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Everyone who is money laundering lies on the AML/KYC forms. The banks know this, the government knows this, the criminals know this. The point of all the AML/

Everyone who is money laundering lies on the AML/KYC forms. The banks know this, the government knows this, the criminals know this. The point of all the AML/KYC stuff isn't to prevent money laundering, but to replace a difficult-to-prosecute crime (money laundering) with an easy-to-prosecute crime (lying on bank forms). It's creating a paper trail for the prosecution when the feds decide they want to take someone down. It's not money laundering per se that the feds have an interest in prosecuting. They have an interest in prosecuting sanctions evasion, tax evasion, black mail, drug smuggling, etc. It's the source of dirty money that they want to stop, not the dirty money itself. What happens is they think someone is smuggling drugs. They see they have money, the money looks suspicious, they get a warrant from the bank, they give them all their AML/KYC forms, and the feds go and track down the real source, and find out that the forms were full of lies and now they can get the drug dealer on bank fraud charges -- which means they don't need to connect them to drugs or murders or anything else, even if that's the real reason they're interested in them. AML/KYC stuff only prevents crime in that it forces criminals to commit other, easier to prosecute crimes to cover up their original crimes.

olalonde 3y ago
You are absolutely right, but I have two issues with that: 1) Non-criminals also lie on the forms. Mainly because it's sometimes their only way to open a bank account (if they are deemed risky by an AML department), even if they have a legal source of income. This renders people who would otherwise not be criminals into criminals. Just recently, I came across a Tweet[0] from someone who will have to face this dilemma sooner or later. 2) It's a loophole for prosecution, as you admit yourself. It's meant to circumvent well established legal principles. For example, in AML cases, the burden of proof is reversed ("guilty until proven innocent"). It's used as a tool to punish people for crimes when the evidence is not sufficient. Is this really something we want? [0] https://twitter.com/mikeinspace/status/1708719585556344993 https://twitter.com/mikeinspace/status/1708719585556344993
- droopyEyelids 3y ago
  What you're describing is a tricky situation with trade-offs. When you face a tricky situation with trade-offs, you have to find a smart and/or complicated solution. It's not usually productive to say "just throw away the solution we have" even if that can be an emotionally satisfying answer.
- hiatus 3y ago
  That thread is about someone determining the cost basis of their crypto and suggesting they go with $0 as they can't reliably ascertain that number. How does that relate to lying on bank forms?
  - olalonde 3y ago
    The question was unrelated but they will nevertheless face this issue. Because if it's a decent amount of Bitcoin and they don't have a paper trail, they will get flagged and reported by their bank and/or crypto exchange. And they will possibly go to prison for money laundering as they won't be able to prove the source of their Bitcoin. So they have three choices: 1) Give up on on their legally acquired BTC, potentially worth millions of dollar. 2) Be honest on the form and pray that they don't get flagged. 3) Lie on the form. There's basically no legal option for cashing out their BTC. A lot of early BTC adopters face this issue, as not everyone had the foresight to keep a paper trail for their 50$ "funny internet money" purchase at Starbucks. Disclaimer: IANAL and this is not legal advice.
    - spicymapotofu 3y ago
      These early adopters are paying for their lack of bookkeeping the same way someone who kept a similar amount of trail-less cash out of the bank would. It's hard to find sympathy for that kind of glibness, especially when crypto actually can be traced back still under most conditions - assuming your bank didn't lose their records from the time, you could show a purchase and vague value increase over time, and accompanying account statements would resolve any AML concerns.
      - olalonde 3y ago
        You think it's fair that someone should lose millions of dollars or go to jail because they didn't keep paperwork for a 50$ cash purchase they made a decade ago? In the early days of Bitcoin, a lot of the purchases were made peer-to-peer with cash. There were even websites called faucets that were literally giving it away.
      - 3y ago
baybal2 3y ago
> The point of all the AML/KYC stuff isn't to prevent money laundering, but to replace a difficult-to-prosecute crime (money laundering) with an easy-to-prosecute crime (lying on bank forms). Absolute nonsense. There was a time when like half of all Russian mafia lived in London fully in the open, and they only vacated the place when they started being kicked out through visa cancellations, not fraud charges. This change changes really nothing in the fact that first world country governments don't want to prosecute those guys. At most, they don't give a fuck, at worst, they are actively conniving. And it's not that they are hard to prosecute at all. Anybody who can read some Russian can get a completely damning charge sheet with a few minutes googling on most of them, let alone British MI-6 analysts. The crazy theory that you can somehow increase prosecution chances with "Al Capon charge" makes little sense if criminals whose offences are provable in 5 minutes without that are walking around. like nothing. There are many accounts in the press of banks employees saying they send hundreds of suspicious activity reports for absolutely clear cut cases without any reaction. And they can't do anything on their own, as their paperwork is completely impeccable from the reporting standpoint. Thinking rationally, it makes sense that a mafioso who is going to launder few billion $, will ensure that his paperwork looks more full, and accurate than that of a legit company. Few percents of such sums will hire legions of top lawyers to do the reporting.

