I pay with cash for pretty much all in-person transactions. It's great! Minimal friction, very little tracking risk, works even when the ISP connection or the merchant network is down. You can even use it to pay people who don't use the same apps you do.
I even get discounts for it most places. Highly recommended.
KYC stands for Know Your Customer, the regulations that require institutions moving money between two parties to positively identify each of those two parties.
I think the intellectual position "it should be illegal for institutions transmitting money between two parties to identify either of those parties" might require some kind of logical argument behind it. Are you saying all financial transactions should be anonmyous by law? How would banks function if they were required to be blind to their customers? How would the government prosecute money laundering if all cash-trails went cold after the first time they passed a bank?
I understand people often like to express extreme positions on the Internet, but I think it's pretty easy to see an ideal society has rules somewhere in between "you're not allowed to know your customers" and "you can't accept a penny unless the giver does a blood draw in front of you and is confirmed to be in a central register of DNA".
Explaining the intellectual position without saying that I accept it (my actual views on this are "it's complicated"):
Arguments against KYC usually go hand-in-hand with the belief that AML statutes are a constitutional overreach and grant the federal government powers that they should not have. The logic is that the government's only role is to provide a stable currency and enforce contracts, and that anything else is involving the government in business that it has no business being in. What's done between two consenting parties should remain between two consenting parties.
Note that such a position usually doesn't have a problem with banks having information on their customers, for the purpose of judging credit risks. But it holds that such information should only be used for judging credit risks, ie if you are just depositing and withdrawing money that has already been earned, the bank should be agnostic to this. And they also object to this information being shared with a central clearinghouse where it can be used to cut off all access to the banking system rather than just one specific bank who objects to the source of funds.
> I understand people often like to express extreme positions on the Internet, but I think it's pretty easy to see an ideal society has rules somewhere in between "you're not allowed to know your customers" and "you can't accept a penny unless the giver does a blood draw in front of you and is confirmed to be in a central register of DNA".
Yeah. This often results in ludicrous positions.
On the other hand, EFT flattens scale. Physical cash gets harder to handle in large quantities. Electronic money does not. It's equally easy to transfer a billion as a cent. So it's hard to get situations where small amounts have privacy and large amounts have scrutiny.
> the regulations that require institutions moving money between two parties to positively identify each of those two parties.
There is much more to it than that. If that were all KYC was, it wouldn't need regulations, because banks would need to do it anyway.
I've had banks straight out ask me, on the phone, what a wire transfer that I executed via their online system was for. And unlike, say, a traffic stop where when the cop starts fishing for things unrelated to the stop, you can exercise your right to remain silent, in the banking scenario the consequences for that can be losing access to your account, losing funds, and everything that follows from that.
Some of the info required by KYC:
* Why the customer wants an account
* Expected types of transactions
* Expected source and approximate volume of funds
* For businesses, the nature of the business and expected banking activity
* Source of funds
This can all translate into very invasive questions, especially when you do something that a computer system or middle manager thinks is suspicious, like sending money to your mother in another country.
> I've had banks straight out ask me, on the phone, what a wire transfer that I executed via their online system was for
Wire transfers are also a common source of fraud; it's common for banks to ask about them so their customers don't unwittingly send their money into a black hole
That might make sense if the bank wasn't also acting as an agent for the government, with potentially severe, life-changing consequences if they hear something they don't like.
If the question was purely for my protection, then I could simply answer "I don't wish to share that information."
But I can't actually answer like that, because it's too risky.
There's also no option to opt out of such investigations. I didn't request the bank to protect me from my own actions. When there's a credit card transaction that they suspect is fraudulent, they ask "did you authorize that transaction?" That's fine, and that's all they need to know. Asking me who I'm paying and why, with implied duress, is a completely unwarranted violation of my privacy.
