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by AnthonyMouse 887 days ago
Not only that, AML/KYC regulations are extraordinarily ineffective. It appears that some people thought they were a good idea and passed them without ever following up to see if the benefit is worth the cost, and the answer turns out to be a resounding no.
1 comments
zimpenfish 886 days ago
> passed them without ever following up to see if the benefit is worth the cost

Pretty much the same for all the work UKGOV does to try and combat "fraud", sadly - they always end up spending multiples of the amount they'd save[1]

[1] whilst at the same time enabling fraud of their own like the fast-track PPE contracts, etc.

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AnthonyMouse 886 days ago
This is worse than that. At least in theory if you spend resources prosecuting fraud, you could prevent more fraud than you prosecute through deterrence.

But that doesn't apply here because the reason KYC/AML is so ineffective -- literally 99.9% ineffective -- is that it's so easy to transfer value in some other way. And in turn to claim that even if you're using a traditional bank.

Money laundering is fundamentally very simple. They open a business that could plausibly generate that amount of profit and then claim the money was the proceeds of that business instead of the illegal one. The bank has no better way to know this is happening than the government, and the only people who do are in on it. So the rules are totally ineffective and because they're totally ineffective, they don't provide a deterrent.

But it's even worse than that. Most government waste is actually somebody's profit or salary, so then they lobby to keep it, but if it's a lot of waste then competing sociopaths lobby to cut it so they can get the tax money, which provides at least some financial pressure to limit the excesses of any given program.

The primary cost of AML/KYC rules isn't tax dollars. They fall on the general public through invasion of privacy, bureaucratic overhead, transaction costs and impaired competition between financial institutions. The general public is a diffuse group without organized lobbyists and without a thorough understanding of how much this is costing them. It also falls disproportionately on people who are already disadvantaged and have even less political influence than average. So there is no one supplying strong political pressure to get rid of it despite the high costs and near-zero effectiveness -- it's basically down to the people who have figured out how stupid this is to make it go away on their behalf.

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