[rich_sasha]

The bank, or any financial institution receiving deposits from random people, has to ask itself: is it likely that this person disposes of such money legally. If yes, accept them as a client, if not, refuse and alert authorities.

Anyone can dispose of £50 or even £5000. If your bank sees a £2k salary come in every month, they won’t be surprised that suddenly you have £50k in your account.

If you knock on their door and say, I’m a lowly administrator in a country in the bottom decile of human development index, can you look after my $100m, the should definitely dig deeper. In such case, yes you should actually document where the money is coming from.

It shouldn’t be such a high burden of proof. Money doesn’t spontaneously appear like particle-antiparticle pairs. Maybe you sold something, or were paid for some services. You should be able to demonstrate that with ease.

Remember, the bank, other things being equal, wants your custom. So they’ll apply the lowest bar possible to make sure the money isn’t stolen, lest the regulators slap them hard.

With CS the issue was, they basically didn’t even do the bare minimum with any degree of honesty and integrity.

[csomar]

You write a lot without addressing my point, basically disregarding it: The point is the bank having deliberation when it comes to making a decision about the source or legitimacy of the money.

This is the job of a judge within a court where the defendant can argue otherwise (to the legitimacy of his money). Period.

Any other system (KYC/AML) should have been anti-constitutional, especially today when most transactions require a bank account. If KYC/AML is required, it should be done by the state (or the local government) itself and let the bank be, you know, a bank.

[rich_sasha]

It basically is how you say it should be, with the pre-sorting distributed to the leaves of the tree (banks and funds).

When a client approaches you, broadly, you have to sort them into low risk, medium risk and high risk.

Low risk you waive through.

Medium risk you do some digging on but if you’re then happy, you continue.

High risk, you alert the authorities. Then they take care of this. You put the client on hold. The authorities may later give you a formal go-ahead. At least this is how AML works in Europe, I’m less familiar with US.

So if the institution is concerned enough to refuse services, they absolutely must alert financial supervisors too, and it’s up to them how to proceed. They give you the go-ahead or the red light.

Strictly speaking you could still refuse a client then, eg if you think they could be on a sanction list soon enough, but that’s business reasons, not supervisory.

[mkim5]

It’s probably no longer useful to think about the state as an entity that cares about things like constitutional rights, or even as a separate “body” like the government, legislature or police. Banks regulate so much of ordinary peoples lives. You say “most transactions require a bank account.” Not to mention the fed/central banking. Banks ARE the state. So I am not surprised if they are given the right or responsibility to KYC