There's also a serious issue with an assumption of guilt in these cases. Look at the case of Donald Trump right now, suing Capital One because they closed over 300 Trump business accounts due to suspected money laundering. In Trump's case, I can well believe that there was some kind of corruption, money laundering, or other criminal activity going on. The man is a documented criminal. But the bank is making a decision to penalize someone, potentially severely, without any meaningful due process. Guilty until proven innocent. For someone without the resources Trump has to challenge something like that, what chance do they have of getting a fair outcome?
This is all completely unacceptable in a supposedly civilized society, and you should not be defending it.
> If the question was purely for my protection, then I could simply answer "I don't wish to share that information."
Fraudsters would tell you to answer the question by saying "I don't wish to share that information." but the bank would still be on the hook for paying you back from the fraudster.
In a sane society, though, you could say "I'm buying wholesale drugs to distribute on the street" and then bank wouldn't care.
> Fraudsters would tell you to answer the question by saying "I don't wish to share that information."
Fraudsters breathe air, therefore we should criminalize breathing air? You need to think just a teensy bit harder about what you’re saying.
> the bank would still be on the hook for paying you back from the fraudster.
You’d need to explain that. If I send a wire transfer, and I tell the bank that I chose to send it voluntarily if they ask, how would they be on the hook?
You’re trying to use an imaginary and unrealistic situation to justify a dystopian surveillance state. Are you Peter Thiel perhaps?
Firstly, you seem to be conflating "know your customer"/anti-money-laundering stuff with "please explain why you're wiring this money because we don't want you to get scammed"
But let's assume you're 99th percentile and won't get scammed or will own up to it and eat the loss (talk is usually cheap and plentiful on that point). I'm not sure how often you interact with the general public but suffice it to say that the "expected value" of banks asking why their clients are performing an unusual and largely irrevocable transaction (in contrast to paying a merchant with a credit card) is probably pretty good, just like a cashier asking why you're spending hundreds on Apple gift cards. But also you're assuming that it's always going to be "you" that they are asking: if your account was compromised (and everyone thinks they're too smart to be tricked), should it be easy for someone to just wire all the money out, aaaaaand it's gone?
That's separate from KYC/AML, which I think is a trickier issue. I will say this though, if a bank showed me the door and I had to take my money elsewhere, that would be less problematic than one of the tech giants capriciously deciding to close my account, which I think illustrates the larger issue about a lack of recourse for being arbitrarily locked out of commerce with private businesses in disruptive ways. Itself a cousin of terms of service that force you to give up rights, and can be changed at any time
As an aside, I don't think you need to make sneering personal attacks to make your points
> Firstly, you seem to be conflating "know your customer"/anti-money-laundering stuff with "please explain why you're wiring this money because we don't want you to get scammed"
Do you have any way to back that up? Because the question about what the transfer is for is pretty clearly an AML question.
> should it be easy for someone to just wire all the money out, aaaaaand it's gone?
Yes, you have to resort to extreme cases to try to support your point. That wasn't what I was talking about.
> I will say this though, if a bank showed me the door and I had to take my money elsewhere, that would be less problematic
> As an aside, I don't think you need to make sneering personal attacks to make your points
You're defending the actions of a reprehensible and despicable regime with ridiculously simplistic “think of the children” style arguments that doesn’t even attempt to address the points I’ve raised. You didn't even respond about the guilty until proven innocent point. Perhaps you're just blitheringly ignorant and lack the cognitive capacity to recognize that, but from where I stand you deserve far worse than I've given.
> if a bank showed me the door and I had to take my money elsewhere
Banks are required to return your money to you if they close your account. I wasn't talking about the various ways in which funds might be frozen (which go far beyond KYC/AML), for which my only point there was that merely being asked about a wire transfer was not it. Not all banks even ask in all situations
"Could I have misinterpreted the other person's point? Nah, they must be an 'elitist prick'"
> from where I stand you deserve far worse than I've given
Maybe next time take a deep breath and count to 10. Best of luck to you.
I suspect the argument is more the particular KYC required by American law, eg, as long as your bank can identify you as a particular customer, they shouldn’t be required to collect certain information by law.
