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The quest to stop "money laundering" is totalitarian in nature. It is not reasonable to stop crime by way of having total awareness of the source of every indiv

The quest to stop "money laundering" is totalitarian in nature. It is not reasonable to stop crime by way of having total awareness of the source of every individual's financial holdings. Such a quest rationalizes warrantless mass-surveillance of the economy, which gives AML agencies and their deputies in the banking sector an unreasonably broad view of the private financial interactions taking place in the economy, and by negating the fungibility of money, undermines its usefulness. Money is only useful to the extent that every unit is interchangable, accepted at face value without prejudice, and can be used without compromising its user's privacy. That means all money must be assumed 'clean' unless proven dirty. Treating everyone as suspect and forcing them prove their money was legitimately acquired in order to utilize it is taking exactly the opposite track.

olefoo 8y ago
> by negating the fungibility of money, undermines its usefulness. I wonder how you could model that. And as a corollary, how to monitor the effect in the real world?
- CryptoPunk 8y ago
  Loss of fungibility has implications for liquidity, and through its centralization of power / creation of information asymmetries, rent-seeking and public choice theory. Maybe these effects could be modelled. I imagine monitoring it could be difficult because the presence of fungibility implies non-traceablility/privacy, meaning observation changes the phenomenon, sort of like the measurement problem of quantum mechanics.
danans 8y ago
> The quest to stop "money laundering" is totalitarian in nature. The point is to raise the risk/cost of money laundering and to minimize its occurrence, otherwise financial fraud becomes culturally normalized, and not something people avoid. For that, anti-money laundering agencies must pay attention to large transfers between anonymized business entities. That's very different than total-awareness of every individual's financial holdings and small transactions. > by negating the fungibility of money, undermines its usefulness Reducing the fungibility (i.e. by increasing the reporting and oversight requirements) of large transfers of money doesn't undermine its usefulness for anything other than money laundering. Most transactions of life fall well below the 10k reporting limit, and those that are above (i.e. purchasing a car) tend to be on-the-record.
- CryptoPunk 8y ago
  >>The point is to raise the risk/cost of money laundering and to minimize its occurrence Of course, that's the point. But the means is totalitarian. >>otherwise financial fraud becomes culturally normalized There are other ways to investigate and prosecute crime besides doing away with due process and protections against warrantless searches. Fraud leaves a massive evidence trail. In many jurisdictions the problem is law enforcement simply not starting a criminal case against those involved in blatant fraud, or taking years to file charges, giving the fraudster time to victimize countless parties before they finally face consequences. So there's no lack of information to use to prosecute those committing fraud without the total surveillance approach. >>For that, anti-money laundering agencies must pay attention to large transfers between anonymized business entities. Anything of significance about the operations of individuals and companies can be known by tracking transactions above $10,000. Requiring that these transactions be reported totally circumvents the traditional limits on government searches, which required a warrant issued by a judge. This is dragnet warrantless surveillance of trillions of dollars of transactions that creates information asymmetries the likes of which have never existed before. >>That's very different than total-awareness of every individual's financial holdings and small transactions. Most small transactions aggregate to larger ones. Having to explain the source of a large deposit to a bank requires providing evidence of the smaller transactions that formed the holding. It amounts to AML agencies and the banks they've deputized having near total knowledge of the financial history of every individual. An enormous amount of proprietary information can be gleened from this, which inevitably contributes to centralization of power, and I imagine, income inequality. >>Reducing the fungibility (i.e. by increasing the reporting and oversight requirements) of large transfers of money doesn't undermine its usefulness for anything other than money laundering. People have their money frozen for months at a time by banks, and have to comply with incredibly intrusive requests for private and hard to acquire information to get it unfrozen. People have their bank accounts closed without explanation because the bank identifies some aspect of their financial profile, like affiliation with a legal marijuana dispensary, as too risky for their AML program. Or because the source of their money, while legal, is perceived as high-risk by the bank. So money is not fungible. Revenue from one legal source is treated differently than revenue from another. And people can't just use cash. The AML drive has resulted in a situation where moving large amounts of cash is not safe, as billions of dollars in cash have been confiscated from individuals without even any charges being laid against them, through civil forfeiture and the principle that cash is "suspicious": http://time.com/4878195/civil-asset-forfeiture-jeff-sessions/ http://time.com/4878195/civil-asset-forfeiture-jeff-sessions...
erikpukinskis 8y ago
> Money is only useful to the extent that every unit is interchangable, accepted at face value without prejudice What makes you say that? If I paid you in gift cards redeemable with specific places you spend money would that not be useful to you? What if I bought coffee from you and paid you in tokens that your employees could invalidate if they proved you engaged in illegal labor practices? What makes these forms of money useless?
- CryptoPunk 8y ago
  There is a usefulness gradient. The more fungible and liquid an asset it is, the more useful it is as a medium of exchange and store of value.
  - erikpukinskis 8y ago
    This seems really reductive. USD in a debit account would rank pretty highly on that gradient, and yet for many purposes it is totally useless. I would propose a diffuse cloud of uses, with different assets filling them out. More like a long tail than a gradient from “useful” to “not useful”.

olefoo 8y ago

> by negating the fungibility of money, undermines its usefulness. I wonder how you could model that. And as a corollary, how to monitor the effect in the real world?

