3 ms·
That’s simple CYA, and also ensures you’ve not only done the illegal activity, you’ve defrauded the brokerage and breached your contract with them, and they get
by wrs 7mo ago
That’s simple CYA, and also ensures you’ve not only done the illegal activity, you’ve defrauded the brokerage and breached your contract with them, and they get a weak KYC defense as well.
Similar to the “Al Capone” instructions from the IRS:
>Income from illegal activities, such as money from dealing illegal drugs, must be included in your income on Schedule 1 (Form 1040), line 8z, or on Schedule C (Form 1040) if from your self-employment activity.
On the other hand, if you want to talk about these stickers all over Seattle saying you’re not allowed to conduct illegal activities on the premises…
- janalsncm 7mo agoI still don’t understand the CYA though. For the majority of banks, they do not want people to conduct illegal activity via their bank. For the minority of banks which don’t mind it, nothing stops them from adding the clause anyways. A cartel bank probably cannot use the existence of the clause as a defense if they’re still allowing illegal activity. If the purpose is to allow the bank to terminate accounts suspected of illegal activity, my assumption is they can already terminate for much less than that.
- wrs 7mo agoIt’s not just that they don’t want it, it’s that they’re liable for it themselves if they should have known it was happening. Asking you adds one more small layer of “we discouraged illegal activity and we didn’t know about any”.
- janalsncm 7mo agoMaybe I am just slow. Bank 1 has the CYA clause and a cartel uses them for a decade for illegal purposes. Bank 2 does not have the clause and a cartel uses them for a decade for illegal purposes. In neither case does the clause prevent the illegal activity or make the bank any more or less aware of what customers are doing. They have to do KYC regardless of what the TOS says.
- anamexis 7mo agoThe point of the CYA clause isn’t to prevent illegal activity or make the bank more aware of what customers are doing. The point is that when Bank 1 is defending itself in court, it has one additional thing they can point at when arguing that it should not be liable for the illegal activities.
- janalsncm 7mo agoOk, fair enough. I just don’t think that is convincing evidence, personally. But there would be 11 other people on the jury.
- watwut 7mo agoThe bank that actually welcome the AlCapone will be first to have that form. If the court can be affected by something like that, it says something really bad about the legal system.
- lxgr 7mo agoIf this actually works in court, the corresponding legal system has completely lost the plot, in my view.
- pocksuppet 7mo agoThe CEO of bank 2 goes to prison because "you turned a blind eye to illegal activity"
- janalsncm 7mo agoAnd what about the CEO of bank 1?
- pocksuppet 7mo agoHis bank gets fined 3 minutes of revenue because "you turned a blind eye to illegal activity"
- stavros 7mo ago
- stevage 7mo agoHaving a clear clause to point to when terminating the account seems useful.
- lxgr 7mo agoBanks can (and in fact are highly incentivized) to close your account if you're using it for criminal activity with or without you lying about it on some silly form.
- sedev 7mo agohttps://www.bitsaboutmoney.com/archive/kyc-and-aml-beyond-the-acronyms/ https://www.bitsaboutmoney.com/archive/kyc-and-aml-beyond-th... > You might look at the standard KYC questionnaire for a new retail account and think “Really? You ask questions which have obviously correct answers. You give people less than a tweet worth of space to answer them. How could this possibly catch any criminals not stupid enough to write Occupation: Drug Dealer?” […] this is not the only mechanism by which KYC questionnaires have a stochastic effect; they’re also useful in an entirely different part of the crime lifecycle. Many, many crimes involve lies, but most lies told are not crimes and most lies told are not recorded for forever. We did, however, make a special rule for lies told to banks: they’re potentially very serious crimes and they will be recorded with exacting precision, for years, by one of the institutions in society most capable of keeping accurate records and most findable by agents of the state. > This means that if your crime touches money, and much crime is financially motivated, and you get beyond the threshold of crime which can be done purely offline and in cash, you will at some point attempt to interface with the banking system. And you will lie to the banks, because you need bank accounts, and you could not get accounts if you told the whole truth. > The government wants you to do this. Their first choice would be you not committing crimes, but contingent on you choosing to break the law, they prefer you also lie to a bank. […] > Particularly in white collar crime, establishing complicated chains of evidence about e.g. a corporate fraud, and mens rea of the responsible parties, is not straightforward. But then at some point in the caper comes a very simple question: “Were you completely honest with your bank?” And the answer will frequently be “Well, no, I necessarily had to lie in writing.” > And congratulations, you have just eaten a wire charge fraud for every transaction you’ve ever done.
- xstas1 7mo agoI learned about this from The Wire. They called it "the headshot"
- abustamam 7mo agoI'm curious if anyone has ever said yes to income from illegal activities. Moreover, I wonder if something like this would be protected under 5th amendment.
- aidenn0 7mo agoIANAL, but my understanding is that it is not protected under the 5th amendment.
- pocksuppet 7mo agoI wonder what happens if you write "5th amendment" as the source for your completely legal salary.
- lxgr 7mo agoThey'll probably close your account and point to their right to choose who they do and don't do business with without having to explain themselves.
- pocksuppet 7mo agoThe IRS will close your IRS account?
- lxgr 7mo agoThis conversation is about banks, not the IRS, at least to my understanding.
- lxgr 7mo agoI recently chuckled when doing my taxes and reporting miscellaneous income when I saw that one possible income category in my tax software was "bribes, received".