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This story touches a nerve for me because I recently tried to make a small market service but couldn't get it off the ground specifically because of money laund

by mjfl 9y ago

This story touches a nerve for me because I recently tried to make a small market service but couldn't get it off the ground specifically because of money laundering concerns from my payments processor (Stripe). They shut me down even though I was a small player and would have been very low risk for large money laundering transactions (which I could have detected anyways). I guess they had a point - it would have been very hard for me to detect and eliminate money laundering from my service, if it was done very cleverly. However, in doing research for my anti-money-laundering strategy (that they had requested) I came to the conclusion that not only could I not solve that problem - no one could! After all, all one has to do to launder money through Venmo is label all the transactions as alcohol purchases. All one has to do to launder money through Stripe is tell them you're selling pizza (hypocrites)! And now apparently all one has to do to launder money through Amazon is sell a crappy book for $25,000. For that reason I'm sort of annoyed to have been shut down. Oh well, I've got other plans now... Edit: To be fair to Stripe, they did tell me that it was not them, but their underwriters that were responsible for the decision.

anoncoward111 9y ago
Your story really resonates with me, as I also was trying to start a side hustle of my own. The original plan was to sell certain retro items on Amazon's Marketplace and possibly Ebay. I figured that the fees and taxation requirements were a logical expense in exchange for increased traffic and ease of payment. While I wasn't concerned about getting hit with accusations of money laundering, I was extremely concerned about chargebacks and Amazon siding with the buyer instead of the seller for pretty much any reason. Which got me thinking-- how and when did it get this bad? A wad of cash or a check in envelopes isn't the most scalable or amazingly convenient payment solution on Earth, but it is more equitable and irreversible than the current system. In fact, I was surprised to learn that Venmo doesn't do chargebacks. Aside from Venmo's strict and arbitrary laws about money laundering ("ISIS beer funds" is a fun googleable term here), it is an infinitely more ideal way to pay than Paypal or etc. "Want to buy something? Venmo me the money and I will send you the item. If you don't trust me as a seller, then find someone you trust who is also selling this item, because by default I do not trust any buyer."
- joecool1029 9y ago
  Guess you'll be even more surprised to learn that Venmo absolutely does chargebacks! Go read their user agreement: https://venmo.com/legal/us-user-agreement/ https://venmo.com/legal/us-user-agreement/
  - anoncoward111 9y ago
    Ahhh, interesting! I literally only googled the problem earlier today. It seems venmo's site lied to me then. It quite literally said "It is not possible to cancel a payment without the consent of the payee". Aka, if i give you money and you say you don't want it, you can cancel the payment. But on Amazon or Ebay, you pay me for an Xbox, I ship it, and 3 days later "IT'S BROKEN" and I lose all my profit + shipping fees
    - bigcostooge 9y ago
      When I was selling hundreds of items per month, I would hold any Spanish name for 48 hours. The majority of Spanish named buyers were committing fraud.
      - Amygaz 9y ago
        Funny story is the first time my credit card number was stolen following the Target hack, it was used in a grocery store and a convenience store near Madrid.
- jdietrich 9y ago
