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It is expensive to keep a crime and corruption department on your banking institution. If you are dealing with a millionaire who is related to some oil mogul in

It is expensive to keep a crime and corruption department on your banking institution. If you are dealing with a millionaire who is related to some oil mogul in Russia you can do your due diligence and Vladimirovich can hire a team of accountants to prove that his business is legit and not at all related to the corporativist oligarchy his uncle runs. Or it might be, but the risk vs reward is good enough to turn a blind eye for now. Ivan, immigrant from Belarus who drives a bus and likes to withdraw cash from his <5000 euro account? Get this living liability out of my bank! I won't run a whole department or risk getting fined because some no name pauper. But since we can't just ban him let's just ask for ridiculous documents like proving the nationality of his grandfather (real story btw) or criminal records, translated in English, by an official translator. Let's annoy him so much with retarded requirements he will leave by himself and if he fails to provide our totally not arbitrary evidence we write a polite e-mail stating that we are sorry but we won't run his account anymore. That's basically AML compliance to you.

malux85 4y ago
Also - wait until Ivan has put 10k in your system, then ask for the documents and refuse to give the money back hoping he will abandon it. - Lawful evil AML companies
- notch898a 4y ago
  Or send him a check for the balance and then put derogatory information under chexsystems and all the other banking blacklists so it can't be cashed.
- irusensei 4y ago
  I think I’ve heard someone calling this shotgun KYC. They will allow you to deposit but as soon as you show signs of using that money they take it as hostage until you prove you are not a criminal.
  - cmeacham98 4y ago
    Common with offshore online casinos: you can deposit and lose your money, but as soon as you try to withdraw winnings the KYC rolls out and you better hope you're not a US citizen because you weren't even supposed to sign up in the first place then.
    - josephcsible 4y ago
      Why is "if you gambled but we found out you weren't allowed to gamble, we'll take back your winnings but not give back your losses" legal? Shouldn't it have to be either "we'll reset everything back to before you gambled" or "everything you already did stands; you just can't do anymore (and are probably in trouble)"?
      - earnesti 4y ago
        It is likely not legal but the gamblers are too lazy to take it to courts I would guess, and the casinos are in jurisdictions where it might be really tedious or expensive.
      - cmeacham98 4y ago
        It probably isn't, but generally their ToS says you're not allowed to be in the US when you sign up, and they don't operate in the US. So you'd have to go sue them in the jurisdiction of whatever island nation they're operating in (or get the authorities there to care). Additionally, if you're within the majority of people who deposit money and lose it all you're not going to even know this unless you do some active research about the casino.
        josephcsible 4y ago
        Why couldn't such a judgment be enforced from a US court, by forbidding any American banks from sending any money to their bank until they pay up?
        cmeacham98 4y ago
- omgomgomgomg 4y ago
  It does not really work like that and the bank rarely gets to keep that money. If the SOW is not sufficiently established, the funds are either sent back to the origin of the funds or a SAR is filed, where another regulatory body will decide about the next steps. In any case, the custodian bank does not make anything from doing this.
JumpCrisscross 4y ago
> annoy him so much with retarded requirements he will leave by himself This is rare. It may be the effect. But plenty of financial institutions openly deny risky accounts; no need to needlessly spin wheels. Your broader point is correct, however. Because of the risk, a lot will be demanded. Because of the reward, nobody is motivated to push back on compliance.
- Mandatum 4y ago
  Sure, but they like to allow as many of them in as they legally can. Hence the questions.
- irusensei 4y ago
  > This is rare. I have a funny passport so some institutions are often probing my life and the source of my funds. The criminal records translated to english (I’m not from an english speaking country, I don’t live or work on an english peaking country) happened to me. I also had a chat with a polish woman who told me that UK banks required documents about her grandparents nationality when she went there for study circa 2014. I am convinced xenophobia is alive and well through the financial system. Hell… even cheered by often progressive people who thinks the AML/KYC framework is protecting their lands from foreign barbarians.
  - mistrial9 4y ago
    a large backdrop to this topic is controlling Oil and Gas trade dollars .. narco dollars is real and large, but OaG trade volumes are large and increasingly fought over.. also agree on the xenophobia -- but instead of culture this is turf wars over control of large dollar trade over time
  - NovemberWhiskey 4y ago
    >I am convinced xenophobia is alive and well through the financial system. It's really not. You don't make money by unnecessarily turning business away.
    - 4y ago
pyuser583 4y ago
There’s a really great book called Kleptopia by T. Burgis. It’s about how wealthy oligarchs use the Western legal and banking systems. He points out that the US financial system is squeaky clean. Oligarchs wind up in prison because they think they can pull the crap in New York that they pull in London. But outside the financial sector it’s the 100% opposite. Americas permissive corporate transparency lets assets vanish. The best example: if you want to get a mortgage to buy a house you have submit to a financial strip search. But if you want to buy a house with bags of cash, you don’t even need to give your name.
