[irusensei]

It is expensive to keep a crime and corruption department on your banking institution. If you are dealing with a millionaire who is related to some oil mogul in Russia you can do your due diligence and Vladimirovich can hire a team of accountants to prove that his business is legit and not at all related to the corporativist oligarchy his uncle runs. Or it might be, but the risk vs reward is good enough to turn a blind eye for now.

Ivan, immigrant from Belarus who drives a bus and likes to withdraw cash from his <5000 euro account? Get this living liability out of my bank! I won't run a whole department or risk getting fined because some no name pauper. But since we can't just ban him let's just ask for ridiculous documents like proving the nationality of his grandfather (real story btw) or criminal records, translated in English, by an official translator. Let's annoy him so much with retarded requirements he will leave by himself and if he fails to provide our totally not arbitrary evidence we write a polite e-mail stating that we are sorry but we won't run his account anymore.

That's basically AML compliance to you.

[pyuser583]

There’s a really great book called Kleptopia by T. Burgis. It’s about how wealthy oligarchs use the Western legal and banking systems.

He points out that the US financial system is squeaky clean. Oligarchs wind up in prison because they think they can pull the crap in New York that they pull in London.

But outside the financial sector it’s the 100% opposite. Americas permissive corporate transparency lets assets vanish.

The best example: if you want to get a mortgage to buy a house you have submit to a financial strip search. But if you want to buy a house with bags of cash, you don’t even need to give your name.

[lotsofpulp]

> The best example: if you want to get a mortgage to buy a house you have submit to a financial strip search. But if you want to buy a house with bags of cash, you don’t even need to give your name.

What is this an example of? You are submitting a financial strip search because the lender wants to ensure the borrower can pay the debt, not to ensure they are a criminal or not.

And that is because prior to 2008, lenders were giving out loans to people with zero underwriting, hence the cascading defaults, and then financial crisis, which led to more regulations on proper underwriting.

[wpietri]

If you want to deposit that same cash in a bank, it's going to raise questions. Real estate is a bit of an exception here. For reasons explained in the article.

[pyuser583]

An innocent buyer would just say “I sold my home of 20 years to some company - Perwinkle LLC of Bermuda. Pretty strange, but not my problem.”

The bank would report it, and in theory the feds could track down Periwinkle LLC.

But tracking down holding companies consumes precious resources, and would be strategic, not just legal, decision.

The US is obsessed with having a clean financial sector, but doesn’t care one jot or tittle about corporate transparency.

[ethbr0]

As separation of concerns, this sounds reasonable and efficient: why should it be the financial sector's job to weigh whether someone is good or bad?

Better to make finance focus on ensuring there are quality, documented links where legally required... and then perform the judging elsewhere (e.g. legal system, FBI, journalism).

That the US (and especially certain states) permits opaque corporate structures is a different problem.

[jtc331]

> why should it be the financial sector's job to weigh whether someone is good or bad

In practice though that’s exactly what happens. Banks have to look for transactions that are potentially illegal (including OFAC and AML). And the banks not only report but have to block some of those transactions or they become liable for the initial crime (if it existed at all).

[MomoXenosaga]

I'd go further and say it isn't the job of Western countries to fix corruption. If Putin wants to fleece his people he can take his billions to a European bank.

[dsfyu404ed]

>But tracking down holding companies consumes precious resources, and would be strategic, not just legal, decision.

And 9x/10 when you track down Perwinkle LLC you'll find that it's owned by a couple American brothers who own a successful regional HVAC business and everything they are doing is legal.

People love to act as if all this offshore stuff is frequently closely connected to illegal things but if you just randomly pull samples you'll be hard pressed to find anything that isn't just a case of someone completely legally doing what the law incentivizes. If there was actually anywhere near as high a crime to not-crime ratio as people imply every bureaucrat with political ambitions would be all over it.

[pyuser583]

Some people legitimately want privacy.

There was a minor scandal a while back when it became clear Queen Elizabeth was using exotic techniques to hid her assets.

She wasn’t doing anything wrong. She just didn’t want people conflating her private assets with her royal persona.

Even Jeremy Corbyn (socialist, republican, then-head-of-Labour) didn’t criticize her for it.

She just didn’t want the public snooping in her private business.

