7 ms·

Throughout all of human history people used private forms of money like cash. Why is it that suddenly only now it is a disaster to have financial privacy becau

Throughout all of human history people used private forms of money like cash. Why is it that suddenly only now it is a disaster to have financial privacy because of "crime"?

vmception 6y ago
they have to clamp down on financial privacy because they invented financial crimes the federal crime of "money laundering" requires the state to use public resources in whitelisting every transaction, and having the entire population stigmatize the concept of ever having money themselves let alone actually moving it and that 50 year old absurdity is pretty much what they are doubling down on
- avianlyric 6y ago
  If you’ve seen the real harm that caused in the world by money laundering, you would be less inclined to condemn its prevention. I’ve personally seen cases of money laundering where the money comes from sexual exploitation, human trafficking, modern day slavery, organ trafficking, high value thefts (petrol, or digits bank robberies), standard social engineering scams etc These aren’t special one of events, this happens in small bank on every day ending in y. Most fincrime teams don’t have the energy to deal with normal people moving their cash, or even high net wealth people moving their cash. They’re too busy tracking down and cleaning up after some really nasty people.
  - nmlnn 6y ago
    > sexual exploitation, human trafficking, modern day slavery, organ trafficking, high value thefts (petrol, or digits bank robberies), standard social engineering scams etc That kind of logic can be used to justify putting government cameras and microphones inside everyone's homes too.
    - dralley 6y ago
      Yes, but that doesn't mean that going to the very opposite extreme is the right response. Nobody is itching to emigrate to Somalia.
      - CryptoPunk 6y ago
        Having laws requiring the state to get a warrant from a court to conduct a search, is not an extreme. Instituting warrantless mass-surveillance, like monitoring every transaction above a certain size, is the extreme.
    - avianlyric 6y ago
      You’re not wrong. There’s clearly a balance to be made, but financial institutions are good choke point for detecting and preventing a great number of different crimes. After all few engage in criminal behaviour just for fun, without the profit motive most serious crimes just wouldn’t be worth it. I don’t advocate for wholesale financial surveillance, and I certainly think the rules advocated by FinCEN here are both naive and an overreach. But I do think banks should have an obligation to detect, prevent and report financial crime, if only to make sure banks don’t become complicit. Providing financial services to criminals is incredibly lucrative, far more than providing services to ordinary consumers.
  - CryptoPunk 6y ago
    Giving government agents the ability to conduct warrantless dragnet surveillance on the population's private financial transactions is extremely dangerous, even if it is a tool government officials can use to combant malevolent criminal behavior. This type of mass-surveillance concentrates power in the hands of the few, and gravely endangers both private property rights and political freedoms. No one should have this power in a free society. Not you, not me, not the most trustworthy individual in society. And with all due respect to the countless men and women who honorably carry out their duty in law enforcement agencies, we don't even have law enforcement agencies with unblemished reputations, to be giving awesome illiberal powers to. In the Silk Road case, two agents, from two different agencies, conspired to steal BTC, and they only got caught because of the mistakes they made due to the novelty of the financial technology. It's any one's guess how much corruption goes undetected. Giving mass-surveillance powers to a select subsection of society is just asking for massive corruption and abuse. Mass-surveillance makes government in general too powerful even ignoring employee-level corruption by those who administer the surveillance programs. The government should not have so much information on the populace that it could enforce any conceivable law. There should be widespread use of privacy-enhancing technologies, like end-to-end encrypted communication, cash and cryptocurrency, so that some laws are hard to enforce, and the government's ability to micromanage people's lives is inherently limited. Absent that, dystopia is only one bad election away. Non-political checks on government powers, like widespread use of cash and its electronic corollaries, are an important institution of a free society, as a failsafe in case of a failure of the political system.