- Spooky23 4y ago
  Real estate is the ultimate legal grift in the US. The whole tax system is wired up to the benefit of real estate investors.
  - mistrial9 4y ago
    further, some say that the expansion curves in Piketty's "Capital in the 21st Century" are not across the whole economy, but that rapid inflated asset values in real estate in particular, are drivers.
    - Spooky23 4y ago
      Probably. How much of the middle class lifestyle in big metros is built on home equity?
- fedreserved 4y ago
  [dead]
- lotsofpulp 4y ago
  > The best example: if you want to get a mortgage to buy a house you have submit to a financial strip search. But if you want to buy a house with bags of cash, you don’t even need to give your name. What is this an example of? You are submitting a financial strip search because the lender wants to ensure the borrower can pay the debt, not to ensure they are a criminal or not. And that is because prior to 2008, lenders were giving out loans to people with zero underwriting, hence the cascading defaults, and then financial crisis, which led to more regulations on proper underwriting.
tagyro 4y ago
The same thing happens in Germany, with N26. Under the pretext of "regulatory requirements", they ask for information like income amount and source, employment status and industry etc. BaFin (the banking supervisory authority) is ignoring this, like they did with Wirecard
StanislavPetrov 4y ago
I know I'm expressing a minority opinion on this, but I'd much rather have an unregulated system where I was able to send and receive money without any sort of hassle or oversight, even if criminals and people frowned upon by the people who run SWIFT are able to do the same.
- drexlspivey 4y ago
  I think you just described cryptocurrencies? Or did I miss the joke?
  - repomies69 4y ago
    AML/KYC laws apply to cryptocurrencies as well, in fact more so because they are by default more suspicious. Try depositing big amount of BTC to an exchange, you will get questions.
- wpietri 4y ago
  That will seem swell to you until better-funded criminals want a piece of your assets, money, or labor. There are very good societal reasons to keep crime to a manageable level.
  - etherael 4y ago
    So crime was not at a manageable level prior to say 1970, when none of these AMLKYC laws existed? And crime has not been at a manageable level after say 2008 when crypto came into existence and made it impossible to actually enforce? Man, for that brief shining window we really had perfection.
    - wpietri 4y ago
      Yes, actually, the American mafia has declined severely since its heyday. There are surely many reasons, as it's part of a broader decline in crime in recent decades, but the increased difficulty of cleaning dirty money is part of it. And crime has definitely gone up because of cryptocurrency. I'm not sure how much it has affected the more traditional sorts of crime, as I don't think it's much of a help in turning dirty cash into clean assets thanks difficulty of exchange and the ledger acting as "prosecution futures". But ransomware has grown massively thanks to cryptocurrency. And ransomware gangs have grown correspondingly in size and sophistication thanks to having all that money to spend.
koheripbal 4y ago
Being a millionaire is no where near enough for banks to look the other way. They turn away millionaire accounts all the time. You need to have many hundreds of millions under management for them to do their diligence so you can open an account. Most accounts under 10 million cannot even get cleared to trade high risk options. No way in hell they'll skip AML checks.
- citrin_ru 4y ago
  May be being a millionaire is not enough to get a non-hostile treatment from a bank but the problem is that the cost of compliance is of the same order for all customers (because reporting thresholds where exist are very low like €1K or $10K) but per-customer profit is different. This creates an incentive to disproportionately deny service to non-rich customers. This would be much less of a problem if government regulators where focused on people/entities which operate with truly large amounts of money so ordinary folks can stay under the radar and not be a burden for a bank. But for some reasons governments wants have a grip almost on everyone. So having below median wage as the main source of income doesn't not make one a low risk customer for a bank if there are other "risk" factors (like being an immigrant).
roenxi 4y ago
Hi. I'm Australian. When Australian companies offer shareholder deals (like capital raises, offering shareholders a chance to get in first on favourable terms) there is usually a neatly printed prospectus that has a couple of pages in very explicit language saying "this is NOT FOR AMERICANS. Please do not show this to a US citizen. If you are a US citizen, you must disregard this booklet!". It always strikes me as unfortunate just how badly the US is locking themselves out of otherwise quite good investment opportunities. I always assumed that these service refusals were due to AML laws using logic similar to what you describe. It is always the US. We're ok with Europeans, Asians, Africans and South Americans.
- lancewiggs 4y ago
  That’s due to US securities laws, not AML. The real reach through for Australia EY al. is FACTA, where any person with US citizenship invokes extra and onerous reporting requirements.
  - kjetijor 4y ago
    Or just changing tax residency. Moving from Norway to the US, brokerages will tell you to liquidate your assets or they'll do it for you, because they do not want to touch the reporting requirements to the US.