[datavirtue]

Zero underwriting? You obviously do not know what you are talking about.

I got a "no-doc" non-conforming FHA loan back then. They fucking strip searched me. It was not easy--I still have PTSD from it. That same loan is still available on the market.

You also need a citation on your reason for the financial crisis of 2008.

I had to walk away from my home BECAUSE of the financial crisis (after having paid down 90% of the principle). Was it triggered by defaults or the credit default swaps themselves? Sure, maybe some bad loans were floated,but the sophisticated, hot off of the regulation preventing it, people in New York started gambling on the plebs losing their homes. Well, a few plebs (really, over-leveraged affluent people) lost their homes, and a cascading effect of credit default swaps came due and spun out of control. The crisis was directly caused by Bill Clinton signing a bill that removed key regulation that would prevent the very thing that happened: Gambling on Wall Street.

So STFU.

[ethbr0]

The 2008 crisis was directly caused by human greed, at all levels, and failing to be reigned in by regulatory bodies.

It's unreasonable to blame one source for something that metastisized over years, involving most parties in the financial sector, until exploding.

Banks could have chosen not to do this business or to hedge their risk in a better way. Credit ratings agencies could have shown some independence and objectivity. Derivatives buyers could have done more due diligence on what they were buying. Home buyers could have looked at the market and said "This is way too hot, and the party can't go on forever."

Deregulation handed everyone rope, including us, and we all hung ourselves.

It stings when you get personally @+$#ed, and it feels good to blame massive, systemic failures on one source, but they're systemic failures for a reason -- because the entire system was culpable.

[aravindgp]

It must be very difficult and emotional nightmare to walk out of your house. I'm sorry to hear that you lost your home. I don't know specifically what caused the financial crisis of 2008, but I do know that it was complex and had many factors. I'm sorry that you had to go through that.

[Ntrails]

Retail Banks were able to offer high risk loans with relatively low concern about the actual quality of the loan, due to the high demand for the repackaged assets. The repackaged assets used shenanigans to trick ratings agencies and make the lower quality loans look relatively secure. Thus secondary prices for the loans were high yada yada.

This is a general comment, nobody is saying every bank required zero documentation.

> I got a "no-doc" non-conforming FHA loan back then. They fucking strip searched me. It was not easy--I still have PTSD from it

I cannot imagine how bad some forms and id checks would have to be to give me PTSD.

> So STFU.

Not useful.

[Spooky23]

Real estate is the ultimate legal grift in the US. The whole tax system is wired up to the benefit of real estate investors.

[mistrial9]

further, some say that the expansion curves in Piketty's "Capital in the 21st Century" are not across the whole economy, but that rapid inflated asset values in real estate in particular, are drivers.

[Spooky23]

Probably. How much of the middle class lifestyle in big metros is built on home equity?

[Havoc]

>He points out that the US financial system is squeaky clean.

Then he is incredibly naive. See Wachovia and HSBC's US operations getting caught laundering for Mexican cartels

This stuff is unfortunately pervasive in the global financial system

[csomar]

I don’t think the US financial system is anything close to clean but they might be strictly hostile to Russians and the government/regulators will not tolerate that.

That boils down to US conflict with Russia. Europe didn’t have a beef in this until the Ukraine invasion.

[pyuser583]

Read Kleptopia. It’s written by a British author and mostly about the British financial/legal system.

I’m not sure how much of it is current in light of the sanctions. The big example it uses (90% of the book) is Khazakhstan.

From what I’ve read more recently, many rich/middle class folks in Latin America are moving to the US. If their businesses so much as look at drug money, and then they so much as look at an American bank, they can wind up in a US prison for a long time.

So they just move to America to get away from drug gangs.

The US does not f*ck around with criminal financing.

[super256]

The USA is the only economically significant country that opts out of participating in the Common Reporting Standard (CRS) data exchange. The USA claim that FACTA is enough. This puts the USA in the unique position where it only receives information from other countries through FACTA and its IGAs, without providing any information in return.

Why doesn't it provide information in return? Well, only specific bank accounts are subject to FACTA:

- Accounts of individuals who are not US taxpayers.

- US deposit accounts of individuals and entities that are not US taxpayers to which US income flows.

