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KYC stands for Know Your Customer, the regulations that require institutions moving money between two parties to positively identify each of those two parties.

KYC stands for Know Your Customer, the regulations that require institutions moving money between two parties to positively identify each of those two parties. I think the intellectual position "it should be illegal for institutions transmitting money between two parties to identify either of those parties" might require some kind of logical argument behind it. Are you saying all financial transactions should be anonmyous by law? How would banks function if they were required to be blind to their customers? How would the government prosecute money laundering if all cash-trails went cold after the first time they passed a bank? I understand people often like to express extreme positions on the Internet, but I think it's pretty easy to see an ideal society has rules somewhere in between "you're not allowed to know your customers" and "you can't accept a penny unless the giver does a blood draw in front of you and is confirmed to be in a central register of DNA".

zmgsabst 18d ago
I suspect the argument is more the particular KYC required by American law, eg, as long as your bank can identify you as a particular customer, they shouldn’t be required to collect certain information by law. Though if I were going to rant, it would be about how constructive surveillance, such as requiring banks keep certain records and then claiming those records aren’t protected from search because they’re third party business records and not those of a private citizen, would be a much higher priority to fix.
- Terr_ 18d ago
  Right: We must distinguish between: 1. "The business-model of being an anonymous fence of stolen goods is prohibited." 2. "You have to give us access to all your records at any time on the flimsiest of pretexts, and we'll charge you with a crime if you don't keep it ultra-secret that we even approached you."
logicchains 18d ago
"regulations that require institutions moving money between two parties to positively identify each of those two parties" Any such kind of regulation is not compatible with financial privacy. Maybe you could argue corporations don't deserve financial privacy, but an individual should have the right to send money to someone without being spied on the same way they should have the right to send a private communication to someone without being spied on.
- AngryData 18d ago
  I agree. If I gave my mother $1000 cash nobody is expecting receipts and records. But if I send it through a bank or payment processor? Now all of a sudden im under suspicion of some bs terrorist or drug law violation.
lkt 18d ago
You know exactly what he means.
antonvs 18d ago
> the regulations that require institutions moving money between two parties to positively identify each of those two parties. There is much more to it than that. If that were all KYC was, it wouldn't need regulations, because banks would need to do it anyway. I've had banks straight out ask me, on the phone, what a wire transfer that I executed via their online system was for. And unlike, say, a traffic stop where when the cop starts fishing for things unrelated to the stop, you can exercise your right to remain silent, in the banking scenario the consequences for that can be losing access to your account, losing funds, and everything that follows from that. Some of the info required by KYC: * Why the customer wants an account * Expected types of transactions * Expected source and approximate volume of funds * For businesses, the nature of the business and expected banking activity * Source of funds This can all translate into very invasive questions, especially when you do something that a computer system or middle manager thinks is suspicious, like sending money to your mother in another country.
- anonymars 18d ago
  > I've had banks straight out ask me, on the phone, what a wire transfer that I executed via their online system was for Wire transfers are also a common source of fraud; it's common for banks to ask about them so their customers don't unwittingly send their money into a black hole
  - antonvs 18d ago
    That might make sense if the bank wasn't also acting as an agent for the government, with potentially severe, life-changing consequences if they hear something they don't like. If the question was purely for my protection, then I could simply answer "I don't wish to share that information." But I can't actually answer like that, because it's too risky. There's also no option to opt out of such investigations. I didn't request the bank to protect me from my own actions. When there's a credit card transaction that they suspect is fraudulent, they ask "did you authorize that transaction?" That's fine, and that's all they need to know. Asking me who I'm paying and why, with implied duress, is a completely unwarranted violation of my privacy. There's also a serious issue with an assumption of guilt in these cases. Look at the case of Donald Trump right now, suing Capital One because they closed over 300 Trump business accounts due to suspected money laundering. In Trump's case, I can well believe that there was some kind of corruption, money laundering, or other criminal activity going on. The man is a documented criminal. But the bank is making a decision to penalize someone, potentially severely, without any meaningful due process. Guilty until proven innocent. For someone without the resources Trump has to challenge something like that, what chance do they have of getting a fair outcome? This is all completely unacceptable in a supposedly civilized society, and you should not be defending it.
pjc50 18d ago
> I understand people often like to express extreme positions on the Internet, but I think it's pretty easy to see an ideal society has rules somewhere in between "you're not allowed to know your customers" and "you can't accept a penny unless the giver does a blood draw in front of you and is confirmed to be in a central register of DNA". Yeah. This often results in ludicrous positions. On the other hand, EFT flattens scale. Physical cash gets harder to handle in large quantities. Electronic money does not. It's equally easy to transfer a billion as a cent. So it's hard to get situations where small amounts have privacy and large amounts have scrutiny.
nostrademons 18d ago
Explaining the intellectual position without saying that I accept it (my actual views on this are "it's complicated"): Arguments against KYC usually go hand-in-hand with the belief that AML statutes are a constitutional overreach and grant the federal government powers that they should not have. The logic is that the government's only role is to provide a stable currency and enforce contracts, and that anything else is involving the government in business that it has no business being in. What's done between two consenting parties should remain between two consenting parties. Note that such a position usually doesn't have a problem with banks having information on their customers, for the purpose of judging credit risks. But it holds that such information should only be used for judging credit risks, ie if you are just depositing and withdrawing money that has already been earned, the bank should be agnostic to this. And they also object to this information being shared with a central clearinghouse where it can be used to cut off all access to the banking system rather than just one specific bank who objects to the source of funds.
charlieyu1 18d ago
Call me old school, but money should be as free as the bank note - untraceable and anyone getting it could use it freely.
jjk166 18d ago
> I think the intellectual position "it should be illegal for institutions transmitting money between two parties to identify either of those parties" might require some kind of logical argument behind it. This is both a straw man position and begs the question. KYC laws aren't the option to identify either party, it's the requirement to identify both. The default throughout pretty much the whole of human history across cultures has been not having KYC laws. A logical and compelling argument must be made for implementing and unholding such laws. > Are you saying all financial transactions should be anonmyous by law? The anti-KYC position is that it should be possible for some financial transactions to be anonymous by law. > How would banks function if they were required to be blind to their customers? While they would not be required to be blind, most have been and by default would like to be. Maintaining identity records reliably tying people to transactions is a significant burden for banks for exactly the same reason it would be an incredible burden on you to keep track of which atm/cashier/couch cushion every dollar in your wallet came from. Some banks may nevertheless consider the option a net positive, and require their customers to provide identification. People would be able to choose if they want to use those banks or not. If the benefits get passed along to the consumer, many likely would choose to. > How would the government prosecute money laundering if all cash-trails went cold after the first time they passed a bank? Presumably by going after the criminal infrastructure handling the money before it passed a bank. Giving up privacy rights tends to make law enforcement easier, but it is a common and reasonable opinion that we should not be trying to maximize the ease of law enforcement at the expense of privacy.
- pocksuppet 17d ago
  > KYC laws aren't the option to identify either party, it's the requirement to identify both. But they didn't say KYC laws should be repealed, they said KYC should be illegal. Meaning it should be illegal to identify either party.
  - jjk166 16d ago
    That's not what KYC being illegal means. It means it should be illegal to impose KYC laws. Just like state religion or warrantless searches are illegal.

