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Could it be that the law here is just unreasonable and only the biggest players can afford to get away with breaking it? (likely for an additional premium)

by swiley 6y ago

rando444 6y ago
The law allows for jail time, it's just rarely pursued these days by the DoJ because Eric Holder changed their system to pursue 'wins' (fines) rather than criminal prosecution, because the bar for successful prosecution is so much higher to convict someone of a crime. Can't lose a case if you never try and convict anyone.
- spottybanana 6y ago
  From government perspective the prosecution with jailtime will mean lengthy court processes with an army of lawyers. Lots of costs for government and headache for the government officials. Instead if you just impose a fine, the government will actually get lots of money with little work and headache, and everyone involved will be moderately happy.
  - redis_mlc 6y ago
    > From government perspective the prosecution with jailtime will mean lengthy court processes with an army of lawyers. You're missing the point. The US government has no desire to try SEC and/or white-collar cases without almost certainty that they will win. They don't really care about deterrence - losses tarnish runs for political office later. (You can watch "Law and Order" to see how that works at the city and state level.) This is a subtle form of regulatory capture that greatly favors the largest companies. Fines look like a govt. win without the risk of a loss. It's so bad that federal prosecutors mailed companies to not fund legal defenses for executives charged with a crime, in order to win more cases against defendants who couldn't mount a vigorous defense. (There are even some court forms that ask where you got the money to pay your defense lawyer.) The Countryside shutdown was a multi-billion dollar debacle for the US government. Countrywide CEO Angelo Mozilo basically walked away without legal repercussions after it cratered. He even gave discounted mortgages to politicians to ingratiate the company in Washington. Who's going to indict their mortgage holder? https://www.propublica.org/article/cheat-sheet-whats-happened-to-the-big-players-in-the-financial-crisis https://www.propublica.org/article/cheat-sheet-whats-happene... Source: worked for an SEC watchdog.
bitcoinbutter 6y ago
What you don't see in this article is that HSBC has tons of false positives and the scrutinization of transactions slows everyone down. The more strict they need to be with money flow, the more regular people suffer from crippling KYC and financial reporting. Do we want every transaction we send out to require an accompanying invoice and paper trail? Payment reviews, account freezing, in-depth explanations for every transaction? Moving money has become tedious and a bureaucratic nightmare. I doubt HSBC is doing this on purpose, they just have so many obligations already from their transaction volume that it's nearly impossible to comply with regulations.
- xvilka 6y ago
  This year they quadrupled their harassment of the common customers with the updates in the KYC and antifraud policy. It's close to be completely unbearable. As we can see all these regulations do not help at all. It's better to scrap them whatsoever and just let law enforcement to do their job on following the trails themselves.
  - ficklepickle 6y ago
    They are applying scrutiny to the wrong parties. Ever-more-strict KYC for individuals will never catch commercial clients, by design. That is not a reason to just give up.
- UncleMeat 6y ago
  > the scrutinization of transactions slows everyone down I really don't know if this is a problem. "It is hard to follow the law" doesn't tend to be an excuse for individuals. I have to scrutinize my tax return pretty closely and "it would take a lot of time" isn't going to convince the IRS that I should be let off the hook. Law enforcement could help. Compared to things like the drug war, we have very few people investigating financial crimes. This appears to be by design, where our society is so invested in enabling the rich to make money that anything that stands in their way is unacceptable.

Could it be that the law here is just unreasonable and only the biggest players can afford to get away with breaking it? (likely for an additional premium)

by swiley 6y ago

Could it be that the law here is just unreasonable and only the biggest players can afford to get away with breaking it? (likely for an additional premium)

rando444 6y ago

The law allows for jail time, it's just rarely pursued these days by the DoJ because Eric Holder changed their system to pursue 'wins' (fines) rather than criminal prosecution, because the bar for successful prosecution is so much higher to convict someone of a crime. Can't lose a case if you never try and convict anyone.

spottybanana 6y ago
From government perspective the prosecution with jailtime will mean lengthy court processes with an army of lawyers. Lots of costs for government and headache for the government officials. Instead if you just impose a fine, the government will actually get lots of money with little work and headache, and everyone involved will be moderately happy.
- redis_mlc 6y ago
  > From government perspective the prosecution with jailtime will mean lengthy court processes with an army of lawyers. You're missing the point. The US government has no desire to try SEC and/or white-collar cases without almost certainty that they will win. They don't really care about deterrence - losses tarnish runs for political office later. (You can watch "Law and Order" to see how that works at the city and state level.) This is a subtle form of regulatory capture that greatly favors the largest companies. Fines look like a govt. win without the risk of a loss. It's so bad that federal prosecutors mailed companies to not fund legal defenses for executives charged with a crime, in order to win more cases against defendants who couldn't mount a vigorous defense. (There are even some court forms that ask where you got the money to pay your defense lawyer.) The Countryside shutdown was a multi-billion dollar debacle for the US government. Countrywide CEO Angelo Mozilo basically walked away without legal repercussions after it cratered. He even gave discounted mortgages to politicians to ingratiate the company in Washington. Who's going to indict their mortgage holder? https://www.propublica.org/article/cheat-sheet-whats-happened-to-the-big-players-in-the-financial-crisis https://www.propublica.org/article/cheat-sheet-whats-happene... Source: worked for an SEC watchdog.

bitcoinbutter 6y ago

What you don't see in this article is that HSBC has tons of false positives and the scrutinization of transactions slows everyone down. The more strict they need to be with money flow, the more regular people suffer from crippling KYC and financial reporting. Do we want every transaction we send out to require an accompanying invoice and paper trail? Payment reviews, account freezing, in-depth explanations for every transaction? Moving money has become tedious and a bureaucratic nightmare. I doubt HSBC is doing this on purpose, they just have so many obligations already from their transaction volume that it's nearly impossible to comply with regulations.

xvilka 6y ago
This year they quadrupled their harassment of the common customers with the updates in the KYC and antifraud policy. It's close to be completely unbearable. As we can see all these regulations do not help at all. It's better to scrap them whatsoever and just let law enforcement to do their job on following the trails themselves.
- ficklepickle 6y ago
  They are applying scrutiny to the wrong parties. Ever-more-strict KYC for individuals will never catch commercial clients, by design. That is not a reason to just give up.
UncleMeat 6y ago
> the scrutinization of transactions slows everyone down I really don't know if this is a problem. "It is hard to follow the law" doesn't tend to be an excuse for individuals. I have to scrutinize my tax return pretty closely and "it would take a lot of time" isn't going to convince the IRS that I should be let off the hook. Law enforcement could help. Compared to things like the drug war, we have very few people investigating financial crimes. This appears to be by design, where our society is so invested in enabling the rich to make money that anything that stands in their way is unacceptable.