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And here I actually thought that the thieves smelted their own block of palladium from catalytic converters. You're probably right that they offload them to som

And here I actually thought that the thieves smelted their own block of palladium from catalytic converters. You're probably right that they offload them to some unscrupulous smelter. Kind of disappointing. Still, regulated how? What you're talking about is criminal activity. Are regulations the antidote to that? And would you really turn down a million dollars if someone showed up and offered it to you with no questions asked? I'd like to think I would, but that'd be a tough decision. (One thief group got caught with $300k in cash. That means whoever they sold the converters to must've made way more, by definition.)

zizee 5y ago
> Still, regulated how? What you're talking about is criminal activity. Are regulations the antidote to that? Perhaps similar to pawn shops, which (I think) have to keep records of who sold you what. If you are a smelter, you should be able to account for where you get certain expensive metals that you are on-selling.
ajsnigrutin 5y ago
> Still, regulated how? What you're talking about is criminal activity. Are regulations the antidote to that? Eg. signed ownership document for every catalytic converter on premises (scrap yards,...), with a written 'source' - eg, removed from car with VIN 123...789, or replaced on care with VIN 123...789 with a proof of purchase of a new one (i'm guessing it's illegal to drive without one). It's a pain in the ass to implement, but could work.
- refurb 5y ago
  Ok, so I throw them all in a container and ship them to Mexico where they don’t ask questions like this.
  - Scoundreller 5y ago
    Just have customs focus more on illegal exports and less on bothering returning citizens. But that'll never happen. Customs needs to keep up the facade that 'it's keeping you safe' by wasting your time.
- afiori 5y ago
  Often these kind of regulation cause more problems than they solve; not because they do not work but for reason of scale and Bayesian proportions. Suppose that 10% of affected bussiness buy catalytic converter illegally and that an audit will determine di 90% accuracy whether a shop does buy catalytic converter illegally or not, then half* of fined business will end up being innocent (In practice including lax bookkeping and edge cases not considered in the law) * I = innocent, F = fined, G = Guilty P(I|F) = P(F|I)P(I)/P(F) = P(F|I)P(I)/(P(F|I)P(I) + P(F|G)P(G)) = (0.1 * 0.9)/(0.10.9 + 0.10.9) = 0.5 I am pro regulation in almost all cases, but it is not easy...
IkmoIkmo 5y ago
Thing is that it's a lot easier to regulate a small number of registered businesses, with known owners, in known locations, versus a potentially endless amount of (unregistered) customers that come and go. Not easy, just easier. Pinpointing those companies that see large growth in an old, competitive or low-margin industry, is a risk-indicator that allows you to filter out many companies and investigate only a few. Seeing that some are selling large fractions of palladium, is a risk-indicator. Appearing at these companies with fake offers to sell palladium, can give insight. Requiring source-of-scrap forms to be filled in, can give a paper-trail that either leads somewhere, or is obviously fake and leads nowhere. If that happens routinely, licenses could be revoked. Don't get me wrong, none of this solves the issue and none of it is easy. It'll always be a cat and mouse game. AML regulations have shown to be quite ineffective at rooting out the problem, it's very much alive and kicking and perhaps even bigger than ever. Yet it seems also obvious that, much, much more money laundering would be happening in absence of any such regulations. Regulations can be helpful without solving the entire problem, if well designed (AML is very much a clusterfuck for example).
- SV_BubbleTime 5y ago
  When the solution is “we need more laws, more regulation, more inspections”… I tend to think this viewpoint is reactionary and not well considered.
ChuckMcM 5y ago
>Still, regulated how? What you're talking about is criminal activity. Are regulations the antidote to that? Yes, the creation of a regulation with a civil (cash) and personal (imprisonment) penalty is required in order to create enforcement actions. Then you load up a van full of Catalytic converters and drive to metal places and offer to sell them, if they accept, they arrest who ever accepted and seize assets of the owning entity.
- zdragnar 5y ago
  Isn't entrapment of this sort stupidly easy to avoid? If you don't know the person offloading goods to you, ask if it is legit. Let them make up a story about how they got them, or kick them out if they admit it is stolen.
  - ChuckMcM 5y ago
    Ask the people convicted of soliciting a prostitute? Not a lawyer but had a brief introduction to the entrapment defense as a youngster. As explained to me, in the US, an entrapment defense requires the prevention of choice on the part of the criminal. So if the LEO offers the converters and the guy says "Get out of here with those things!" then no arrest and no entrapment. If the LEO says, "I work at a place that replaces catalytic converters and we need to convert these older non-working ones to cash." Then the person making the choice can reasonably say he believed that it was a legal transaction, so even if he is arrested the defense would be entrapment. I will leave the other script (LEO is the buyer) as an exercise for the reader :-)
    - actually_a_dog 5y ago
      > Not a lawyer but had a brief introduction to the entrapment defense as a youngster. As explained to me, in the US, an entrapment defense requires the prevention of choice on the part of the criminal. Not quite. It's more like that the LEO entices or coerces the alleged criminal into committing a criminal act they otherwise would not have done. A legit sting just offers the opportunity to commit an illegal act. Once law enforcement starts using persuasive or coercive tactics, then, you cross over into entrapment. That means that both of your scenarios are actually legit stings, absent any further interaction. See https://www.nolo.com/legal-encyclopedia/entrapment-basics-33987.html https://www.nolo.com/legal-encyclopedia/entrapment-basics-33...
reaperducer 5y ago
Still, regulated how? This kind of regulation already exists for pawn shops. Just expand it to cover more types of items and businesses.
lamontcg 5y ago
There needs to be something like KYC laws so that if agents show up with a van full of catalytic converters and get a no questions asked pile of cash for that scrap that people get arrested and assets get seized, making it highly risky to be on that side of the trade. Make it so that they cannot deal in cash and require ID and a bank account for payment. Move the goalposts so that the scrap dealer accepting the converters must be engaging in criminal conspiracy with the thieves, then if you bust thieves you can get them to easily roll on the scrap dealers.
- calvinmorrison 5y ago
  Except that's how normal scrap often works. We save old cats at the shop and drop them off every six or twelve months to get that cash. Got a big pile of them now.
  - detaro 5y ago
    "we currently do X, that has downsides, we could do Y instead" "but we currently do X!" That's... a weird line of argument?
    - nawgz 5y ago
      I don't think it's weird to point out with first-hand experience that the institutions which the regulations are being proposed for currently carry operational inertia that the regulations will need to work around. Can you explain why that is weird? It was quite a good contribution from my perspective
      - detaro 5y ago
        It seems kind of obvious that any regulation that requires changing workflows would ... cause workflows to change. And it in no way suggests why the changes would be a problem, or would be useless, which is what one would usually expect as reaction.
        5y ago

