[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".

[eadmund]

Was the U.S. before these KYC/AML laws (within our lifetimes) a high-crime/high-corruption country? If so, are the KYC/AML laws responsible for the reduction? If so, is the cost of these laws less than, approximately equivalent to or greater than the money saved by reduction?

I can honestly see that this could be the case. But I can honestly see that it might not be. A related situation would be occupational licensing: maybe it saves society money, maybe it costs society money; how certain are we that we are at the correct balance?

[dsfyu404ed]

You know how we can be pretty sure that the NSA's data haystack hasn't done much to prevent terrorism because if it did they'd be shouting it from the rooftops?

Well occupational licensing is the same way. If there was even a shred of a farcical bad-faith argument that it saved money they'd be happy to spout it. The fact that the proponents don't even have that and instead shove appeals to emotion in your face tells you everything you need to know.