- KLexpat 6y ago
  Capital Gains Taxes + Inheritance Taxes (more so in the UK) + Inflation means that all wealth is gradually eroded. The stigmatisation is to prevent transactions occurring outside of the taxation and government credit system.
alkonaut 6y ago
Because it's cumbersome enough to use cash. My main problem with cryptocurrencies isn't that it's used by organized crime, but that it risks eroding public trust in the tax system. In high tax/high trust systems, that can be disastrous.
- Nextgrid 6y ago
  Is it a bad thing? Maybe taxes shouldn't be a thing, or should be low enough that it's easier to pay them than to dodge them? One of my problems with taxes is that it's essentially a free, automatically-replenishing pool of money for stupid politicians/government officials to spend recklessly (often prioritizing short-term wins that give them the most political clout) without the "pressure" a typical business in a competitive environment faces to use their money in the most efficient manner possible.
  - karlp 6y ago
    So we should throw away public spending because people can't be bothered to check on their politicians once in a while?
  - krageon 6y ago
    Very few low-tax countries are pleasant to live in for the average human being. Clamors for low tax are inevitably made by millionaires or misguided people that believe they might one day be millionaires. Taxes exist for a good reason and have a demonstrable positive effect on the societies where they are levied. Trust in politicians doesn't factor into that, as taxes are generally spent by government officials.
    - Nextgrid 6y ago
      > taxes are generally spent by government officials By politicians I meant to include government officials; I've edited my comment to reflect that. > Very few low-tax countries are pleasant to live in for the average human being I agree, but I don't see the current situation being great either; I think the countries where high taxes are demonstrably increasing quality of life are outliers, and similarly you can increase QOL without a significant (or any?) raise in taxes. My point is that in my opinion taxes break the typical market dynamics (that private companies are subjected to) that incentivise the entity (the company, or in this case the government) to spend their money in the most efficient way possible. Instead, taxes are seen as a near-infinite pool of money you can afford to burn with no ill effects because it'll just keep replenishing itself forever. A recent example in the US another scam going around is the "Solar Roadways" which the electronics engineering community has debunked years ago and yet they recently secured yet another grant from the DOT to burn public funds on something that is known to not work (give this fact, the only reason it was chosen is because someone in power wanted to take advantage of this opportunity to show their support for sustainability/renewable energy/eco-friendliness to gain more political support).
brmgb 6y ago
Hard limits to cash transactions exist in most countries around the world. For example, in France, as a business, you can't accept payment in cash above 1000€. Between consumers, you need to produce an invoice. I personally deeply disagree with the EFF regarding FinCEN. From my point of view, the obligation imposed by the regulation strikes a good balance between protecting private life and fighting tax dodging and money laundering. Records only start at $3000 and reporting at $10000. This puts most transactions between individuals in the no reporting zone.
- ajkdhcb2 6y ago
  The extreme limits and AML regulations are quite a recent phenomenon.
- avianlyric 6y ago
