; how things as small as calling 9th-century European polities "countries" can disastrously mis-callibrate our models. Once you understand the system that someone is working in, you can hope to understand them, and why they do the things they do. Once you have that, you can hope to pass reasonable judgement on their actions.

This article is all about systems and tradeoffs. It is aspiring to that third level. The title is arguably a little bit misleading, but I think it accomplishes it's goal, and personally, I feel like I've come away with a reasonable overall understanding of his thesis, and I think it matches the title.

I think it's one of his better pieces and in some way a culmination of a lot of things he's been writing about; I think he's counting on people to actually read his previous posts about why e.g. business bank accounts are functionally credit products, not the financial equivalent of water and electric service, and it really helps if you understand some of those details.

The right-wing false-victimhood ragebait narrative of the "Debanking" non-scandal is the story. It's ragebait propaganda and has no place on HN.

People whose business is effectively a grift should not be offered banking services, both as a moral issue and as a good business decision.

Right-wingers are far more likely to be grifters.

So right-wingers are more likely to be debanked but correlation is not...yadda yadda.

The tech industry was a lot cooler back when it was mostly graybeard hippies and not a bunch of incel adjacent techbros who never grew out of their Ayn Rand idolization phase.

Debanking is part of the culture war now, which means that someone's reaction to it shows that they're either on the right or on the left, with no positions in between allowed, and that therefore they also support all the other culture war positions of their chosen side. The culture war is designed to bundle positions together like this, and to force issues into the bundle, in order to foster an us-versus-them feeling about every issue. It's possible to recognize this is happening, attempt to analyze the issue and the merits of each side of the argument, and come to a conclusion that one side or the other has the better argument. It's difficult though to convince others that your position is not because of culture war dynamics because the design of the culture war is to minimize independent analysis.

I think that debanking is absolutely a right wing false victimhood propaganda narrative, but I'm still interested in why they think it's an issue, partly in order to engage in the argument and defeat it based on facts, and partly to continue to learn the foundations for their side of the culture war in general

>The culture war is designed to bundle positions together like this

Reply on news.ycombinator.com