7 ms·

Even according to the IRS's own estimates, laws like Fatca would never pass a cost/benefit test. The implementation costs of such bureaucratic monstrosities is

by Hermel 8y ago

Even according to the IRS's own estimates, laws like Fatca would never pass a cost/benefit test. The implementation costs of such bureaucratic monstrosities is in the range of hundreds of billions, whereas the benefit is a few orders of magnitude lower. The established banks do not complain much about it because the high fixed cost of compliance disproportionally affects small firms, thereby protecting them from being disrupted by innovative startups.

deleted 8y ago
[deleted]
simias 8y ago
So I know next to nothing about these regulations but what do you mean by "cost/benefit" exactly? Surely if these rules are meant to fight (directly or indirectly) organized crime then you can't just judge them on the amount of money saved? If you spend $10 millions to prevent $1 million to reach a terrorist organization, can't you consider it money well spent?
- avar 8y ago
  FATCA is about making non-US financial institutions report to the IRS et al about holdings of US citizens abroad. Worrying about terrorist cells in foreign countries made up of U.S. citizens is absurd.
  - toomuchtodo 8y ago
    FATCA is the stick used to dissuade tax evasion by US citizens. If people think they can evade taxes successfully, they will. Whether this impacts Bitcoin or other crypto is inconsequential.
- osd 8y ago
  if the terrorist organization is able to fund itself, then no, 10 to 1 is not money well spent. You'll lose in the long run.
- wpietri 8y ago
  Exactly. If we want to do a true benefit calculation, we have to look at alternate futures. One important future to avert is where organized crime is rampant. Even if we look at only the economic costs, one study in Italy suggests mafia domination cost 16% of per-capita GDP. Given the US's $20 trillion GDP, that's quite a lot. And that's ignoring people's preference for security and safety. As an entrepreneur, for example, I think it's great that I don't have to worry about paying for "protection" to keep from having my business burned down or my legs broken. We also have to look at terrorism. KYC/AML work to keep cash out of the hands of terrorists. Terrorism is, moral and human cost aside, very expensive. The 9/11 incident alone sees estimates in the $2-3 trillion range for total economic costs. So even if KYC/AML really does cost hundreds of billions, which I doubt, it's a bargain compared to the problems it's meant to prevent. [1] https://onlinelibrary.wiley.com/doi/abs/10.1111/ecoj.12235 https://onlinelibrary.wiley.com/doi/abs/10.1111/ecoj.12235 [2] E.g., see https://www.brookings.edu/articles/the-world-after-911-part-i/ https://www.brookings.edu/articles/the-world-after-911-part-... and https://archive.nytimes.com/www.nytimes.com/interactive/2011/09/08/us/sept-11-reckoning/cost-graphic.html https://archive.nytimes.com/www.nytimes.com/interactive/2011...
  - antidesitter 8y ago
    > One important future to avert is where organized crime is rampant... one study in Italy suggests mafia domination cost 16% of per-capita GDP. Given the US's $20 trillion GDP, that's quite a lot. You’re making two separate, tenuous extrapolations here. Can you justify them?
    - wpietri 8y ago
      I probably can. Did you want to ask some specific question? Better, do you you have a way of calculating path-not-taken costs for rampant organized crime that you think might be more effective?
      - antidesitter 8y ago
        I didn't see any calculation in the parent comment.
- Scoundreller 8y ago
  My American relative that was born in the USA and lived there for about 6 weeks finally did their US tax returns a few years ago. No tax owing and received some hundreds of dollars in refunds from the IRS. They even corrected a mistake resulting in an even larger refund (forgot to apply for some program). All because of increasingly draconious laws for non-filers that conveniently ignore that most Americans abroad aren’t millionaires. Cost: hundreds of US$, data entry and processing. Benefit to US: ?????
- joering2 8y ago
  He meant cost bebefit to organizations to implement it. Take HSBC for example, one of largest China/HK bank. They waited until Fatca kicks in, then realized it will be too complicated and expensive to implement, so what do they do? Within 45 days they kick out all us-citizen based accounts off their grid. All gone. Thats how foreign banks “comply” with Fatca. Arguably some politicians say it was actually mean to work this way so us citizens behave nice and just keep their freaking money in us banks. I know of 3 friends who had to sold their hong kong based business because noone there would open them banking account anymore so here it is american politicans screwing over american citizens having business on a foreign land.
  - deleted 8y ago
    [deleted]
brohee 8y ago
Do you have a source for your hundreds of billions (hundreds of billions what?). Compliance costs are usually baked in personnel and IT costs.
dd36 8y ago
KYC compliance: A form and proof of identity.
- CaptainZapp 8y ago
  Actually it goes a bit further than that. It means to determine the actual beneficiery of a bank account in addition to traceability of the funds used. The bloke showing id may not be the actual owner of the funds and it's up to the bank to determine this.
CaptainZapp 8y ago
FATCA has nothing to do with KYC / AML provisions. It involves, simplified, reporting requirements of US account holders by foreign banks to the US authorities. It's main purpose is to avoid tax dodging by US persons. I'm not arguing that it's a great law, since it's not. For example: it can make it extremely hard for US persons living abroad to open a bank account because foreign banks just don't want to bother with those onnerous reporting requirements. It has nothing, whatsoever, to do with KYC / AML provisions, which are very rightfully imposed on financial instituions. And yes, I work for one.