  As someone that works in financial crime prevention, I think these rules are a very blunt instrument that will almost certainly do more harm than good. There have been banks in the past that have operated similar policies, and regulators have raked their senior leaders over the coals for implementing such naive rules. Transaction size alone tends to be an extremely weak signal for money laundering, but does tend to be a very strong single of high net wealth. Any criminal worth their salt will split up illicit transactions into smaller ones to avoid these types of rules, it’s money laundering 101.
  - brmgb 6y ago
    > Any criminal worth their salt will split up illicit transactions into smaller ones to avoid these types of rules, it’s money laundering 101. FinCEN mandates that all transactions conducted by or or on behalf of the same person during the same business day have to be aggregated and the $10000 dollars limit is per individual not per account.
- bouncycastle 6y ago
  So if all >1000€ transactions need to be reported, that means that they need to be recorded in an electronic system. That data is recorded for the purpose of sharing with various institutions and agencies, and you do not know who will see that data or how long it will be shared for. There is basically no privacy for transactions above 1000€. Worse, that data can be hacked and leaked to the internet. Eg. Criminals will be able to see that last summer you bought an expensive watch, and know that you may be a good target. Such data has often been leaked to the internet before. There was a recent incident where the sales data for the Ledger cryptocurrency hardware wallet was hacked and leaked to the internet. Including names and addresses of people. I guess this stort of stuff will happen more frequently in the future.
buran77 6y ago
While you may not be wrong with your conclusion, you're likely wrong withe the argument behind it. Something being done "like this" in the past is not an argument for or against continuing. Counterpoint: Throughout all of human history people warred, raped, pillaged, and enslaved.
KLexpat 6y ago
The idea of fiat currency only works when people are forced to participate in it. The petro-dollar was fairly obvious in the late 20th century, but now things are more subtle. The key thing is ensuring that all exchanges of wealth only occur within a currency controlled by the authorities. They are not really concerned about minor instances of tax avoidance; the primary concern is that large scale economic activity could start occuring outside of a government controlled credit market place. The goal here is to ensure that Bitcoin is financed in USD, and that the finance of this asset remains in government controlled credit. You can borrow bitcoin sure, but its in USD credit markets. You can't at this stage get a bitcoin-mortgage, or a bitcoin credit card that never references USD. Imagine if you could transact in bitcoin all the time, and post assets as collateral to get bitcoin loans with interest pay-able in bitcoin. This would be a point where people stop measuring bitcoin in USD and start measuring things in bitcoin, and is something the US regulators seek to avoid at absolutely all costs.
- avianlyric 6y ago
  > The key thing is ensuring that all exchanges of wealth only occur within a currency controlled by the authorities. I don’t think even this is a requirement. Really all you need is all large transfers of wealth to be reported to central governments so they can collect tax, and enforce money laundering prevention rules. Don’t think a government really cares what currency you use, fiat or crypto, as long as they get their cut in a currency of their choice.
  - KLexpat 6y ago
    They care a lot about control over credit markets. The entire premise of central banks controlling inflation via the money supply becomes precarious when people are able to issue and access credit outside of the controlled money supply. You're entirely right that they want their cut, but they also don't want to end up like a country such as Indonesia or Vietnam where all the financing has to be organised in the USA. The US FED can print money during a recession to ease credit conditions; many non-western countries have no such luxury because while they might have a sovereign currency, all the serious enterprise in their country is financed in New York and cities in Western Europe.

