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KYC laws aimed at anti-money laundering; any large movement of money has to be between trusted parties. Which means a verification process that is more thorough

KYC laws aimed at anti-money laundering; any large movement of money has to be between trusted parties. Which means a verification process that is more thorough the more money you move around.

actually_a_dog 5y ago
Right, but that just means some paperwork gets filed when you attempt to do large transactions with cash, not that it's literally illegal to do those transactions. I don't understand why the toplevel comment says it's illegal to buy stocks. It seems like it would be merely very difficult, not illegal. I think your biggest problem would be finding a broker that would accept a pile of cash to buy you stocks with, rather than the fact that the transaction needs to be reported to the government.
- fragmede 5y ago
  They're saying it's illegal because a random person can't just walk into a bank with a proverbial suitcase full of cash, and deposit it, and use that money to buy stocks. It's quite possible, and certain people do it regularly, but these aren't hypothetical people with no background. These are people known to the bank, its manager, have a thoroughly checked back story, and a reason for doing this, likely as the owner of a mostly cash business. It's not a one time "oh I just got lucky at Vegas, don't mind me" story.
  - actually_a_dog 5y ago
    That's not what "illegal" means.
- andrewla 5y ago
  You are correct; buying a stock with cash is impractical but not illegal or impossible. You cannot transact with an exchange, you cannot transact with a broker or a broker/dealer, using cash -- your cash must be deposited somewhere in order for it to be used. You can do a private sale of stock where you give someone cash and they transfer stock that they own to your name, either through a broker or by signing the transfer form on the back of an actual stock certificate. To actually claim ownership of the stock (to receive proxy and dividends) you must transact with a broker dealer or the issuing agent, which will almost certainly mean that you have to deal with AML and KYC regulations.

KYC laws aimed at anti-money laundering; any large movement of money has to be between trusted parties. Which means a verification process that is more thorough the more money you move around.

actually_a_dog 5y ago

Right, but that just means some paperwork gets filed when you attempt to do large transactions with cash, not that it's literally illegal to do those transactions. I don't understand why the toplevel comment says it's illegal to buy stocks. It seems like it would be merely very difficult, not illegal. I think your biggest problem would be finding a broker that would accept a pile of cash to buy you stocks with, rather than the fact that the transaction needs to be reported to the government.

fragmede 5y ago
They're saying it's illegal because a random person can't just walk into a bank with a proverbial suitcase full of cash, and deposit it, and use that money to buy stocks. It's quite possible, and certain people do it regularly, but these aren't hypothetical people with no background. These are people known to the bank, its manager, have a thoroughly checked back story, and a reason for doing this, likely as the owner of a mostly cash business. It's not a one time "oh I just got lucky at Vegas, don't mind me" story.
- actually_a_dog 5y ago
  That's not what "illegal" means.
andrewla 5y ago
You are correct; buying a stock with cash is impractical but not illegal or impossible. You cannot transact with an exchange, you cannot transact with a broker or a broker/dealer, using cash -- your cash must be deposited somewhere in order for it to be used. You can do a private sale of stock where you give someone cash and they transfer stock that they own to your name, either through a broker or by signing the transfer form on the back of an actual stock certificate. To actually claim ownership of the stock (to receive proxy and dividends) you must transact with a broker dealer or the issuing agent, which will almost certainly mean that you have to deal with AML and KYC regulations.