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I find it hard to believe it is expensive to do AML and KYC for customers whose balances never cross 5 figures. It seems they would almost never go over any thr

I find it hard to believe it is expensive to do AML and KYC for customers whose balances never cross 5 figures. It seems they would almost never go over any thresholds that require reporting.

iudqnolq 3y ago
From that you should infer that your guess is wrong, there is no such threshold for some requirements
throwaway2037 3y ago
Yes, that post was ridiculous "dog whistle" to discriminate against low income people. How can you work your way out of poverty if you cannot keep a bank account? Ridiculous. people who are statistical outliers. I.e. people with low income Unbelievable, this one. Some people are blind to their privilege here.
- Maxion 3y ago
  I'm not sure how you interepreted my comment as being rude towards some group of people, I was merely describing why things are the way they are. Here's a longer description: KYC and AML costs are fixed. I.e. identifying someone is a one time cost (if done virtually, around 5-25 USD, more if done in person). AML costs are ongoing, but can be automated to a great degree to save on costs. Usually this is done via various heuristic and statistical methods. These work great for the customer types you have a lot of, but for those you have less of you have less training data and your models will cause more alerts than necessary. Alerts that need to be looked at manually. Most of these occur from rich people doing stupid shit, but you also get the same happening on the other end of the spectrum. Poor people usually are very creative with their money, and this causes them to hit AML checks. (Think crypto, remittances, romance scam victims and the like). Rich people aren't a problem, they have so much money in the bank that their compliance costs are offset by the profit the bank earns on them. The average customer usually isn't a problem either, there's a lot of them so a few being unprofitable doesn't really matter. But low income people will incurr more AML and KYC costs that the bank can't offset --> these customers aren't profitable and the bank will do as much as they legally can to annoy them until they leave. This phenomena is called de-risking (it happens to companies, too) and is hugely damaging and is a side-effect of the increasing AML and KYC regulations (Which are shit). AML / KYC regulations desperately need exceptions for people who aren't moving a lot of money. And, conversly, those who DO move a lot of money need to be put under stricter regulations. A) Because it is financially possible and B) they're the guys who do the really damaging money laundering.
Maxion 3y ago
This is precisly the issue, there are no exemptions to AML and KYC regulations for those not moving a lot of money around.

I find it hard to believe it is expensive to do AML and KYC for customers whose balances never cross 5 figures. It seems they would almost never go over any thresholds that require reporting.

iudqnolq 3y ago

From that you should infer that your guess is wrong, there is no such threshold for some requirements

throwaway2037 3y ago

Yes, that post was ridiculous "dog whistle" to discriminate against low income people. How can you work your way out of poverty if you cannot keep a bank account? Ridiculous. people who are statistical outliers. I.e. people with low income Unbelievable, this one. Some people are blind to their privilege here.

Maxion 3y ago
I'm not sure how you interepreted my comment as being rude towards some group of people, I was merely describing why things are the way they are. Here's a longer description: KYC and AML costs are fixed. I.e. identifying someone is a one time cost (if done virtually, around 5-25 USD, more if done in person). AML costs are ongoing, but can be automated to a great degree to save on costs. Usually this is done via various heuristic and statistical methods. These work great for the customer types you have a lot of, but for those you have less of you have less training data and your models will cause more alerts than necessary. Alerts that need to be looked at manually. Most of these occur from rich people doing stupid shit, but you also get the same happening on the other end of the spectrum. Poor people usually are very creative with their money, and this causes them to hit AML checks. (Think crypto, remittances, romance scam victims and the like). Rich people aren't a problem, they have so much money in the bank that their compliance costs are offset by the profit the bank earns on them. The average customer usually isn't a problem either, there's a lot of them so a few being unprofitable doesn't really matter. But low income people will incurr more AML and KYC costs that the bank can't offset --> these customers aren't profitable and the bank will do as much as they legally can to annoy them until they leave. This phenomena is called de-risking (it happens to companies, too) and is hugely damaging and is a side-effect of the increasing AML and KYC regulations (Which are shit). AML / KYC regulations desperately need exceptions for people who aren't moving a lot of money. And, conversly, those who DO move a lot of money need to be put under stricter regulations. A) Because it is financially possible and B) they're the guys who do the really damaging money laundering.

Maxion 3y ago

This is precisly the issue, there are no exemptions to AML and KYC regulations for those not moving a lot of money around.