zmgsabst 18d ago

I suspect the argument is more the particular KYC required by American law, eg, as long as your bank can identify you as a particular customer, they shouldn’t be required to collect certain information by law. Though if I were going to rant, it would be about how constructive surveillance, such as requiring banks keep certain records and then claiming those records aren’t protected from search because they’re third party business records and not those of a private citizen, would be a much higher priority to fix.

Terr_ 18d ago
Right: We must distinguish between: 1. "The business-model of being an anonymous fence of stolen goods is prohibited." 2. "You have to give us access to all your records at any time on the flimsiest of pretexts, and we'll charge you with a crime if you don't keep it ultra-secret that we even approached you."

logicchains 18d ago

"regulations that require institutions moving money between two parties to positively identify each of those two parties" Any such kind of regulation is not compatible with financial privacy. Maybe you could argue corporations don't deserve financial privacy, but an individual should have the right to send money to someone without being spied on the same way they should have the right to send a private communication to someone without being spied on.

AngryData 18d ago
I agree. If I gave my mother $1000 cash nobody is expecting receipts and records. But if I send it through a bank or payment processor? Now all of a sudden im under suspicion of some bs terrorist or drug law violation.

lkt 18d ago

You know exactly what he means.

antonvs 18d ago

> the regulations that require institutions moving money between two parties to positively identify each of those two parties. There is much more to it than that. If that were all KYC was, it wouldn't need regulations, because banks would need to do it anyway. I've had banks straight out ask me, on the phone, what a wire transfer that I executed via their online system was for. And unlike, say, a traffic stop where when the cop starts fishing for things unrelated to the stop, you can exercise your right to remain silent, in the banking scenario the consequences for that can be losing access to your account, losing funds, and everything that follows from that. Some of the info required by KYC: * Why the customer wants an account * Expected types of transactions * Expected source and approximate volume of funds * For businesses, the nature of the business and expected banking activity * Source of funds This can all translate into very invasive questions, especially when you do something that a computer system or middle manager thinks is suspicious, like sending money to your mother in another country.