by Hermel 8y ago

deleted 8y ago

[deleted]

simias 8y ago

So I know next to nothing about these regulations but what do you mean by "cost/benefit" exactly? Surely if these rules are meant to fight (directly or indirectly) organized crime then you can't just judge them on the amount of money saved? If you spend $10 millions to prevent $1 million to reach a terrorist organization, can't you consider it money well spent?

avar 8y ago
FATCA is about making non-US financial institutions report to the IRS et al about holdings of US citizens abroad. Worrying about terrorist cells in foreign countries made up of U.S. citizens is absurd.
- toomuchtodo 8y ago
  FATCA is the stick used to dissuade tax evasion by US citizens. If people think they can evade taxes successfully, they will. Whether this impacts Bitcoin or other crypto is inconsequential.
osd 8y ago
if the terrorist organization is able to fund itself, then no, 10 to 1 is not money well spent. You'll lose in the long run.
wpietri 8y ago
Exactly. If we want to do a true benefit calculation, we have to look at alternate futures. One important future to avert is where organized crime is rampant. Even if we look at only the economic costs, one study in Italy suggests mafia domination cost 16% of per-capita GDP. Given the US's $20 trillion GDP, that's quite a lot. And that's ignoring people's preference for security and safety. As an entrepreneur, for example, I think it's great that I don't have to worry about paying for "protection" to keep from having my business burned down or my legs broken. We also have to look at terrorism. KYC/AML work to keep cash out of the hands of terrorists. Terrorism is, moral and human cost aside, very expensive. The 9/11 incident alone sees estimates in the $2-3 trillion range for total economic costs. So even if KYC/AML really does cost hundreds of billions, which I doubt, it's a bargain compared to the problems it's meant to prevent. [1] https://onlinelibrary.wiley.com/doi/abs/10.1111/ecoj.12235 https://onlinelibrary.wiley.com/doi/abs/10.1111/ecoj.12235 [2] E.g., see https://www.brookings.edu/articles/the-world-after-911-part-i/ https://www.brookings.edu/articles/the-world-after-911-part-... and https://archive.nytimes.com/www.nytimes.com/interactive/2011/09/08/us/sept-11-reckoning/cost-graphic.html https://archive.nytimes.com/www.nytimes.com/interactive/2011...
- antidesitter 8y ago
  > One important future to avert is where organized crime is rampant... one study in Italy suggests mafia domination cost 16% of per-capita GDP. Given the US's $20 trillion GDP, that's quite a lot. You’re making two separate, tenuous extrapolations here. Can you justify them?
  - wpietri 8y ago
    I probably can. Did you want to ask some specific question? Better, do you you have a way of calculating path-not-taken costs for rampant organized crime that you think might be more effective?
    - antidesitter 8y ago
      I didn't see any calculation in the parent comment.
Scoundreller 8y ago
My American relative that was born in the USA and lived there for about 6 weeks finally did their US tax returns a few years ago. No tax owing and received some hundreds of dollars in refunds from the IRS. They even corrected a mistake resulting in an even larger refund (forgot to apply for some program). All because of increasingly draconious laws for non-filers that conveniently ignore that most Americans abroad aren’t millionaires. Cost: hundreds of US$, data entry and processing. Benefit to US: ?????
joering2 8y ago
He meant cost bebefit to organizations to implement it. Take HSBC for example, one of largest China/HK bank. They waited until Fatca kicks in, then realized it will be too complicated and expensive to implement, so what do they do? Within 45 days they kick out all us-citizen based accounts off their grid. All gone. Thats how foreign banks “comply” with Fatca. Arguably some politicians say it was actually mean to work this way so us citizens behave nice and just keep their freaking money in us banks. I know of 3 friends who had to sold their hong kong based business because noone there would open them banking account anymore so here it is american politicans screwing over american citizens having business on a foreign land.
- deleted 8y ago
  [deleted]

brohee 8y ago

Do you have a source for your hundreds of billions (hundreds of billions what?). Compliance costs are usually baked in personnel and IT costs.

dd36 8y ago

KYC compliance: A form and proof of identity.

CaptainZapp 8y ago
Actually it goes a bit further than that. It means to determine the actual beneficiery of a bank account in addition to traceability of the funds used. The bloke showing id may not be the actual owner of the funds and it's up to the bank to determine this.

CaptainZapp 8y ago

FATCA has nothing to do with KYC / AML provisions. It involves, simplified, reporting requirements of US account holders by foreign banks to the US authorities. It's main purpose is to avoid tax dodging by US persons. I'm not arguing that it's a great law, since it's not. For example: it can make it extremely hard for US persons living abroad to open a bank account because foreign banks just don't want to bother with those onnerous reporting requirements. It has nothing, whatsoever, to do with KYC / AML provisions, which are very rightfully imposed on financial instituions. And yes, I work for one.