And certain types are exempted from the data agreement:

- US corporate accounts, even when foreign companies hold these US accounts.

- Investment accounts and custodial accounts (of individuals and entities), even when they are a resident in the FACTA partner country. This is true, as long as the custody account doesn't have income flows into this accounts (eg dividends or interests). Example: A German has a custody account in the USA and holds German shares in it. This data won't be disclosed to Germany. You probably know where this leads to...

If you think you are now in the need for an American corporate account, don't worry, we got you covered! Delaware offers setups without the need to file yearly lists of managers, owners (shareholders), directors, or members.

In case this is not sufficient for you because tax evasion isn't enough, and you are doing some really shady business, don't look further than this weird US arm called “Puerto Rico”. It is common knowledge among wealthy (and fishy) Europeans and Russians to just park your money there. Banks like the Euro Pacific bank allowed you to keep your money safe, and even allowed you to trade stocks electronically through IBKR without any disclosure to anyone. (ok, maybe the EuroPac Bank was too well known for this because they had to close down, but don't worry, there are a bunch of alternatives like facebank).

Combining a PR bank account with a Belize company is also very popular for money laundering. You know, Stripe doesn't allow banana republics, but for whatever reason PR is allowed there.

The setup is to create a company in Belize with a heavenly tax rate of 0% and just laundering through it to your bank account in PR. This is mostly used for companies who straight up do illegal things, but you know, you can sell virtual stuff all day long and it scales infinitely.

My personal opinion is that the USA doesn't want to disclose anything to third parties because they know too well that too much transparency would make them unattractive as the financial centre of the world. While they want to nail down US tax evaders at all costs, they have little motivation to fuck around with the billions of foreign capital in the US by providing too much information/support to foreign tax authorities.

[quelltext]

    Well, only specific bank accounts are subject to FACTA:
    
    ...
    
    Investment accounts and custodial accounts (of individuals and entities), even when they are a resident in the FACTA partner country. This is true, as long as the custody account doesn't have income flows into this accounts (eg dividends or interests).

You say that investment accounts are subject to FACTA, but not anymore if dividends or interest earnings flow in? I'm confused.

[super256]

Sorry, I missed “US” in this sentence. It should say:

  Investment accounts and custodial accounts (of individuals and entities), even when they are a resident in the FACTA partner country. This is true, as long as the custody account doesn't have \*US\* income flows (eg dividends or interests).

To be clear: US custody accounts of individuals and entities, which are not US taxpayers, but receive US income, are subject to FACTA data exchange.

But, if you don't have the before mentioned US income to your account, you are exempted from data sharing.

[nfzOndjy]

I am confused as well. Maybe you could share a reference? I am trying to understand how this would affect 401K/IRAs for people leaving the US.

[super256]

The comment above should clarify a few things.

Unfortunately, I don't have a reference, as I was told this by an advisor from PWC a few years ago. I guess you could contact any good tax consultant, tell him the details, and let him look into it. I have no idea about how 401K works in the US.

[super256]

I found some resource here:

https://uskanzlei.com/pages/usa-oecd-crs-facta-aia

[alliao]

ever since US broke Switzerland by snooping via UK's help US determined to harbour all the world's dirty money... big fries only though and AML is just an extension to this..

SWIFT and Swiss don't just give up client data easily and yet they did due to US had exact names and details of every transaction, I recall some said fibre optic was tapped. too bad I left London soon after GFC there was a tonne of high quality gossip fun times.

[meekaaku]

Honest question, where does this happen? If you are buying a house, the solicitor or whoever is dealing with legal/deed etc will ask where the money came from, don't they? In the UK atleast that seems to be the case. Lenders are fine as long as you can show your future income (eg by being employed), but not much about how you got your initial deposit money.

[roenxi]

Hi. I'm Australian.

When Australian companies offer shareholder deals (like capital raises, offering shareholders a chance to get in first on favourable terms) there is usually a neatly printed prospectus that has a couple of pages in very explicit language saying "this is NOT FOR AMERICANS. Please do not show this to a US citizen. If you are a US citizen, you must disregard this booklet!".

