3 ms·

patio11 covers this a bit in a series of blog posts in his newsletter: https://www.bitsaboutmoney.com/archive/money-laundering-and-aml-compliance/?ref=bits-abou

by er4hn 3y ago

patio11 covers this a bit in a series of blog posts in his newsletter: https://www.bitsaboutmoney.com/archive/money-laundering-and-aml-compliance/?ref=bits-about-money-newsletter https://www.bitsaboutmoney.com/archive/money-laundering-and-.... Quoting a relevant paragraph from the AML post above: Much like KYC, AML policies are recursive stochastic management of crime. The state deputizes financial institutions to, in effect, change the physics of money. In particular, it wants them to situationally repudiate the fungibility of money. (Fungibility is the property that $1 is $1 and, moreover, that you are utterly indifferent between particular dollars.) They are not required to catch every criminal moving money (that would not be a positive result!)

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theturtletalks 3y ago
Deputizing payment processors to curb money laundering sounds good on paper. The issue is that the payment processors ban and deny processing for random, computer generated reasons. Their decision is unappealable even if you’re in the right and are selling perfectly legal items. Normally, if the government suspects you of money laundering, they build a case and bring it to court. The burden of proof is on them to prove you’re laundering money or selling illegal goods. Here, they found a way to not only lessen their work load by deputizing private companies, but also affectively gave payment processors a moat and impunity to decide what people can and cannot sell everywhere. Visa and MC are well within their rights to deny any person for any reason, but the government should have their own processing network. My gut is saying this will never happen since Visa/MC would lobby heavily against it. Even if one is created, expect it to be neutered.
- milsorgen 3y ago
  >the government should have their own processing network Not government per se but isn't this what FedNow is all about? https://www.nerdwallet.com/article/banking/fednow https://www.nerdwallet.com/article/banking/fednow
- kelnos 3y ago
  > Visa and MC are well within their rights to deny any person for any reason True, but as payment networks take on a more utility-like place in society (I'd argue they're already there), we shouldn't allow them to discriminate for arbitrary reasons.
cfn 3y ago
He is right on point. I recently went through a KYC process and, due to a misunderstanding (and their lack of proper user support), I got kicked out of the service for a while. What strikes me is how much financial information I had to provide them. Bank accounts, salary slips, savings accounts, etc. I am more than happy to provide that information to my government in the course of, say, a tax audit, but handing it off to a private company abroad just to buy a few shares is not proportionate. And who else will have access to that information? Is it going to be sold to the highest bidder? The goverment is outsourcing its policing duties and, sooner or later, that will come back to bite us all when a leak outs all this information.

by er4hn 3y ago

deleted 3y ago

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theturtletalks 3y ago

Deputizing payment processors to curb money laundering sounds good on paper. The issue is that the payment processors ban and deny processing for random, computer generated reasons. Their decision is unappealable even if you’re in the right and are selling perfectly legal items. Normally, if the government suspects you of money laundering, they build a case and bring it to court. The burden of proof is on them to prove you’re laundering money or selling illegal goods. Here, they found a way to not only lessen their work load by deputizing private companies, but also affectively gave payment processors a moat and impunity to decide what people can and cannot sell everywhere. Visa and MC are well within their rights to deny any person for any reason, but the government should have their own processing network. My gut is saying this will never happen since Visa/MC would lobby heavily against it. Even if one is created, expect it to be neutered.

milsorgen 3y ago
>the government should have their own processing network Not government per se but isn't this what FedNow is all about? https://www.nerdwallet.com/article/banking/fednow https://www.nerdwallet.com/article/banking/fednow
kelnos 3y ago
> Visa and MC are well within their rights to deny any person for any reason True, but as payment networks take on a more utility-like place in society (I'd argue they're already there), we shouldn't allow them to discriminate for arbitrary reasons.

cfn 3y ago

He is right on point. I recently went through a KYC process and, due to a misunderstanding (and their lack of proper user support), I got kicked out of the service for a while. What strikes me is how much financial information I had to provide them. Bank accounts, salary slips, savings accounts, etc. I am more than happy to provide that information to my government in the course of, say, a tax audit, but handing it off to a private company abroad just to buy a few shares is not proportionate. And who else will have access to that information? Is it going to be sold to the highest bidder? The goverment is outsourcing its policing duties and, sooner or later, that will come back to bite us all when a leak outs all this information.