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Money Laundering and AML Compliance

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Re: Money Laundering and AML Compliance

#51

Post by btilly »

exbanker wrote: post #30
timerol wrote: post #20

Earlier quoted context omitted.

> burdening 8 billion law-abiding Citizens with impossibly complex and arduous KYC/AML requirements TFA notes that "This will affect the typical user of the financial system precisely zero times during their lives." It is very much not a complex and arduous situation in most instances, only in very few edge cases. (Which patio11 wants us to pay closer attention to.) I had occasion to unexpectedly transfer $10k over A…

This is just factually untrue. AML policies unjustly affect millions of Americans. At US Bank, you can’t deposit cash without an ID which is standard post 2018 or so. Yet go to a US Bank in a low income area, deposit $100 in a family member’s account and they will ask for ID, social security number and your job. US Bank has been involved in multiple money laundering scandals leading to deferred criminal prosecution.…

While I appreciate the problems that you're describing, I'm dubious that it violates the 4th amendment. In particular look at the Private Search Exemption. Which says that the 4th amendment does NOT apply to searches done by private parties. And if a private party has voluntarily done the search and reported it to the government, the government may redo the search without a warrant, but can't exceed what the private party said.

This applies here because both KYC and AML procedures are set up and carried out by private banks. Which makes it a private search, that fits squarely in the exemption.

In turn this begs the question of whether the government can encourage through intentionally vague regulation behavior that they cannot directly ask for. But given the courts we have, I suspect they will avoid answering this question.

Furthermore it is hardly the worst violation of the 4th that is common. I'm personally most incensed about civil forfeiture. Through the workaround of suing your stuff instead of you, all Constitutional protections are voided. The result is essentially legalized robbery by the government, carried out by the very law enforcement departments that directly profit from the proceeds. Given that the courts have repeatedly OKed this, why would you expect them to object to KYC and AML?

Re: Money Laundering and AML Compliance

#52

Post by fragmede »

HWR_14 wrote: post #50
exbanker wrote: post #32

The biggest money launderers are close to those who write the AML policies. One of the most significant money launderers is a famous attorney from Shearman and Sterling in NYC. From my experience, prominent financial executives attempted to engage in blatant laundering of drug money in BVI. These individuals were connected to the attorney and one is a public official appointed by 4 US Presidents. This was 20+ years a…

Like, they offered you $1MM (clean) to put $100MM cash in a suitcase and smuggle it through customs? Or to babysit it on a chartered flight and claim it was yours at customs? Because those feel pretty different.

I doubt the $1M in cash was in any way clean.

Re: Money Laundering and AML Compliance

#53

Post by notch898a »

btilly wrote: post #51
exbanker wrote: post #30

Earlier quoted context omitted.

This is just factually untrue. AML policies unjustly affect millions of Americans. At US Bank, you can’t deposit cash without an ID which is standard post 2018 or so. Yet go to a US Bank in a low income area, deposit $100 in a family member’s account and they will ask for ID, social security number and your job. US Bank has been involved in multiple money laundering scandals leading to deferred criminal prosecution.…

While I appreciate the problems that you're describing, I'm dubious that it violates the 4th amendment. In particular look at the Private Search Exemption. Which says that the 4th amendment does NOT apply to searches done by private parties. And if a private party has voluntarily done the search and reported it to the government, the government may redo the search without a warrant, but can't exceed what the private…

It's not really a private or voluntary search when it's imposed by government. Otherwise I could just make a law saying everybody who walks down X private road has to get searched by private security or turn around, obviously that won't work. The private road owner might never wanted to do it, they're only doing because the gun of the government man is at their head.

It is a public search carried with the dirty work portion of the search done by private entities directed by the state.

Re: Money Laundering and AML Compliance

#54

Post by sjy »

mmerlin wrote: post #49
exbanker wrote: post #32

The biggest money launderers are close to those who write the AML policies. One of the most significant money launderers is a famous attorney from Shearman and Sterling in NYC. From my experience, prominent financial executives attempted to engage in blatant laundering of drug money in BVI. These individuals were connected to the attorney and one is a public official appointed by 4 US Presidents. This was 20+ years a…

Thanks to the Wikileaks effect of the internet (rapid info declassification + sharing) more corruption is able to be exposed, and the scale is shocking and enormous. The hardest part is then trying to change a known-to-be-corrupt system, when those who write the rules always do so in their favour. Here in Australia we have slid into the bottom 10 percent of global corruption index [0] Politicians, lawyers, accountant…

Source shows the opposite: although Australia is declining in the rankings, it remains in the top 10% of least corrupt countries.

Re: Money Laundering and AML Compliance

#55

Post by fedreserved »

pyuser583 wrote: post #18
irusensei wrote: post #4

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 bli…

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 vani…

[dead]

Re: Money Laundering and AML Compliance

#56

Post by btilly »

NovemberWhiskey wrote: post #46
btilly wrote: post #43

Earlier quoted context omitted.

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 laun…

> 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.

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.

Re: Money Laundering and AML Compliance

#57

Post by HWR_14 »

fragmede wrote: post #52
HWR_14 wrote: post #50

Earlier quoted context omitted.

Like, they offered you $1MM (clean) to put $100MM cash in a suitcase and smuggle it through customs? Or to babysit it on a chartered flight and claim it was yours at customs? Because those feel pretty different.

I doubt the $1M in cash was in any way clean.

I assumed they were offering him clean cash. Maybe it was a "just help yourself to 1% of the bag". At any rate, the perk of working for money launderers and literally depositing the dirty money is you should be able to do the exact same strategy with your million.

Re: Money Laundering and AML Compliance

#58

Post by btilly »

notch898a wrote: post #53
btilly wrote: post #51

Earlier quoted context omitted.

While I appreciate the problems that you're describing, I'm dubious that it violates the 4th amendment. In particular look at the Private Search Exemption. Which says that the 4th amendment does NOT apply to searches done by private parties. And if a private party has voluntarily done the search and reported it to the government, the government may redo the search without a warrant, but can't exceed what the private…

It's not really a private or voluntary search when it's imposed by government. Otherwise I could just make a law saying everybody who walks down X private road has to get searched by private security or turn around, obviously that won't work. The private road owner might never wanted to do it, they're only doing because the gun of the government man is at their head. It is a public search carried with the dirty work…

But the government DIDN'T impose it. Whatever the bank's procedures may be, the regulator can say with a straight face, "We didn't tell them to implement those procedures, and we didn't tell them to take those actions. That was their decision."

And, unbelievable as it may seem, the government won't be exactly wrong either.

Re: Money Laundering and AML Compliance

#59

Post by NovemberWhiskey »

btilly wrote: post #56
NovemberWhiskey wrote: post #46

Earlier quoted context omitted.

> 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.

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 accordan…

>Japan does not doubt that the USA has strong national financial controls.

US citizens have the opposite problem, FATCA, that makes overseas institutions allergic to doing business with them. I lived in Japan for four years and had absolutely zero problems with banking (including overseas fund transfers both inbound and outbound; getting credit cards; leasing a car), but I have a UK passport.

Re: Money Laundering and AML Compliance

#60

Post by tedunangst »

josephcsible wrote: post #27
cmeacham98 wrote: post #26

Earlier quoted context omitted.

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.

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)"?

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