You may as well say, "KYC might deter a large fraction - let's say about 99% of these malefactors"
There's no evidence provided for these numbers. It's one thing to make an assumption which is counter to your argument - "Even if 99% of criminals are deterred, it creates an unconscionable burden upon those whose identities are stolen" or etc.
It's quite another just to assume your own argument. Let's assume cops prevent 99% of crime - it's worth their brutality or whatever. Let's assume cops prevent 1% of crime - we would be better off with 1% more crime and no cops or whatever.
It's absolutely pointless.
The article goes on to immediately compare KYC with widespread facial recognition. Why are these equivalent?
They could at least try to engage with arguments for KYC - that large financial institutions should not be making life easier for criminals. Historically, a bank obviously knew their customers - they had to open the accounts in person, talk with the bank manager, etc.
They're both violations of people's privacy.
>There's no evidence provided for these numbers
And KYC proponents provide no empirical evidence that KYC has actually led to a measurable reduction in organised crime. The onus should be on them to demonstrate why it's effective enough to justify the violation of citizens' privacy that it entails.
Having worked in an industry with strict kyc requirements and worked for a well known payment processor, if they were only catching 1% then some truly absurd amount of business is fraudulent.
Oh wait, they don't. Just ditch it and let anyone move money around with no controls. I'm sure that would work out fine.
It did, for thousands of years. The only thing that's new is the ability to track every penny and person from cradle to grave and the incessant and ever-growing desire for those in power to control those who aren't.
https://www.unodc.org/documents/data-and-analysis/Studies/Il...
> Globally, it appears that much less than 1% (probably around 0.2%) of the proceeds of crime laundered via the financial system are seized and frozen.
https://www.tandfonline.com/doi/full/10.1080/25741292.2020.1...
> the confiscation rate might be 0.07 percent. In other words, despite ubiquitous money laundering controls, criminals retain up to 99.93 percent of criminal proceeds.
and KYC isn't only for money laundering, it's also for tax fraud
This is true, but it's also not the point. KYC isn't about protecting individuals - it's about protecting the system (financial and geopolitical) as a whole.
Can it be defeated? Of course it can. But it's not the sole line of defense against these sorts of things - it's part of a broader system comprised of internal bank security procedures, government monitoring and after-the-fact investigation of financial crimes.
I don't mean to say that everything written here is wrong, but this is a complex topic that has meaningful tradeoffs of security vs. being free of surveillance and convenience. This sort of blind CRPYTO GUD GUBMINT BAD writing that doesn't even pretend to attempt to understand its topic at any meaningful level of depth doesn't exactly contribute to the discourse.
Isn't this what laws are for? Selling porn is legal, yet payment processors decide what you can sell online. And to think they don't decide which company can process payment or not, effectively decides who wins. This is where decentralization and CRPYTO GUD comes from. I don't want a few companies deciding what I can sell online, especially if it's legal, and they hide behind KYC/AML laws afterwards.
Just looking at credit card processing fees where we essentially have a rent-seeking fee that will continually increase and is not even refunded to the merchant when a customer returns something. That's the power the government gave to these financial institutions with these laws.
The difference between my comment and yours, as well as my comment and the initial post, is that I acknowledge the complexity. You look only at the bad - you don't seem to understand the reason that KYC exists or the value that it provides (and yes, despite the negatives, there is value to KYC rules).
At the cost of individual privacy.
Everyone knows that criminals lie on these forms and _that is the point_. They now have an easy to prosecute charge just waiting for them if they ever attract the attention of the authorities. They just need to look into where their money is coming from and there will be a lot of ways they can prosecute them.
https://www.bitsaboutmoney.com/archive/optimal-amount-of-fra...
We'll surely get a significant amount of people who are doing or own things they shouldn't. Maybe even as high as 1%!
And Al Capone could have used a non-profit as they are tax exempt, where money laundering - the crime - is not possible because there are potentially no taxes to report
that's the system
laundering is a crime which relies on identifying an illicit origin. so this victimless invention is actually impossible to prosecute laundering on its own, only unsuccessful laundering not just “why are you moving money how suspicious”, and it can only be a tacked on charge that might stick when the other charges wont
this further bolsters the point that the dragnet is just inconveniencing everyone else
This. Right here. KYC is prone to abuse for censorship, and does anyone believe that it isn't already? Does anyone believe that KYC scores aren't going to eventually be linked to credit scores, ESG scores, perhaps social credit scores someday?
The best proxy for the deterrent effect is how much criminals need to pay to launder money. I can’t find a good source on this, but some anectdata that put it between 15-50%.
Author's point is like saying having cops near a bank is useless because robbers will just avoid those banks.
Do you just keep the money? Or do you send it to the government who keeps it, because they can’t assign it to a person?
KYC is a speed-bump for criminals, yes. But it’s also the only way to support the finance system for regular people.
What happens when you have a financial system where there is no people or traceability tied to funds? You know the answer, it’s a loaded question.
I don’t think tin foil hat shout into the clouds articles are very useful. Is the author an expert on money laundering or organized crime? Give me some reasons that aren’t just soap box speeches about freedom.
Finally, I think that it’s pretty obvious how basic identity regulations can work. If a bar has an ID scanner that accesses a state database to look up your picture on file that can trivially defeat a fake ID. If a car dealership does the same they can prevent selling a car to someone who isn’t licensed to drive. Seems pretty normal to me.
I find Patrick McKenzie’s (patio11) deep dive into KYC [1] useful to understand more of why KYC exists and what is and isn’t in the law.
1. https://www.bitsaboutmoney.com/archive/kyc-and-aml-beyond-th...
nobody here would ever know if a bank account currently exists in their name at a different institution, if it was properly used to simply accept payments for legal services and not leave an account in overdraft.
the entire concept of whitelisting transactions is a fools errand
I too can pull arbitrary statistics straight out of my backside, and use them to argue my point
Why not 10%? Why not 10000% in fact (if we’re comparing it to the number of current bad actors)?
Do you really think there wouldn’t be more tax cheaters if nobody did KYC checks? Come on…
If that was the intention they'd be applied equally in all legal contexts like re: DMCA claims, but the fact that they aren't shows the intentions of regulators for KYC in practice.
and to clarify the article, not all cryptocurrencies are set in stone traceable. Monero enjoys ephemeral transactions that are so untraceable, no ones claimed the US government bounty for a proof-of-concept yet. In turn, youll likely see most KYC exchanges get strong-armed into dropping support for mondero-like currencies altogether.
your entire monetary life is effectively for review. visa/amex/mc all tag your transactions with a vendor code as part of KYC to build a profile of your spending and sell analytics to economists about what you buy (food, guns, clothing, cars, etc..) move too much money in cash? KYC kicks in and youll need to explain to the teller why you want that money. Dont want to explain? they will inform the FBI under the bank secrecy act. want to know if they reported you? you cant (its literally illegal.)
This line of reasoning is highly suspect --- particularly when based on assumptions without concrete supporting evidence.
Oh yeah we did that a few years ago and it was scams all the way down :)
So clearly AML laws are making a difference at detection at least.
[1] https://www.eurojust.europa.eu/news/money-laundering-cases-r...