CryptoPunk 8y ago
Loss of fungibility has implications for liquidity, and through its centralization of power / creation of information asymmetries, rent-seeking and public choice theory. Maybe these effects could be modelled. I imagine monitoring it could be difficult because the presence of fungibility implies non-traceablility/privacy, meaning observation changes the phenomenon, sort of like the measurement problem of quantum mechanics.

danans 8y ago

> The quest to stop "money laundering" is totalitarian in nature. The point is to raise the risk/cost of money laundering and to minimize its occurrence, otherwise financial fraud becomes culturally normalized, and not something people avoid. For that, anti-money laundering agencies must pay attention to large transfers between anonymized business entities. That's very different than total-awareness of every individual's financial holdings and small transactions. > by negating the fungibility of money, undermines its usefulness Reducing the fungibility (i.e. by increasing the reporting and oversight requirements) of large transfers of money doesn't undermine its usefulness for anything other than money laundering. Most transactions of life fall well below the 10k reporting limit, and those that are above (i.e. purchasing a car) tend to be on-the-record.

CryptoPunk 8y ago
>>The point is to raise the risk/cost of money laundering and to minimize its occurrence Of course, that's the point. But the means is totalitarian. >>otherwise financial fraud becomes culturally normalized There are other ways to investigate and prosecute crime besides doing away with due process and protections against warrantless searches. Fraud leaves a massive evidence trail. In many jurisdictions the problem is law enforcement simply not starting a criminal case against those involved in blatant fraud, or taking years to file charges, giving the fraudster time to victimize countless parties before they finally face consequences. So there's no lack of information to use to prosecute those committing fraud without the total surveillance approach. >>For that, anti-money laundering agencies must pay attention to large transfers between anonymized business entities. Anything of significance about the operations of individuals and companies can be known by tracking transactions above $10,000. Requiring that these transactions be reported totally circumvents the traditional limits on government searches, which required a warrant issued by a judge. This is dragnet warrantless surveillance of trillions of dollars of transactions that creates information asymmetries the likes of which have never existed before. >>That's very different than total-awareness of every individual's financial holdings and small transactions. Most small transactions aggregate to larger ones. Having to explain the source of a large deposit to a bank requires providing evidence of the smaller transactions that formed the holding. It amounts to AML agencies and the banks they've deputized having near total knowledge of the financial history of every individual. An enormous amount of proprietary information can be gleened from this, which inevitably contributes to centralization of power, and I imagine, income inequality. >>Reducing the fungibility (i.e. by increasing the reporting and oversight requirements) of large transfers of money doesn't undermine its usefulness for anything other than money laundering. People have their money frozen for months at a time by banks, and have to comply with incredibly intrusive requests for private and hard to acquire information to get it unfrozen. People have their bank accounts closed without explanation because the bank identifies some aspect of their financial profile, like affiliation with a legal marijuana dispensary, as too risky for their AML program. Or because the source of their money, while legal, is perceived as high-risk by the bank. So money is not fungible. Revenue from one legal source is treated differently than revenue from another. And people can't just use cash. The AML drive has resulted in a situation where moving large amounts of cash is not safe, as billions of dollars in cash have been confiscated from individuals without even any charges being laid against them, through civil forfeiture and the principle that cash is "suspicious": http://time.com/4878195/civil-asset-forfeiture-jeff-sessions/ http://time.com/4878195/civil-asset-forfeiture-jeff-sessions...

erikpukinskis 8y ago

> Money is only useful to the extent that every unit is interchangable, accepted at face value without prejudice What makes you say that? If I paid you in gift cards redeemable with specific places you spend money would that not be useful to you? What if I bought coffee from you and paid you in tokens that your employees could invalidate if they proved you engaged in illegal labor practices? What makes these forms of money useless?

CryptoPunk 8y ago
There is a usefulness gradient. The more fungible and liquid an asset it is, the more useful it is as a medium of exchange and store of value.
- erikpukinskis 8y ago
  This seems really reductive. USD in a debit account would rank pretty highly on that gradient, and yet for many purposes it is totally useless. I would propose a diffuse cloud of uses, with different assets filling them out. More like a long tail than a gradient from “useful” to “not useful”.