  >A wad of cash or a check in envelopes isn't the most scalable or amazingly convenient payment solution on Earth, but it is more equitable and irreversible than the current system. Cash gets counterfeited. Checks bounce. Invoices go unpaid. Debtors go bankrupt. Packages get pilfered. The world is full of shoplifters, skimmers, change raisers, rip dealers, embezzlers, commercial burglars and opportunists. It didn't "get this bad" - it used to be much worse. Shrinkage is a cost of doing business and it's priced in to margins. If your business venture can't withstand a normal level of shrinkage that all your competitors deal with, then you didn't have a business to begin with.
jstanley 9y ago
Money laundering regulations are one of those things that started out with good intentions (prevent people who obtain money via theft or fraud from being able to spend it in the legitimate economy) but has now morphed into a kafkaesque burden that isn't obviously a net positive for society. This is one of the reasons I'm a big fan of cryptocurrency. Your service would not have been shut down by the payment processor if you were able to handle the money yourself without relying on a third party. The world probably hasn't reached the point where going cryptocurrency-only would be viable for your service, but onerous anti-money laundering regulation is just pushing more people towards cryptocurrency, at the margin.
- deleted 9y ago
  [deleted]
- bayesian_horse 9y ago
  I actually like that you can go after people financing terrorism or making huge amounts of cash from illegal drugs, gambling, smuggling and the like. Without money laundering regulations, and within cryptocurrencies, that would be a lot harder. People dealing in significant amounts of cryptocurrency will eventually have to be regulated in some way, also.
  - jstanley 9y ago
    You can go after people laundering money through cryptocurrency, of course. The part I'm protesting (in this thread, at least) is the part where the regulations on banks and payment processors are so onerous that they refuse to work with legitimate businesses.
  - megous 9y ago
    Are there any numbers? How much of a dent to terror financing this does? I doubt it's very much.
    - bayesian_horse 9y ago
      Just imagine if basically anybody could finance terrorism without much fear of being discovered. I doubt very much there would be less terrorism then.
amelius 9y ago
How to become a bank: https://news.ycombinator.com/item?id=16920125 https://news.ycombinator.com/item?id=16920125
- kennydude 9y ago
  The weird thing is Stripe have invested in Monzo, a bank.
jasonlotito 9y ago
You say all you have to do is lie, but that’s not true at all. I mean, laundering money $20 a day isn’t going to really matter, and a $25,000 pizza order is going to set off alerts. It’s not about preventing 100%, it’s about making it difficult to the point that it’s not a way to efficiently move that much money. I mean, technically Apple could be used to launder money. And frankly, any service that looks to offer some marketplace should be aware of money laundering potential, and how you are going to limit it. And don’t get me started on other issues like fraud.
qaq 9y ago
This is precious world's top banks have being laundering 100s of billions of dollars for drug cartels, ISIS etc. Yet they are worried that some small market place might be used for money laundering.
- shifter 9y ago
  The laws aren't there to protect us, they exist to secure entrenched interests.
  - marricks 9y ago
    You’re not wrong. Banks have enough money to do what they want and hide it or pay off. Average joe has to adhere to the letter of law and what ever corporations throw at them.
  - TorKlingberg 9y ago
    We all love to be cynical, but I feel this sort of discussion is pointless. It's not based on facts or any domain knowledge.
    - spaceribs 9y ago
      Look up "Human History" if you need a source.
  - qaq 9y ago
    In general I agree with you, but I doubt banks lobbied for stricter anti money laundering laws as a measure to stifle competition. They do get pretty much a free pass when they do break them unlike smaller entities though.