It always strikes me as unfortunate just how badly the US is locking themselves out of otherwise quite good investment opportunities. I always assumed that these service refusals were due to AML laws using logic similar to what you describe. It is always the US. We're ok with Europeans, Asians, Africans and South Americans.

[lancewiggs]

That’s due to US securities laws, not AML. The real reach through for Australia EY al. is FACTA, where any person with US citizenship invokes extra and onerous reporting requirements.

[kjetijor]

Or just changing tax residency. Moving from Norway to the US, brokerages will tell you to liquidate your assets or they'll do it for you, because they do not want to touch the reporting requirements to the US.

[koheripbal]

Being a millionaire is no where near enough for banks to look the other way.

They turn away millionaire accounts all the time. You need to have many hundreds of millions under management for them to do their diligence so you can open an account.

Most accounts under 10 million cannot even get cleared to trade high risk options. No way in hell they'll skip AML checks.

[citrin_ru]

May be being a millionaire is not enough to get a non-hostile treatment from a bank but the problem is that the cost of compliance is of the same order for all customers (because reporting thresholds where exist are very low like €1K or $10K) but per-customer profit is different. This creates an incentive to disproportionately deny service to non-rich customers. This would be much less of a problem if government regulators where focused on people/entities which operate with truly large amounts of money so ordinary folks can stay under the radar and not be a burden for a bank. But for some reasons governments wants have a grip almost on everyone. So having below median wage as the main source of income doesn't not make one a low risk customer for a bank if there are other "risk" factors (like being an immigrant).

[tagyro]

The same thing happens in Germany, with N26. Under the pretext of "regulatory requirements", they ask for information like income amount and source, employment status and industry etc. BaFin (the banking supervisory authority) is ignoring this, like they did with Wirecard

[StanislavPetrov]

I know I'm expressing a minority opinion on this, but I'd much rather have an unregulated system where I was able to send and receive money without any sort of hassle or oversight, even if criminals and people frowned upon by the people who run SWIFT are able to do the same.

[wpietri]

That will seem swell to you until better-funded criminals want a piece of your assets, money, or labor. There are very good societal reasons to keep crime to a manageable level.

[dsfyu404ed]

>That will seem swell to you until better-funded criminals want a piece of your assets, money, or labor.

And the status quo where the banks take a bigger cut to pay for their big compliance departments and the government takes a bigger cut to pay for auditing those compliance departments is somehow better?

X-percent not in your pocket is X-percent not in your pocket no matter how you cut it. At least in the proposed "stop giving a crap" case nobody will be denied access to boring routine financial products because they have a 3rd cousin with the same name as a Turkish mob boss.

[wpietri]

Yes, the status quo is definitely better. The numbers on total AML cost vary widely, and I think the high-end numbers are suspicious because there are incentives to inflate them. But taking them at face value, AML costs the US financial industry about 1% of revenue.

That is nothing compared to the costs of crime in high-crime/high-corruption societies. And looking at dollars alone doesn't paint a true picture. Criminal enterprises work through violence and add risk throughout the economy. E.g., if your business is doing well, a protection racket is not going to take 1% and call it a day. They'll take everything they think they can get. And if not, they break your leg. That serves as a strong disincentive to creating successful businesses.

Do the FDIC have disputes with the OCC? Probably. But unlike criminal gangs, they don't settle them with shooting wars in the streets.

[dsfyu404ed]

>That is nothing compared to the costs of crime in high-crime/high-corruption societies.

Is it really though? How much was the US (or any other equally developed country) losing to crime and corruption prior to all this KYC/AML BS? Not that much. Letting a mobster have a bank account doesn't magically turn your country into Nigeria. If anything it makes your country better because the mobster doesn't have to store that value another way and then protect it (with violence). >Criminal enterprises work through violence and add risk throughout the economy

So like government but with less abstraction?

> But unlike criminal gangs, they don't settle them with shooting wars in the streets.

Only because they don't have to. Being an above the table enterprise they can just go to the government court system and get their (credible threat of) violence that way.

All this violence you're complaining about w.r.t. organized crime is just their (low buck, because due process and diffusion of responsibility sufficient to dissuade revenge are expensive) way of settling business disputes.

[wpietri]

> Is it really though?