Throughout all of human history people used private forms of money like cash. Why is it that suddenly only now it is a disaster to have financial privacy because of "crime"?

vmception 6y ago

they have to clamp down on financial privacy because they invented financial crimes the federal crime of "money laundering" requires the state to use public resources in whitelisting every transaction, and having the entire population stigmatize the concept of ever having money themselves let alone actually moving it and that 50 year old absurdity is pretty much what they are doubling down on

avianlyric 6y ago
If you’ve seen the real harm that caused in the world by money laundering, you would be less inclined to condemn its prevention. I’ve personally seen cases of money laundering where the money comes from sexual exploitation, human trafficking, modern day slavery, organ trafficking, high value thefts (petrol, or digits bank robberies), standard social engineering scams etc These aren’t special one of events, this happens in small bank on every day ending in y. Most fincrime teams don’t have the energy to deal with normal people moving their cash, or even high net wealth people moving their cash. They’re too busy tracking down and cleaning up after some really nasty people.
- nmlnn 6y ago
  > sexual exploitation, human trafficking, modern day slavery, organ trafficking, high value thefts (petrol, or digits bank robberies), standard social engineering scams etc That kind of logic can be used to justify putting government cameras and microphones inside everyone's homes too.
  - dralley 6y ago
    Yes, but that doesn't mean that going to the very opposite extreme is the right response. Nobody is itching to emigrate to Somalia.
    - CryptoPunk 6y ago
      Having laws requiring the state to get a warrant from a court to conduct a search, is not an extreme. Instituting warrantless mass-surveillance, like monitoring every transaction above a certain size, is the extreme.
  - avianlyric 6y ago
    You’re not wrong. There’s clearly a balance to be made, but financial institutions are good choke point for detecting and preventing a great number of different crimes. After all few engage in criminal behaviour just for fun, without the profit motive most serious crimes just wouldn’t be worth it. I don’t advocate for wholesale financial surveillance, and I certainly think the rules advocated by FinCEN here are both naive and an overreach. But I do think banks should have an obligation to detect, prevent and report financial crime, if only to make sure banks don’t become complicit. Providing financial services to criminals is incredibly lucrative, far more than providing services to ordinary consumers.
- CryptoPunk 6y ago
  Giving government agents the ability to conduct warrantless dragnet surveillance on the population's private financial transactions is extremely dangerous, even if it is a tool government officials can use to combant malevolent criminal behavior. This type of mass-surveillance concentrates power in the hands of the few, and gravely endangers both private property rights and political freedoms. No one should have this power in a free society. Not you, not me, not the most trustworthy individual in society. And with all due respect to the countless men and women who honorably carry out their duty in law enforcement agencies, we don't even have law enforcement agencies with unblemished reputations, to be giving awesome illiberal powers to. In the Silk Road case, two agents, from two different agencies, conspired to steal BTC, and they only got caught because of the mistakes they made due to the novelty of the financial technology. It's any one's guess how much corruption goes undetected. Giving mass-surveillance powers to a select subsection of society is just asking for massive corruption and abuse. Mass-surveillance makes government in general too powerful even ignoring employee-level corruption by those who administer the surveillance programs. The government should not have so much information on the populace that it could enforce any conceivable law. There should be widespread use of privacy-enhancing technologies, like end-to-end encrypted communication, cash and cryptocurrency, so that some laws are hard to enforce, and the government's ability to micromanage people's lives is inherently limited. Absent that, dystopia is only one bad election away. Non-political checks on government powers, like widespread use of cash and its electronic corollaries, are an important institution of a free society, as a failsafe in case of a failure of the political system.
KLexpat 6y ago
Capital Gains Taxes + Inheritance Taxes (more so in the UK) + Inflation means that all wealth is gradually eroded. The stigmatisation is to prevent transactions occurring outside of the taxation and government credit system.

alkonaut 6y ago

Because it's cumbersome enough to use cash. My main problem with cryptocurrencies isn't that it's used by organized crime, but that it risks eroding public trust in the tax system. In high tax/high trust systems, that can be disastrous.

Nextgrid 6y ago
Is it a bad thing? Maybe taxes shouldn't be a thing, or should be low enough that it's easier to pay them than to dodge them? One of my problems with taxes is that it's essentially a free, automatically-replenishing pool of money for stupid politicians/government officials to spend recklessly (often prioritizing short-term wins that give them the most political clout) without the "pressure" a typical business in a competitive environment faces to use their money in the most efficient manner possible.
- karlp 6y ago
  So we should throw away public spending because people can't be bothered to check on their politicians once in a while?
- krageon 6y ago
  Very few low-tax countries are pleasant to live in for the average human being. Clamors for low tax are inevitably made by millionaires or misguided people that believe they might one day be millionaires. Taxes exist for a good reason and have a demonstrable positive effect on the societies where they are levied. Trust in politicians doesn't factor into that, as taxes are generally spent by government officials.
  - Nextgrid 6y ago
    > taxes are generally spent by government officials By politicians I meant to include government officials; I've edited my comment to reflect that. > Very few low-tax countries are pleasant to live in for the average human being I agree, but I don't see the current situation being great either; I think the countries where high taxes are demonstrably increasing quality of life are outliers, and similarly you can increase QOL without a significant (or any?) raise in taxes. My point is that in my opinion taxes break the typical market dynamics (that private companies are subjected to) that incentivise the entity (the company, or in this case the government) to spend their money in the most efficient way possible. Instead, taxes are seen as a near-infinite pool of money you can afford to burn with no ill effects because it'll just keep replenishing itself forever. A recent example in the US another scam going around is the "Solar Roadways" which the electronics engineering community has debunked years ago and yet they recently secured yet another grant from the DOT to burn public funds on something that is known to not work (give this fact, the only reason it was chosen is because someone in power wanted to take advantage of this opportunity to show their support for sustainability/renewable energy/eco-friendliness to gain more political support).