anonymars 18d ago
> I've had banks straight out ask me, on the phone, what a wire transfer that I executed via their online system was for Wire transfers are also a common source of fraud; it's common for banks to ask about them so their customers don't unwittingly send their money into a black hole
- antonvs 18d ago
  That might make sense if the bank wasn't also acting as an agent for the government, with potentially severe, life-changing consequences if they hear something they don't like. If the question was purely for my protection, then I could simply answer "I don't wish to share that information." But I can't actually answer like that, because it's too risky. There's also no option to opt out of such investigations. I didn't request the bank to protect me from my own actions. When there's a credit card transaction that they suspect is fraudulent, they ask "did you authorize that transaction?" That's fine, and that's all they need to know. Asking me who I'm paying and why, with implied duress, is a completely unwarranted violation of my privacy. There's also a serious issue with an assumption of guilt in these cases. Look at the case of Donald Trump right now, suing Capital One because they closed over 300 Trump business accounts due to suspected money laundering. In Trump's case, I can well believe that there was some kind of corruption, money laundering, or other criminal activity going on. The man is a documented criminal. But the bank is making a decision to penalize someone, potentially severely, without any meaningful due process. Guilty until proven innocent. For someone without the resources Trump has to challenge something like that, what chance do they have of getting a fair outcome? This is all completely unacceptable in a supposedly civilized society, and you should not be defending it.

pjc50 18d ago

> I understand people often like to express extreme positions on the Internet, but I think it's pretty easy to see an ideal society has rules somewhere in between "you're not allowed to know your customers" and "you can't accept a penny unless the giver does a blood draw in front of you and is confirmed to be in a central register of DNA". Yeah. This often results in ludicrous positions. On the other hand, EFT flattens scale. Physical cash gets harder to handle in large quantities. Electronic money does not. It's equally easy to transfer a billion as a cent. So it's hard to get situations where small amounts have privacy and large amounts have scrutiny.

nostrademons 18d ago

Explaining the intellectual position without saying that I accept it (my actual views on this are "it's complicated"): Arguments against KYC usually go hand-in-hand with the belief that AML statutes are a constitutional overreach and grant the federal government powers that they should not have. The logic is that the government's only role is to provide a stable currency and enforce contracts, and that anything else is involving the government in business that it has no business being in. What's done between two consenting parties should remain between two consenting parties. Note that such a position usually doesn't have a problem with banks having information on their customers, for the purpose of judging credit risks. But it holds that such information should only be used for judging credit risks, ie if you are just depositing and withdrawing money that has already been earned, the bank should be agnostic to this. And they also object to this information being shared with a central clearinghouse where it can be used to cut off all access to the banking system rather than just one specific bank who objects to the source of funds.

charlieyu1 18d ago

Call me old school, but money should be as free as the bank note - untraceable and anyone getting it could use it freely.

jjk166 18d ago

> I think the intellectual position "it should be illegal for institutions transmitting money between two parties to identify either of those parties" might require some kind of logical argument behind it. This is both a straw man position and begs the question. KYC laws aren't the option to identify either party, it's the requirement to identify both. The default throughout pretty much the whole of human history across cultures has been not having KYC laws. A logical and compelling argument must be made for implementing and unholding such laws. > Are you saying all financial transactions should be anonmyous by law? The anti-KYC position is that it should be possible for some financial transactions to be anonymous by law. > How would banks function if they were required to be blind to their customers? While they would not be required to be blind, most have been and by default would like to be. Maintaining identity records reliably tying people to transactions is a significant burden for banks for exactly the same reason it would be an incredible burden on you to keep track of which atm/cashier/couch cushion every dollar in your wallet came from. Some banks may nevertheless consider the option a net positive, and require their customers to provide identification. People would be able to choose if they want to use those banks or not. If the benefits get passed along to the consumer, many likely would choose to. > How would the government prosecute money laundering if all cash-trails went cold after the first time they passed a bank? Presumably by going after the criminal infrastructure handling the money before it passed a bank. Giving up privacy rights tends to make law enforcement easier, but it is a common and reasonable opinion that we should not be trying to maximize the ease of law enforcement at the expense of privacy.

pocksuppet 17d ago
> KYC laws aren't the option to identify either party, it's the requirement to identify both. But they didn't say KYC laws should be repealed, they said KYC should be illegal. Meaning it should be illegal to identify either party.
- jjk166 16d ago
  That's not what KYC being illegal means. It means it should be illegal to impose KYC laws. Just like state religion or warrantless searches are illegal.