malux85 4y ago

Also - wait until Ivan has put 10k in your system, then ask for the documents and refuse to give the money back hoping he will abandon it. - Lawful evil AML companies

notch898a 4y ago
Or send him a check for the balance and then put derogatory information under chexsystems and all the other banking blacklists so it can't be cashed.
irusensei 4y ago
I think I’ve heard someone calling this shotgun KYC. They will allow you to deposit but as soon as you show signs of using that money they take it as hostage until you prove you are not a criminal.
- cmeacham98 4y ago
  Common with offshore online casinos: you can deposit and lose your money, but as soon as you try to withdraw winnings the KYC rolls out and you better hope you're not a US citizen because you weren't even supposed to sign up in the first place then.
  - josephcsible 4y ago
    Why is "if you gambled but we found out you weren't allowed to gamble, we'll take back your winnings but not give back your losses" legal? Shouldn't it have to be either "we'll reset everything back to before you gambled" or "everything you already did stands; you just can't do anymore (and are probably in trouble)"?
    - earnesti 4y ago
      It is likely not legal but the gamblers are too lazy to take it to courts I would guess, and the casinos are in jurisdictions where it might be really tedious or expensive.
    - cmeacham98 4y ago
      It probably isn't, but generally their ToS says you're not allowed to be in the US when you sign up, and they don't operate in the US. So you'd have to go sue them in the jurisdiction of whatever island nation they're operating in (or get the authorities there to care). Additionally, if you're within the majority of people who deposit money and lose it all you're not going to even know this unless you do some active research about the casino.
      - josephcsible 4y ago
        Why couldn't such a judgment be enforced from a US court, by forbidding any American banks from sending any money to their bank until they pay up?
        cmeacham98 4y ago
omgomgomgomg 4y ago
It does not really work like that and the bank rarely gets to keep that money. If the SOW is not sufficiently established, the funds are either sent back to the origin of the funds or a SAR is filed, where another regulatory body will decide about the next steps. In any case, the custodian bank does not make anything from doing this.

JumpCrisscross 4y ago

> annoy him so much with retarded requirements he will leave by himself This is rare. It may be the effect. But plenty of financial institutions openly deny risky accounts; no need to needlessly spin wheels. Your broader point is correct, however. Because of the risk, a lot will be demanded. Because of the reward, nobody is motivated to push back on compliance.

Mandatum 4y ago
Sure, but they like to allow as many of them in as they legally can. Hence the questions.
irusensei 4y ago
> This is rare. I have a funny passport so some institutions are often probing my life and the source of my funds. The criminal records translated to english (I’m not from an english speaking country, I don’t live or work on an english peaking country) happened to me. I also had a chat with a polish woman who told me that UK banks required documents about her grandparents nationality when she went there for study circa 2014. I am convinced xenophobia is alive and well through the financial system. Hell… even cheered by often progressive people who thinks the AML/KYC framework is protecting their lands from foreign barbarians.
- mistrial9 4y ago
  a large backdrop to this topic is controlling Oil and Gas trade dollars .. narco dollars is real and large, but OaG trade volumes are large and increasingly fought over.. also agree on the xenophobia -- but instead of culture this is turf wars over control of large dollar trade over time
- NovemberWhiskey 4y ago
  >I am convinced xenophobia is alive and well through the financial system. It's really not. You don't make money by unnecessarily turning business away.
  - 4y ago

pyuser583 4y ago

There’s a really great book called Kleptopia by T. Burgis. It’s about how wealthy oligarchs use the Western legal and banking systems. He points out that the US financial system is squeaky clean. Oligarchs wind up in prison because they think they can pull the crap in New York that they pull in London. But outside the financial sector it’s the 100% opposite. Americas permissive corporate transparency lets assets vanish. The best example: if you want to get a mortgage to buy a house you have submit to a financial strip search. But if you want to buy a house with bags of cash, you don’t even need to give your name.