brmgb 6y ago

Hard limits to cash transactions exist in most countries around the world. For example, in France, as a business, you can't accept payment in cash above 1000€. Between consumers, you need to produce an invoice. I personally deeply disagree with the EFF regarding FinCEN. From my point of view, the obligation imposed by the regulation strikes a good balance between protecting private life and fighting tax dodging and money laundering. Records only start at $3000 and reporting at $10000. This puts most transactions between individuals in the no reporting zone.

ajkdhcb2 6y ago
The extreme limits and AML regulations are quite a recent phenomenon.
avianlyric 6y ago
As someone that works in financial crime prevention, I think these rules are a very blunt instrument that will almost certainly do more harm than good. There have been banks in the past that have operated similar policies, and regulators have raked their senior leaders over the coals for implementing such naive rules. Transaction size alone tends to be an extremely weak signal for money laundering, but does tend to be a very strong single of high net wealth. Any criminal worth their salt will split up illicit transactions into smaller ones to avoid these types of rules, it’s money laundering 101.
- brmgb 6y ago
  > Any criminal worth their salt will split up illicit transactions into smaller ones to avoid these types of rules, it’s money laundering 101. FinCEN mandates that all transactions conducted by or or on behalf of the same person during the same business day have to be aggregated and the $10000 dollars limit is per individual not per account.
bouncycastle 6y ago
So if all >1000€ transactions need to be reported, that means that they need to be recorded in an electronic system. That data is recorded for the purpose of sharing with various institutions and agencies, and you do not know who will see that data or how long it will be shared for. There is basically no privacy for transactions above 1000€. Worse, that data can be hacked and leaked to the internet. Eg. Criminals will be able to see that last summer you bought an expensive watch, and know that you may be a good target. Such data has often been leaked to the internet before. There was a recent incident where the sales data for the Ledger cryptocurrency hardware wallet was hacked and leaked to the internet. Including names and addresses of people. I guess this stort of stuff will happen more frequently in the future.

buran77 6y ago

While you may not be wrong with your conclusion, you're likely wrong withe the argument behind it. Something being done "like this" in the past is not an argument for or against continuing. Counterpoint: Throughout all of human history people warred, raped, pillaged, and enslaved.

KLexpat 6y ago

The idea of fiat currency only works when people are forced to participate in it. The petro-dollar was fairly obvious in the late 20th century, but now things are more subtle. The key thing is ensuring that all exchanges of wealth only occur within a currency controlled by the authorities. They are not really concerned about minor instances of tax avoidance; the primary concern is that large scale economic activity could start occuring outside of a government controlled credit market place. The goal here is to ensure that Bitcoin is financed in USD, and that the finance of this asset remains in government controlled credit. You can borrow bitcoin sure, but its in USD credit markets. You can't at this stage get a bitcoin-mortgage, or a bitcoin credit card that never references USD. Imagine if you could transact in bitcoin all the time, and post assets as collateral to get bitcoin loans with interest pay-able in bitcoin. This would be a point where people stop measuring bitcoin in USD and start measuring things in bitcoin, and is something the US regulators seek to avoid at absolutely all costs.

avianlyric 6y ago
> The key thing is ensuring that all exchanges of wealth only occur within a currency controlled by the authorities. I don’t think even this is a requirement. Really all you need is all large transfers of wealth to be reported to central governments so they can collect tax, and enforce money laundering prevention rules. Don’t think a government really cares what currency you use, fiat or crypto, as long as they get their cut in a currency of their choice.
- KLexpat 6y ago
  They care a lot about control over credit markets. The entire premise of central banks controlling inflation via the money supply becomes precarious when people are able to issue and access credit outside of the controlled money supply. You're entirely right that they want their cut, but they also don't want to end up like a country such as Indonesia or Vietnam where all the financing has to be organised in the USA. The US FED can print money during a recession to ease credit conditions; many non-western countries have no such luxury because while they might have a sovereign currency, all the serious enterprise in their country is financed in New York and cities in Western Europe.