by mjfl 9y ago

anoncoward111 9y ago

Your story really resonates with me, as I also was trying to start a side hustle of my own. The original plan was to sell certain retro items on Amazon's Marketplace and possibly Ebay. I figured that the fees and taxation requirements were a logical expense in exchange for increased traffic and ease of payment. While I wasn't concerned about getting hit with accusations of money laundering, I was extremely concerned about chargebacks and Amazon siding with the buyer instead of the seller for pretty much any reason. Which got me thinking-- how and when did it get this bad? A wad of cash or a check in envelopes isn't the most scalable or amazingly convenient payment solution on Earth, but it is more equitable and irreversible than the current system. In fact, I was surprised to learn that Venmo doesn't do chargebacks. Aside from Venmo's strict and arbitrary laws about money laundering ("ISIS beer funds" is a fun googleable term here), it is an infinitely more ideal way to pay than Paypal or etc. "Want to buy something? Venmo me the money and I will send you the item. If you don't trust me as a seller, then find someone you trust who is also selling this item, because by default I do not trust any buyer."

joecool1029 9y ago
Guess you'll be even more surprised to learn that Venmo absolutely does chargebacks! Go read their user agreement: https://venmo.com/legal/us-user-agreement/ https://venmo.com/legal/us-user-agreement/
- anoncoward111 9y ago
  Ahhh, interesting! I literally only googled the problem earlier today. It seems venmo's site lied to me then. It quite literally said "It is not possible to cancel a payment without the consent of the payee". Aka, if i give you money and you say you don't want it, you can cancel the payment. But on Amazon or Ebay, you pay me for an Xbox, I ship it, and 3 days later "IT'S BROKEN" and I lose all my profit + shipping fees
  - bigcostooge 9y ago
    When I was selling hundreds of items per month, I would hold any Spanish name for 48 hours. The majority of Spanish named buyers were committing fraud.
    - Amygaz 9y ago
      Funny story is the first time my credit card number was stolen following the Target hack, it was used in a grocery store and a convenience store near Madrid.
jdietrich 9y ago
>A wad of cash or a check in envelopes isn't the most scalable or amazingly convenient payment solution on Earth, but it is more equitable and irreversible than the current system. Cash gets counterfeited. Checks bounce. Invoices go unpaid. Debtors go bankrupt. Packages get pilfered. The world is full of shoplifters, skimmers, change raisers, rip dealers, embezzlers, commercial burglars and opportunists. It didn't "get this bad" - it used to be much worse. Shrinkage is a cost of doing business and it's priced in to margins. If your business venture can't withstand a normal level of shrinkage that all your competitors deal with, then you didn't have a business to begin with.

jstanley 9y ago

Money laundering regulations are one of those things that started out with good intentions (prevent people who obtain money via theft or fraud from being able to spend it in the legitimate economy) but has now morphed into a kafkaesque burden that isn't obviously a net positive for society. This is one of the reasons I'm a big fan of cryptocurrency. Your service would not have been shut down by the payment processor if you were able to handle the money yourself without relying on a third party. The world probably hasn't reached the point where going cryptocurrency-only would be viable for your service, but onerous anti-money laundering regulation is just pushing more people towards cryptocurrency, at the margin.

deleted 9y ago
[deleted]
bayesian_horse 9y ago
I actually like that you can go after people financing terrorism or making huge amounts of cash from illegal drugs, gambling, smuggling and the like. Without money laundering regulations, and within cryptocurrencies, that would be a lot harder. People dealing in significant amounts of cryptocurrency will eventually have to be regulated in some way, also.
- jstanley 9y ago
  You can go after people laundering money through cryptocurrency, of course. The part I'm protesting (in this thread, at least) is the part where the regulations on banks and payment processors are so onerous that they refuse to work with legitimate businesses.
- megous 9y ago
  Are there any numbers? How much of a dent to terror financing this does? I doubt it's very much.
  - bayesian_horse 9y ago
    Just imagine if basically anybody could finance terrorism without much fear of being discovered. I doubt very much there would be less terrorism then.

amelius 9y ago

How to become a bank: https://news.ycombinator.com/item?id=16920125 https://news.ycombinator.com/item?id=16920125

kennydude 9y ago
The weird thing is Stripe have invested in Monzo, a bank.

jasonlotito 9y ago

You say all you have to do is lie, but that’s not true at all. I mean, laundering money $20 a day isn’t going to really matter, and a $25,000 pizza order is going to set off alerts. It’s not about preventing 100%, it’s about making it difficult to the point that it’s not a way to efficiently move that much money. I mean, technically Apple could be used to launder money. And frankly, any service that looks to offer some marketplace should be aware of money laundering potential, and how you are going to limit it. And don’t get me started on other issues like fraud.

qaq 9y ago

This is precious world's top banks have being laundering 100s of billions of dollars for drug cartels, ISIS etc. Yet they are worried that some small market place might be used for money laundering.

shifter 9y ago
The laws aren't there to protect us, they exist to secure entrenched interests.
- marricks 9y ago
  You’re not wrong. Banks have enough money to do what they want and hide it or pay off. Average joe has to adhere to the letter of law and what ever corporations throw at them.
- TorKlingberg 9y ago
  We all love to be cynical, but I feel this sort of discussion is pointless. It's not based on facts or any domain knowledge.
  - spaceribs 9y ago
    Look up "Human History" if you need a source.
- qaq 9y ago
  In general I agree with you, but I doubt banks lobbied for stricter anti money laundering laws as a measure to stifle competition. They do get pretty much a free pass when they do break them unlike smaller entities though.