[berjin]

Every time I have to fill in some AML (anti-money laundering) form I think how much of a waste of time and money it is for every party involved since the real big fish are getting around it with professional help. It's all very kafkaesque and invasive so I come to the conclusion it's more about powerful governments existing to gain more power than it is about solving any injustice.

[HashThis]

100%. Elites are allowed to do "money laundering" while commoners are put in jail for it.

FinCen exists to put commoners in jail, for the same things the Elites can do without going to jail. The Elites use Shell Companies to do the same tactics.

The following have FinCen put commoners in jail, but elites move money the same way via Shell companies and stay out of jail: 1) Breaking up transactions, to hide total amount. Commoners=Jail vs Elites=Shell Companies.

2) Fee assets when law enforcement comes = "Obstruction of Justice". Commoners=Jail w/FinCen. Elites=no jail via Shell companies articles of incorporation

3) Keeping identity secret. Commoners=Jail w/FinCen. Shell Companies= No Jail

4) ...list every way commoners go to jail via FinCan and cross boarder. Elites do full list via Shell companies and don't go to jail.

[nine_k]

From your comment, shell companies look like some magical protective gear.

Are they that expensive to set up? I think a discerning commoner could consider doing so if the amount of money is enough to certainly trigger AML.

[yourapostasy]

> Are they that expensive to set up?

It depends.

Usually it isn't the shell company itself per se that is expensive, it is the professional advice to use it to achieve your desired ends that you pay the big bucks for.

That said, a run of the mill offshore company in <insert-island-banking-nation-here> runs around $3-5K USD per year in various administrative and filing fees, depending upon your specifics.

Slightly less for a US shell company.

However. In order to avail yourself of advice for various tax minimization tactics and strategies, and have those tax attorneys nearly indemnify you when the IRS comes a-knockin'...now you're talking percentages of AUM. It isn't the specific consultation fees, though those are fairly healthy. These consultants won't really materially help you when the IRS audits you unless you have been running your entire bookkeeping and CPA book of business through them the entire time. Those fees rack up quickly over the years.

Once I worked out their business model and the numbers, it suddenly made sense why the fancy tax minimization strategies were commonly employed only by large companies hiring these folks, large companies with in-house teams like this, or count-the-commas-club UHNWI's. The strategies they shared with me were clever, years later I independently confirmed they would have worked, but I don't have nearly enough FCF to sanely justify using them.

[3np]

I'd imagine that insights into specifics and knowing who you can trust for what is a major barrier.

[yamtaddle]

From what I've gathered from various schemes like this, including smaller-fry ones, it seems like the minimum requirement is to have enough Serious Business Shit going on that you can plausibly mask a bunch of activity (international, ideally) as part of that. Normal people don't.

You've also got to have enough money that any tax authority looking at you decides you'd be an expensive target, so they won't try it unless they're sure it's a slam-dunk.

[nine_k]

OK, if we assume that it only works if you can hide a small amount of illicit activity in a flurry of legit activity, it can't be such a large problem; maybe you can make 5% of your transactions illicit, but not even 50%. I don't think this is the case with Russian oligarchs right now.

I always had thought that the idea of shell companies is that there is a long chain, or even DAG, of companies that own basically nothing but obligations of other such companies, and the structure is large enough that tracing it back to the original masters and beneficiaries becomes infeasible.

If running a typical no-op LLC is $200-300 a year, running 30 of them is $6-9k, not an entirely trivial amount but quite feasible for anyone interested to hide even mere $200-300k of illicit activities, like selling a moderate-size home.

[6510]

we cant accurately enough guess how these boutique wealth management firms do their thing... but we could pay them to do the guessing for us.

[Red_Leaves_Flyy]

>we could pay them to do the guessing for us.

No we can’t. Their clients would drop them with prejudice if they even suggested serving commoners.

[zoklet-enjoyer]

I imagine super cheap and easy to set up. Can't be much more complicated than creating an LLC

[nine_k]

Such was my idea, too. But a peer comment mentions that the scheme only works if there is enough background activity to hide a particular tree in the forest. I'm puzzled.

[temp2022account]

$50/year for an llc in Delaware from what I recall hearing a few years back

[kornhole]

Like many laws, they apply to you and me, not to the oligarchs. The international lawyers and accountants are the gatekeepers that navigate them through the loopholes.