olalonde 3y ago

You are absolutely right, but I have two issues with that: 1) Non-criminals also lie on the forms. Mainly because it's sometimes their only way to open a bank account (if they are deemed risky by an AML department), even if they have a legal source of income. This renders people who would otherwise not be criminals into criminals. Just recently, I came across a Tweet[0] from someone who will have to face this dilemma sooner or later. 2) It's a loophole for prosecution, as you admit yourself. It's meant to circumvent well established legal principles. For example, in AML cases, the burden of proof is reversed ("guilty until proven innocent"). It's used as a tool to punish people for crimes when the evidence is not sufficient. Is this really something we want? [0] https://twitter.com/mikeinspace/status/1708719585556344993 https://twitter.com/mikeinspace/status/1708719585556344993

droopyEyelids 3y ago
What you're describing is a tricky situation with trade-offs. When you face a tricky situation with trade-offs, you have to find a smart and/or complicated solution. It's not usually productive to say "just throw away the solution we have" even if that can be an emotionally satisfying answer.
hiatus 3y ago
That thread is about someone determining the cost basis of their crypto and suggesting they go with $0 as they can't reliably ascertain that number. How does that relate to lying on bank forms?
- olalonde 3y ago
  The question was unrelated but they will nevertheless face this issue. Because if it's a decent amount of Bitcoin and they don't have a paper trail, they will get flagged and reported by their bank and/or crypto exchange. And they will possibly go to prison for money laundering as they won't be able to prove the source of their Bitcoin. So they have three choices: 1) Give up on on their legally acquired BTC, potentially worth millions of dollar. 2) Be honest on the form and pray that they don't get flagged. 3) Lie on the form. There's basically no legal option for cashing out their BTC. A lot of early BTC adopters face this issue, as not everyone had the foresight to keep a paper trail for their 50$ "funny internet money" purchase at Starbucks. Disclaimer: IANAL and this is not legal advice.
  - spicymapotofu 3y ago
    These early adopters are paying for their lack of bookkeeping the same way someone who kept a similar amount of trail-less cash out of the bank would. It's hard to find sympathy for that kind of glibness, especially when crypto actually can be traced back still under most conditions - assuming your bank didn't lose their records from the time, you could show a purchase and vague value increase over time, and accompanying account statements would resolve any AML concerns.
    - olalonde 3y ago
      You think it's fair that someone should lose millions of dollars or go to jail because they didn't keep paperwork for a 50$ cash purchase they made a decade ago? In the early days of Bitcoin, a lot of the purchases were made peer-to-peer with cash. There were even websites called faucets that were literally giving it away.
    - 3y ago

baybal2 3y ago

> The point of all the AML/KYC stuff isn't to prevent money laundering, but to replace a difficult-to-prosecute crime (money laundering) with an easy-to-prosecute crime (lying on bank forms). Absolute nonsense. There was a time when like half of all Russian mafia lived in London fully in the open, and they only vacated the place when they started being kicked out through visa cancellations, not fraud charges. This change changes really nothing in the fact that first world country governments don't want to prosecute those guys. At most, they don't give a fuck, at worst, they are actively conniving. And it's not that they are hard to prosecute at all. Anybody who can read some Russian can get a completely damning charge sheet with a few minutes googling on most of them, let alone British MI-6 analysts. The crazy theory that you can somehow increase prosecution chances with "Al Capon charge" makes little sense if criminals whose offences are provable in 5 minutes without that are walking around. like nothing. There are many accounts in the press of banks employees saying they send hundreds of suspicious activity reports for absolutely clear cut cases without any reaction. And they can't do anything on their own, as their paperwork is completely impeccable from the reporting standpoint. Thinking rationally, it makes sense that a mafioso who is going to launder few billion $, will ensure that his paperwork looks more full, and accurate than that of a legit company. Few percents of such sums will hire legions of top lawyers to do the reporting.