zizee 5y ago

> Still, regulated how? What you're talking about is criminal activity. Are regulations the antidote to that? Perhaps similar to pawn shops, which (I think) have to keep records of who sold you what. If you are a smelter, you should be able to account for where you get certain expensive metals that you are on-selling.

ajsnigrutin 5y ago

> Still, regulated how? What you're talking about is criminal activity. Are regulations the antidote to that? Eg. signed ownership document for every catalytic converter on premises (scrap yards,...), with a written 'source' - eg, removed from car with VIN 123...789, or replaced on care with VIN 123...789 with a proof of purchase of a new one (i'm guessing it's illegal to drive without one). It's a pain in the ass to implement, but could work.

refurb 5y ago
Ok, so I throw them all in a container and ship them to Mexico where they don’t ask questions like this.
- Scoundreller 5y ago
  Just have customs focus more on illegal exports and less on bothering returning citizens. But that'll never happen. Customs needs to keep up the facade that 'it's keeping you safe' by wasting your time.
afiori 5y ago
Often these kind of regulation cause more problems than they solve; not because they do not work but for reason of scale and Bayesian proportions. Suppose that 10% of affected bussiness buy catalytic converter illegally and that an audit will determine di 90% accuracy whether a shop does buy catalytic converter illegally or not, then half* of fined business will end up being innocent (In practice including lax bookkeping and edge cases not considered in the law) * I = innocent, F = fined, G = Guilty P(I|F) = P(F|I)P(I)/P(F) = P(F|I)P(I)/(P(F|I)P(I) + P(F|G)P(G)) = (0.1 * 0.9)/(0.10.9 + 0.10.9) = 0.5 I am pro regulation in almost all cases, but it is not easy...