[notch898a]

That reminds me of FATCA. They made the burden just high enough for banks taking sub six-figure accounts that it's worthless to bank an American customer overseas unless they are rich.

[Scoundreller]

Depends on the country.

Progressive ones have laws against refusals to open accounts, especially if you are a citizen of the country you’re trying to open an account in.

[berjin]

Yes and they do it under the pretence of solving sexual slavery or child sexual abuse...yet at the same time how many global leaders have visited J.Epstein's island?

[mikeyouse]

Maybe none? There's no evidence that Clinton or Trump ever visited the island, so I guess the 10th in line to the British Throne is probably the closest you can get to a "global leader"?

[ipaddr]

Trump not mentioned in court. Clinton yes.

Celebrities and high profile figures named in court documents Prince Andrew Alan Dershowitz Emmy Taylor Sarah Kellen Eva Dubin Glen Dubin Jean Luc Brunel Nadia Marcinkova Bill Clinton Marvin Minsky Henry Jarecki Naomi Campbell Ron Eppinger Stephen Hawking

[mikeyouse]

Which is both a different question to whether “global leaders” were at Epsteins island and not entirely true..

https://nymag.com/intelligencer/2019/08/what-the-unsealed-ep...

[ipaddr]

Intelligencer? Do they feel the name is clever, is it historical or is it just the most stupid sounding name they could come up with?

[majormajor]

Nothing will be 100% proof around evasion or exploitation.

The answer isn't to do nothing and let it be a free-for-all.

[anigbrowl]

That's not what was proposed. The problem is that things like KYC laws are now probing down to thresholds like $600, so the cumulative cost (both directly, of compliance, and indirectly, of overbearing surveillance, chilling effects etc.) is hugely increased for little benefit. In the name of limiting untoward concentrations of money capital, it creates untoward concentrations of political capital.

[nine_k]

But this is like... killing two birds with one stone for, mmm, certain politicians?

[tobyjsullivan]

I think both sentiments have merit and are not necessarily mutually exclusive.

Money stuff tends to follow power laws. The basic, beaurocratic checks probably dissuade 80% of offenders while only stopping maybe 20% of the volume.

Doing nothing would leave those 80% of offenders free to launder which seems bad. Meanwhile, it seems fair to call the measures mostly ineffective.

There’s also a cost to these measures. They frequently block or add friction for people just trying to do legitimate business. Is it worth it?

[harha]

Just makes the rest that can avoid it more powerful.

KYC doesn’t protect you from much, all sorts of scams still send money to bank accounts and you wont get your money back from the bank it was sent to even though they should have systems in place to know what is happening and where money is going.

And as you mention it doesn’t dissuade the powerful. So what’s the purpose other than control and bullying the ones who didn’t commit a crime?

[JumpCrisscross]

> basic, beaurocratic checks probably dissuade 80% of offenders while only stopping maybe 20% of the volume

Concentrating illicit behavior into fewer nodes also makes whacking them when necessary simpler. I doubt the concentration this paper notes would occur were Russian and Chinese oligarchs able to hold dollars without KYC.

[notch898a]

Just as likely IMO is that the 20% are using regulatory capture to stomp out the 80% and consolidate their business and create even more effective crime.

[ted_bunny]

It's darkly funny how nearly every control mechanism in capitalist society equates to merely making a particular action more or less expensive.

[nine_k]

Very unlike in historically known communist societies, where a mere bribe was not enough, you had to have access to a right person to bribe.

[matheusmoreira]

AML is just the financial arm of global mass surveillance.

[jhobag]

now go further down this line of thinking... how those with status and money must view the world as nothing more than theatrics. airport security theatre being the most obvious

[moremetadata]

Watch this.

The Spider's Web: Britain's Second Empire | Finance Documentary | History

https://www.youtube.com/watch?v=OYfnkLurLA8

And if you dont like the source, here are some alternatives.

https://www.theguardian.com/business/2012/jul/09/city-london...

https://www.theguardian.com/uk/2011/oct/31/corporation-londo...

https://www.theguardian.com/commentisfree/2011/oct/31/corpor...

https://www.theguardian.com/artanddesign/2016/feb/19/city-of...