Spooky23 4y ago
Real estate is the ultimate legal grift in the US. The whole tax system is wired up to the benefit of real estate investors.
- mistrial9 4y ago
  further, some say that the expansion curves in Piketty's "Capital in the 21st Century" are not across the whole economy, but that rapid inflated asset values in real estate in particular, are drivers.
  - Spooky23 4y ago
    Probably. How much of the middle class lifestyle in big metros is built on home equity?
fedreserved 4y ago
[dead]
lotsofpulp 4y ago
> The best example: if you want to get a mortgage to buy a house you have submit to a financial strip search. But if you want to buy a house with bags of cash, you don’t even need to give your name. What is this an example of? You are submitting a financial strip search because the lender wants to ensure the borrower can pay the debt, not to ensure they are a criminal or not. And that is because prior to 2008, lenders were giving out loans to people with zero underwriting, hence the cascading defaults, and then financial crisis, which led to more regulations on proper underwriting.

tagyro 4y ago

The same thing happens in Germany, with N26. Under the pretext of "regulatory requirements", they ask for information like income amount and source, employment status and industry etc. BaFin (the banking supervisory authority) is ignoring this, like they did with Wirecard

StanislavPetrov 4y ago

I know I'm expressing a minority opinion on this, but I'd much rather have an unregulated system where I was able to send and receive money without any sort of hassle or oversight, even if criminals and people frowned upon by the people who run SWIFT are able to do the same.

drexlspivey 4y ago
I think you just described cryptocurrencies? Or did I miss the joke?
- repomies69 4y ago
  AML/KYC laws apply to cryptocurrencies as well, in fact more so because they are by default more suspicious. Try depositing big amount of BTC to an exchange, you will get questions.
wpietri 4y ago
That will seem swell to you until better-funded criminals want a piece of your assets, money, or labor. There are very good societal reasons to keep crime to a manageable level.
- etherael 4y ago
  So crime was not at a manageable level prior to say 1970, when none of these AMLKYC laws existed? And crime has not been at a manageable level after say 2008 when crypto came into existence and made it impossible to actually enforce? Man, for that brief shining window we really had perfection.
  - wpietri 4y ago
    Yes, actually, the American mafia has declined severely since its heyday. There are surely many reasons, as it's part of a broader decline in crime in recent decades, but the increased difficulty of cleaning dirty money is part of it. And crime has definitely gone up because of cryptocurrency. I'm not sure how much it has affected the more traditional sorts of crime, as I don't think it's much of a help in turning dirty cash into clean assets thanks difficulty of exchange and the ledger acting as "prosecution futures". But ransomware has grown massively thanks to cryptocurrency. And ransomware gangs have grown correspondingly in size and sophistication thanks to having all that money to spend.

koheripbal 4y ago

Being a millionaire is no where near enough for banks to look the other way. They turn away millionaire accounts all the time. You need to have many hundreds of millions under management for them to do their diligence so you can open an account. Most accounts under 10 million cannot even get cleared to trade high risk options. No way in hell they'll skip AML checks.

citrin_ru 4y ago
May be being a millionaire is not enough to get a non-hostile treatment from a bank but the problem is that the cost of compliance is of the same order for all customers (because reporting thresholds where exist are very low like €1K or $10K) but per-customer profit is different. This creates an incentive to disproportionately deny service to non-rich customers. This would be much less of a problem if government regulators where focused on people/entities which operate with truly large amounts of money so ordinary folks can stay under the radar and not be a burden for a bank. But for some reasons governments wants have a grip almost on everyone. So having below median wage as the main source of income doesn't not make one a low risk customer for a bank if there are other "risk" factors (like being an immigrant).

roenxi 4y ago

Hi. I'm Australian. When Australian companies offer shareholder deals (like capital raises, offering shareholders a chance to get in first on favourable terms) there is usually a neatly printed prospectus that has a couple of pages in very explicit language saying "this is NOT FOR AMERICANS. Please do not show this to a US citizen. If you are a US citizen, you must disregard this booklet!". It always strikes me as unfortunate just how badly the US is locking themselves out of otherwise quite good investment opportunities. I always assumed that these service refusals were due to AML laws using logic similar to what you describe. It is always the US. We're ok with Europeans, Asians, Africans and South Americans.

lancewiggs 4y ago
That’s due to US securities laws, not AML. The real reach through for Australia EY al. is FACTA, where any person with US citizenship invokes extra and onerous reporting requirements.
- kjetijor 4y ago
  Or just changing tax residency. Moving from Norway to the US, brokerages will tell you to liquidate your assets or they'll do it for you, because they do not want to touch the reporting requirements to the US.