[londons_explore]

AML tech is so primitive, it almost looks like it's designed that anyone 'in the know' will know how to not be detected.

Eg. Most AML checks are done because someone wrote some triggering keyword in the payment reference field. Do we honestly think a criminal mastermind won't manage to come up with something else to write there?

[Onavo]

The AML you are thinking of is designed to catch small time crooks and drug mules (and maybe also dumb terrorist supporters). They are not really designed (or more specifically deliberately obtuse towards) Slavic oligarch money. Not all "corruption" and money laundering are treated equally. Places like London (not to mention Jersey), Switzerland, and Singapore are more for good old fashioned siphoning-of-national-assets type of corruption where there's almost always a "clean" paper trail to back things up. Also, don't get tax dodging mixed with money laundering. There are plenty of processes required by OECD and similar orgs, e.g. the concepts of a LEI number, that are not really useful against real oligarch/state level money launderers.

Here's a simple example: You lived in a former USSR/iron curtain state. During the chaos of '89 you managed to "acquire" lots of assets or finagle yourself into owning former public companies/real estate/factories. The paper trail is clean as far as your typical London banks are concerned because you are merely liquidating assets you own in your own country where there's a full paper trail (regardless of whether it was attained through illegitimate means). Alternatively, in a different narrative, you a rich international student from similar types of countries and you just happened to have "rich parents" who have plenty of money to throw around. It's a very different threat model than for example trying to prevent grassroots terrorism financing.

Money laundering vs tax evasion have a lot of overlap but don't get them confused. They are very different threat models from the perspective of the service provider (and it's also why many smaller foreign banks refuse to accept Americans as customers, partially because of the paperwork required to stay compliant with Uncle Sam).

If you want an actual no-questions-asked romp of organized crime type of money I believe the current main contenders are the middle eastern states like Dubai (pre Iranian conflict at least).

Rumor through the financial grapevine is that ironically there are many GCC middle eastern royalty/pseudo-royalty currently under house arrest who are trying to do the opposite i.e. get their assets out of the country because their main bank accounts are frozen domestically. So basically real life Nigerian princes.

(As for why they are under house arrest, it's kinda out of scope for HN but mostly because of domestic political purges, especially in Saudi Arabia from what I heard)

[Oarch]

Thank you for a very detailed explanation.

The rich international student pipeline has always stood out to me – we've seen dozens of 30, 40 or even 50 storey skyscrapers built for students, enjoying lifestyles usually reserved for those in high finance.

It just seems very suspect to me.

[Onavo]

Well, I assure you most London bankers won't lose any sleep given that the money is often from Gulf states/places like China/ex Soviet oligarchies/various forms of corruption in the global south. The countries where the money flow out from often lack the means to actually pursue and prosecute overseas, especially for what boils down to "white collar" offences/corruption. It's only when anything like terrorism/organized crime/anything involving Uncle Sam's tax revenue occurs then the banks AML processes might become useful for more than just check-the-box compliance.

You will often find that entrepreneurs and digital nomads get caught in this sort of of AML debanking web because the paltry 6-7 figs of business/personal transactions across countries often resemble mules/illegitimate businesses and the banks are not allowed to talk about it. (Just go to the subreddit for wise or PayPal and search for the keyword "frozen")

Meanwhile international students can easily bring in 8 figs to buy houses and that's perfectly fine because it's "clean" as far as the compliance department is concerned. It's also a cultural issue, fintech platforms and neobanks try very hard to use heuristics to automate compliance. This is why I recommend digital nomads to use a proper cross border bank like HSBC Premier. You pay a lot more but you get a lot less of the "account frozen" bullshit.

You should also take a look at this

https://news.ycombinator.com/item?id=43001441

Countries that are caught in between corruption and terrorist threats and Uncle Sam are the worst generally. E.g. transfering money both into and from Turkey are a pain in the ass.

[RachelF]

Australian house transactions are also commonly used for low-million dollar money laundering operations.

Australia specifically exempts house purchases and the associated agents and their lawyers from AML laws.

[multjoy]

The references are almost irrelevant. The banks + fintechs have far more depth than that.