IkmoIkmo 5y ago

Thing is that it's a lot easier to regulate a small number of registered businesses, with known owners, in known locations, versus a potentially endless amount of (unregistered) customers that come and go. Not easy, just easier. Pinpointing those companies that see large growth in an old, competitive or low-margin industry, is a risk-indicator that allows you to filter out many companies and investigate only a few. Seeing that some are selling large fractions of palladium, is a risk-indicator. Appearing at these companies with fake offers to sell palladium, can give insight. Requiring source-of-scrap forms to be filled in, can give a paper-trail that either leads somewhere, or is obviously fake and leads nowhere. If that happens routinely, licenses could be revoked. Don't get me wrong, none of this solves the issue and none of it is easy. It'll always be a cat and mouse game. AML regulations have shown to be quite ineffective at rooting out the problem, it's very much alive and kicking and perhaps even bigger than ever. Yet it seems also obvious that, much, much more money laundering would be happening in absence of any such regulations. Regulations can be helpful without solving the entire problem, if well designed (AML is very much a clusterfuck for example).

SV_BubbleTime 5y ago
When the solution is “we need more laws, more regulation, more inspections”… I tend to think this viewpoint is reactionary and not well considered.

ChuckMcM 5y ago

>Still, regulated how? What you're talking about is criminal activity. Are regulations the antidote to that? Yes, the creation of a regulation with a civil (cash) and personal (imprisonment) penalty is required in order to create enforcement actions. Then you load up a van full of Catalytic converters and drive to metal places and offer to sell them, if they accept, they arrest who ever accepted and seize assets of the owning entity.

zdragnar 5y ago
Isn't entrapment of this sort stupidly easy to avoid? If you don't know the person offloading goods to you, ask if it is legit. Let them make up a story about how they got them, or kick them out if they admit it is stolen.
- ChuckMcM 5y ago
  Ask the people convicted of soliciting a prostitute? Not a lawyer but had a brief introduction to the entrapment defense as a youngster. As explained to me, in the US, an entrapment defense requires the prevention of choice on the part of the criminal. So if the LEO offers the converters and the guy says "Get out of here with those things!" then no arrest and no entrapment. If the LEO says, "I work at a place that replaces catalytic converters and we need to convert these older non-working ones to cash." Then the person making the choice can reasonably say he believed that it was a legal transaction, so even if he is arrested the defense would be entrapment. I will leave the other script (LEO is the buyer) as an exercise for the reader :-)
  - actually_a_dog 5y ago
    > Not a lawyer but had a brief introduction to the entrapment defense as a youngster. As explained to me, in the US, an entrapment defense requires the prevention of choice on the part of the criminal. Not quite. It's more like that the LEO entices or coerces the alleged criminal into committing a criminal act they otherwise would not have done. A legit sting just offers the opportunity to commit an illegal act. Once law enforcement starts using persuasive or coercive tactics, then, you cross over into entrapment. That means that both of your scenarios are actually legit stings, absent any further interaction. See https://www.nolo.com/legal-encyclopedia/entrapment-basics-33987.html https://www.nolo.com/legal-encyclopedia/entrapment-basics-33...

reaperducer 5y ago

Still, regulated how? This kind of regulation already exists for pawn shops. Just expand it to cover more types of items and businesses.

lamontcg 5y ago

There needs to be something like KYC laws so that if agents show up with a van full of catalytic converters and get a no questions asked pile of cash for that scrap that people get arrested and assets get seized, making it highly risky to be on that side of the trade. Make it so that they cannot deal in cash and require ID and a bank account for payment. Move the goalposts so that the scrap dealer accepting the converters must be engaging in criminal conspiracy with the thieves, then if you bust thieves you can get them to easily roll on the scrap dealers.

calvinmorrison 5y ago
Except that's how normal scrap often works. We save old cats at the shop and drop them off every six or twelve months to get that cash. Got a big pile of them now.
- detaro 5y ago
  "we currently do X, that has downsides, we could do Y instead" "but we currently do X!" That's... a weird line of argument?
  - nawgz 5y ago
    I don't think it's weird to point out with first-hand experience that the institutions which the regulations are being proposed for currently carry operational inertia that the regulations will need to work around. Can you explain why that is weird? It was quite a good contribution from my perspective
    - detaro 5y ago
      It seems kind of obvious that any regulation that requires changing workflows would ... cause workflows to change. And it in no way suggests why the changes would be a problem, or would be useless, which is what one would usually expect as reaction.
      - 5y ago