It really is. People flee high-crime/high-corruption countries for good reason. They also have demonstrably worse economies over the long term. KYC/AML efforts are only part of the difference, of course. But we've ended up with KYC/AML because it's one of the least intrusive ways of keeping crime in check.

If you think otherwise, I encourage you to go live in a high-crime/high-corruption country and let me know how much you're enjoying the "freedom".

[etherael]

So crime was not at a manageable level prior to say 1970, when none of these AMLKYC laws existed? And crime has not been at a manageable level after say 2008 when crypto came into existence and made it impossible to actually enforce?

Man, for that brief shining window we really had perfection.

[wpietri]

Yes, actually, the American mafia has declined severely since its heyday. There are surely many reasons, as it's part of a broader decline in crime in recent decades, but the increased difficulty of cleaning dirty money is part of it.

And crime has definitely gone up because of cryptocurrency. I'm not sure how much it has affected the more traditional sorts of crime, as I don't think it's much of a help in turning dirty cash into clean assets thanks difficulty of exchange and the ledger acting as "prosecution futures". But ransomware has grown massively thanks to cryptocurrency. And ransomware gangs have grown correspondingly in size and sophistication thanks to having all that money to spend.

[novok]

AML regulations prevent about %0.05 of criminal proceeds from being 'harvested' and the cost of these compliance regimes costs vastly more than the value they bring. And it enables a vast financial surveillance system and a huge industry of AML analysts doing pointless busy work writing SARs nobody cares about.

The US mafia declined because of the rico act and the fact that there was less racism and better integration of italian americans. The current ethnic crime groups of today are different.

IMO AML is security theatre, much like the post 9/11 flying regulations making everyone's lives worse, especially if your name is Mohammed sending money to family back home in the home country.

[wpietri]

> AML regulations prevent about %0.05 of criminal proceeds from being 'harvested' and the cost of these compliance regimes costs vastly more than the value they bring.

I look forward to your proving these two very numerical claims. But you can't just count existing criminal proceeds. That'd be saying, "The current level of speeding is so low that we can get rid of traffic cops." You have to measure the crime prevented, too.

[from]

“Money laundering” became a crime in 1986. The bank secrecy act originally just introduced the $10000 threshold ($80000 now) and record keeping requirements. It was later amended in the 90s to add suspicious activity reporting. Nearly all of the major mafia cases predate this. There are many reasons for this decline (https://www.journals.uchicago.edu/doi/10.1086/706895) but mostly it has to do with RICO, wiretap evidence becoming admissible, the witness protection program, changing demographics, and more federal prosecutions where the people involved were smarter, less corruptible and where the sentences were greater. I am incredibly skeptical that it had anything to do with the decline of organized crime in this country.

[wpietri]

So you're saying the improved tracking of criminal proceeds, which started during the peak of the mafia's prominence and improved further as the mafia declined, had nothing to do with that decline? And further, has nothing to do with other criminal organizations not rising to prominence to fill the same role? I agree other things played a role, of course. You get to believe what you want, obviously, but I'm sure not persuaded.

[question11]

Cryptocurrencies? Maybe for a few 100k

Real Estate provides a much easier method to move millions.

[t0suj4]

The Mafia just bought politicians and now operate their rackets according to law. Can't commit something illegal when it's explicitly legal.

[etherael]

And this, right here, is the fundamental problem with all of this. "Legal" vs "illegal" doesn't really tell us much these days about the value of the thing in question. Civil asset forfeiture losses per year long ago crossed the amount lost to simple robbery, politicians engaging in insider trading has long been seen as perfectly normal and acceptable, and large multinational corporations buying off politicians and getting return on investment in the tens of thousands of percent, likewise.

Very little separates the state from an organised criminal enterprise. A particularly cynical person might point out just how comfortably well the operating logic of states and large multinational corporations fits into the world of organised crime. The only thing that separates the two is legality.

You want to enslave a bunch of people and profit off their labor in some far flung corner of the world to whom nobody is much paying attention? No problem, just don't do it yourself. Invest in cobalt mining or diamonds in Africa, or manufacturing in China. A territory is getting uppity? Support the governmental structure that wants to brutally repress them by buying from their corporations or investing in their treasuries. Want to promote some nightmarish theocratic brutality? Saudi Aramco stock is a steal these days. In fact, I'm having trouble coming up with something that organised crime has historically profited from, which you could not do in a white market context in the modern world by simply trading in the full breadth of financial instruments, particularly in concert with the state financial actors already promoting these very things.