Though if I were going to rant, it would be about how constructive surveillance, such as requiring banks keep certain records and then claiming those records aren’t protected from search because they’re third party business records and not those of a private citizen, would be a much higher priority to fix.
1. "The business-model of being an anonymous fence of stolen goods is prohibited."
2. "You have to give us access to all your records at any time on the flimsiest of pretexts, and we'll charge you with a crime if you don't keep it ultra-secret that we even approached you."
> I think the intellectual position "it should be illegal for institutions transmitting money between two parties to identify either of those parties" might require some kind of logical argument behind it.
This is both a straw man position and begs the question. KYC laws aren't the option to identify either party, it's the requirement to identify both. The default throughout pretty much the whole of human history across cultures has been not having KYC laws. A logical and compelling argument must be made for implementing and unholding such laws.
> Are you saying all financial transactions should be anonmyous by law?
The anti-KYC position is that it should be possible for some financial transactions to be anonymous by law.
> How would banks function if they were required to be blind to their customers?
While they would not be required to be blind, most have been and by default would like to be. Maintaining identity records reliably tying people to transactions is a significant burden for banks for exactly the same reason it would be an incredible burden on you to keep track of which atm/cashier/couch cushion every dollar in your wallet came from.
Some banks may nevertheless consider the option a net positive, and require their customers to provide identification. People would be able to choose if they want to use those banks or not. If the benefits get passed along to the consumer, many likely would choose to.
> How would the government prosecute money laundering if all cash-trails went cold after the first time they passed a bank?
Presumably by going after the criminal infrastructure handling the money before it passed a bank. Giving up privacy rights tends to make law enforcement easier, but it is a common and reasonable opinion that we should not be trying to maximize the ease of law enforcement at the expense of privacy.
That's not what KYC being illegal means. It means it should be illegal to impose KYC laws. Just like state religion or warrantless searches are illegal.
"regulations that require institutions moving money between two parties to positively identify each of those two parties"
Any such kind of regulation is not compatible with financial privacy. Maybe you could argue corporations don't deserve financial privacy, but an individual should have the right to send money to someone without being spied on the same way they should have the right to send a private communication to someone without being spied on.
I agree. If I gave my mother $1000 cash nobody is expecting receipts and records. But if I send it through a bank or payment processor? Now all of a sudden im under suspicion of some bs terrorist or drug law violation.
I just tried to pay my elderly neighbors cell phone bill here in California. I will spare you the details. Is all of this really required?
It reminds me of a time when credit and credit cards were flying fast. Large losses started appearing on consumer credit accounts by the tens of thousands. A casual look into it indicated that it was the employees and leaders of the sector, who read and understood the credit agreement that put liability ultimately on the company. The actual credit card employees, adjacent accountants, quick witted cons, all siphoning money from credit cards in very large numbers. Why say this? Actual customers with increasing security requirements were largely not at all involved with the growing fraud. It was the participants in the credit industry seizing the opportunity to steal, with relative impunity. Things have changed and changed again since then with scale, local rules, fraud detection systems etc.
The point of the rant is that ordinary people's rights are squeezed, privacy vanishes, routine humiliating document production and security, required because the people in the industry that created those is cheating.
Yes of course there is cheating on taxes over tip money, or no-show jobs for relatives.. but what kind of society is being built with constant oversight into ordinary people's activity ?
The criminal money and money laundering has been researched since 19th century. It has stayed at constant 2-5% of world GDP. However the cost of compliance has gone up exponentially.
Today banks use $250B/year on KYC checks. You could fix the world hunger and still have $50B leftover money with this amount.
The board of directors recognizes the cost savings and immediately start solving world hunger. Meanwhile a gangster in Moldova intrinsically knows that world money laundering has hit 5% GDP and decides not to.
It's not a fair comparison. Money laundering controls likely have also been implemented since the 19th century in some way shape or form. Therefore, that 2-5% figure also includes the effect of those controls. This might just the natural equilibrium below which the juice is no longer worth the squeeze.
Access to information and interconnectedness have also increased exponentially so it might make sense that the costs have increased proportionately.