The thing that really scares me though is that as I get older and more cynical and see the way people are responding as the boot stamps down harder on them, I find it harder and harder to care or see the above as something to get righteously indignant about. Why should I find the slavery of people abhorrent when they so clearly crave the lash?

[wpietri]

I look forward to your evidence of this. But things like robbery, selling stolen goods, protection rackets, extortion, prostitution, and drugs are still all generally illegal.

Things like alcohol and marijuana have become legal, but I don't see much evidence that Budwiser/InBev is a mob front.

[etherael]

Specific instances in the decline in power of particular organised criminal enterprises is much more believable than "crime", I'll grant that much.

[drexlspivey]

I think you just described cryptocurrencies? Or did I miss the joke?

[repomies69]

AML/KYC laws apply to cryptocurrencies as well, in fact more so because they are by default more suspicious. Try depositing big amount of BTC to an exchange, you will get questions.

[malux85]

Also - wait until Ivan has put 10k in your system, then ask for the documents and refuse to give the money back hoping he will abandon it.

- Lawful evil AML companies

[irusensei]

I think I’ve heard someone calling this shotgun KYC. They will allow you to deposit but as soon as you show signs of using that money they take it as hostage until you prove you are not a criminal.

[wolongong942]

Sites like Paypal and Skrill did this because they know most people would otherwise just cancel on sign up , and when you've got money locked in you have no choice but to complete verification. Thankfully i haven't had to deal with their crap in the past 4 years due to better options existing.

[IG_Semmelweiss]

You cannot end such a compelling sentence.. and not finish your thoughts in writing!!

What are the better options?

[from]

Hint: Starts with “adv” and ends with “cash”

[scrollaway]

wise.com for example.

[abofh]

Wise has brutal aml and zero kyc - I was abroad and using wise as I thought it intended, as a means to transfer from my US accounts to my EU accounts, both happy and kyc'd through the roof. Account closed, would you like to click a button that feigns an appeals process? Click here to have it instantly denied!

[alternatetwo]

My brother actually abandoned 50€ 10+ years ago because he refused to do that verification ... I wonder if he could actually get that money back in any way still ...

[cmeacham98]

Common with offshore online casinos: you can deposit and lose your money, but as soon as you try to withdraw winnings the KYC rolls out and you better hope you're not a US citizen because you weren't even supposed to sign up in the first place then.

[josephcsible]

Why is "if you gambled but we found out you weren't allowed to gamble, we'll take back your winnings but not give back your losses" legal? Shouldn't it have to be either "we'll reset everything back to before you gambled" or "everything you already did stands; you just can't do anymore (and are probably in trouble)"?

[tablespoon]

> Why is "if you gambled but we found out you weren't allowed to gamble, we'll take back your winnings but not give back your losses" legal?

I don't know the actual law is, but it could be that the customer is the one who committed the crime of illegal gambling. If that's the case, it doesn't matter if keeping his winnings is legal or illegal, if the gambler brings suit he puts himself in legal jeopardy and I don't think the courts will enforce contracts associated with illegal activities (e.g. a hitman can't go to court to force his client to pay).

[thaumasiotes]

> a hitman can't go to court to force his client to pay

Somehow I doubt that causes many problems in trying to collect from clients.

[earnesti]

It is likely not legal but the gamblers are too lazy to take it to courts I would guess, and the casinos are in jurisdictions where it might be really tedious or expensive.

[cmeacham98]

It probably isn't, but generally their ToS says you're not allowed to be in the US when you sign up, and they don't operate in the US. So you'd have to go sue them in the jurisdiction of whatever island nation they're operating in (or get the authorities there to care).

Additionally, if you're within the majority of people who deposit money and lose it all you're not going to even know this unless you do some active research about the casino.

[josephcsible]

Why couldn't such a judgment be enforced from a US court, by forbidding any American banks from sending any money to their bank until they pay up?

[wpietri]

Presumably for the same reason you can't call the police if an illegal drug deal goes bad. [1]

[1] Which, yes, actually happens. E.g.: https://www.wect.com/story/22122424/man-calls-911-to-report-...