Finally 200B/year would not solve world hunger if nefarious actors grift away most of that money (especially because you wouldn't be able to track them with out some form of KYC)
You also have to ask if money laundering is bad enough of a crime to warrant all of the overkill responses to it. At some point the medicine becomes worse than the disease. Lawmakers tend to get into these inescapable loops:
Crime X exists -> Try solution Y -> Crime X still exists -> Try harsher solution Y0 -> Crime X still exists -> Try harsher solution Y1 -> Crime X still exists -> Try harsher solution Y2...
I think the problem here might be that while Crime by its definition might be the same, the way that it is executed changes drastically so Solution Y/Y0/Y1/Y2 are not required to exist in terms of severity (very likely solution Y was severe enough if you were tried and convicted of the crime) but they are needed because the way Crime X is executed changes (especially this Crime X)
Who decides who we're sanctioning and who is a "terrorist"? Not me, that's for sure! My money is my business and I don't need the state nanny watching who I send it to.
> Government should require regular, mandatory reporting by technology service providers to document abuse of their systems including financial support of violence, harassment, and terrorism.This includes implementation of mandatory financial abuse reporting requirements for internet services operating in the United States, including social media services, infrastructure providers, banking institutions, cryptocurrency exchanges, crowdfunding sites, video streaming platforms, and the like.
> [These companies] should be required to investigate and report the details of harms and abuse of their service. There should be … penalties applied to services that refuse these tracking and reporting responsibilities.
Hard disagree, low level crimes should not be so heavily enforced. A bit of blackmarket activity is not only beneficial but neccessary for any stable economy. It can't be allowed at mass scale, but you can't effectively micromanage every transaction and account for every situation for every single good or dollar.
They route through all kinds of intermediaries that handle the banking by proxy — eg, as we saw in the Panama Papers and similar leaks.
Reporting $600 in CashApp isn’t about stopping cartels, terrorists, etc; it’s about harassing sex workers and street dealers, profiling side businesses, etc.
It's rich coming from a person affected by ukrainian propaganda that is one of the most corrupt countries in Europe. Maybe you should back your opinion with facts. Citation is desperately needed.
Money laundering isn't even a real thing. It's an excuse for the government to arrest people who are linked to people who are linked to people who they don't like.
when terrorism can be defined as "having a book" and can result in indefinite detention without charge or access to an attorney maybe i'm not 100% gung-ho by default on everything labelled anti-terrorism
I want crypto to work like cash so bad, but in practice it's too complicated for your average person and I'm not sure anyone has the incentive to make it simple.
Monero works like cash and there's nothing complicated to get the privacy. With QR codes it's not bad but sync time and 20 minute confirmation is a convenience proble.
You know Zelle and venmo already won the arms race when every person selling meat cooked over open flame on the side of the road is set up for that and not crypto.
With Monero it doesn't matter for future transaction privacy if it's KYCed just like it doesn't matter for cash. Financial institutions know you have purchased Monero like if you withdrew cash from an ATM, but then it goes off their radar.
I wonder if we are at the point its safer to just cash your entire paycheck? I mean people's cards get skimmed or numbers leaked all the time. Maybe not under your mattress but some other hidy spot a thief will never find your cash, but the risk is probably nonzero for every debit/creidt card holder that they will not experience some fraud. Muggings are also simpler if you are cashed based. You get mugged with cash on you, that's it, that's the extent of the damage just whatever bills you had on you. You get mugged with your cards on you, good luck cancelling them quickly with that banking app on your phone the thief also stole off you.
I no longer have a credit card (nor cell phone [nor email]), so everything is cash or crypto (USA forty-something male). Semi-retired datacenter electrician.
As for "wrench attacks," mine is mostly held in offsite multi-signatures, so good luck (to us both!) on your attack. Multiple hidden guns might help here.
I'm increasingly finding businesses that simply don't accept cash. Want a beer at the Clippers game? Can't pay with cash. Even a local bar near my house stopped accepting cash about a year ago - a bar!