[tedunangst]

To the extent it's about money laundering, if you lose the money and don't withdraw it, you're not laundering it.

[omgomgomgomg]

Usually, it is all deposits minus all withdrawals are refunded. The casino will be in the red here, due to provider costs.

[layer8]

They probably count on you not suing them in the offshore jurisdiction.

[omgomgomgomg]

Its well defined laws and aml directives, there is little ambiguity but those are the laws our dear politicians have passed.

[omgomgomgomg]

It does not really work like that and the bank rarely gets to keep that money. If the SOW is not sufficiently established, the funds are either sent back to the origin of the funds or a SAR is filed, where another regulatory body will decide about the next steps. In any case, the custodian bank does not make anything from doing this.

[notch898a]

Or send him a check for the balance and then put derogatory information under chexsystems and all the other banking blacklists so it can't be cashed.

[JumpCrisscross]

> annoy him so much with retarded requirements he will leave by himself

This is rare. It may be the effect. But plenty of financial institutions openly deny risky accounts; no need to needlessly spin wheels.

Your broader point is correct, however. Because of the risk, a lot will be demanded. Because of the reward, nobody is motivated to push back on compliance.

[irusensei]

> This is rare.

I have a funny passport so some institutions are often probing my life and the source of my funds. The criminal records translated to english (I’m not from an english speaking country, I don’t live or work on an english peaking country) happened to me.

I also had a chat with a polish woman who told me that UK banks required documents about her grandparents nationality when she went there for study circa 2014.

I am convinced xenophobia is alive and well through the financial system. Hell… even cheered by often progressive people who thinks the AML/KYC framework is protecting their lands from foreign barbarians.

[JumpCrisscross]

Point is nobody is generating meaningless requests to push someone away. They can just push them away. The tediousness arises from not giving a shit, not outright malice.

[harvey9]

My friend from asia arrived in the UK to study in 2011 and her school recommended all their students to a nearby high street bank. No difficulty opening an account with a passport and letter from the school.

There was almost certainly something crooked though: The account had a monthly fee, but almost anyone can get an account with no fees if they know about them.

[mistrial9]

a large backdrop to this topic is controlling Oil and Gas trade dollars .. narco dollars is real and large, but OaG trade volumes are large and increasingly fought over..

also agree on the xenophobia -- but instead of culture this is turf wars over control of large dollar trade over time

[NovemberWhiskey]

>I am convinced xenophobia is alive and well through the financial system.

It's really not. You don't make money by unnecessarily turning business away.

[btilly]

It really is.

Go read patio11's AML article again. He gives examples. And says he has personally experienced it.

More importantly he explains why it happens. And expresses a wish for more scrutiny on how AML works in practice, because the common result has some bad effects.

Here is his explanation. Having regulators crack down on you is bad for business. Which they will do if money laundering is found. And money launderers actively want to bounce money between different organizations in different legal jurisdictions. Therefore if someone wants to send money to a different country, particularly if they look like they might be hard to find if regulators decide to ask hard questions, they get arbitrarily increased scrutiny. The result of which is indistinguishable from xenophobia. (Which may also be involved.)

[NovemberWhiskey]

>The result of which is indistinguishable from xenophobia.

Yeah, but it's not xenophobia: it's mandatory compliance activity associated with a framework that - if it did not exist - banks would not do. Motives matter. Xenophobia wouldn't be distributed in accordance with weak national finance controls etc.

[btilly]

Any instance is plausibly not xenophobia. Which ones are is hard to prove.

But in practice it is set up and carried out by people who often have some level of personal xenophobia. Thereby generating an institutional cover for personal feelings. The extent of this is impossible to verify. But certainly more than zero. And, anecdotally, likely far more than zero.

That the policies are not simply distributed in accordance with weak national financial controls is demonstrated by the fact that Patrick McKenzie (US citizen) has encountered these problems multiple times while trying to get Japanese banks to deal with US financial institutions. Japan does not doubt that the USA has strong national financial controls. But "foreigner wanting to deal with foreigners" still generates heightened scrutiny and sometimes real problems.

[Mandatum]

Sure, but they like to allow as many of them in as they legally can. Hence the questions.