It makes non-crime also more expensive. My bank now, to comply with AML rules, has a yearly KYC process that keeps getting more and more annoying, requiring more paperwork, a lot more of my time to fill that paperwork and me feeling like a criminal (although a long term client and the bank made enough money of me).

I have no good solution, but this is also quite crappy.

Like for one of the business accounts, the KYC/AML 'assistent' for my bank kept sending back the documents with 'this is not in English'. It was my street name. The street name is a name, it's not translatable. But nope, they were not having it. And of course it's a 'different appartment' from my business account manager so he cannot help.

Nice point; but ... "you've got to look a little further / the argument i'm refuting is too simplistic" can continue here.

What cost does society at large pay for the 15% bite on people laundering money? How many legitimate transactions are made more expensive, or never begun at all, because of AML regulations?

Things this article fails to address:

1) That AML creates a massive honeypot of data for hackers, housed at institutions which historically have structural challenges with technology investment

2) The real, material downsides felt by non-criminals, as expressed by many others in this thread

3) That the sum total financial activity of criminals who would benefit from the lack of AML is likely a rounding error compared to money laundering carried out by banks like HSBC

4) The philosophical position that governments are entitled to dragnet surveil law-abiding citizens in order to combat crime

This feeling when you realize drug money laundering overhead is still lower than Apple tax — :(

And anyway these costs will be just passed on to the Dutch drug consumers, so what exactly is achieved here?

So there are many regulations, making many things much harder and sometimes extremely inconvenient and potentially hugely privacy-invading, with all the negative effects also for legitimate entities which are MUCH higher in numbers, only for something that is 1% efficient.

Great, what a waste of resources.

So AML works because now criminals must pay a 15% fee. While if they were above board they would pay taxes, insurance, various social fees. In the Netherlands corporate taxes are 25%.

Literally the criminals are better off financially with the worthless anti-money-laundering system than we have than with being legal and paying taxes.

What nonsense.

If the goal is to make crime more expensive it's been a miserable failure. Cocaine is cheaper inflation adjusted and Deutschebank and Wells Fargo are still in business.

This is a good time to reflect that high-value economic activity has an unexpected side to it. Apple is a good example - nobody believed post-2006 Apple was possible before it started throwing out market changing products, and the idea that a phone company would swoop in and become the most profitable tech company was not on people's radars. If something had disrupted Apple, it would never have been detected. We'd probably still be slowly moving away from Blackberries even now.

The article raises a good point that the small amount of proceeds seized isn't evidence of failure. But the people saying compliance is negligible aren't properly accounting for the danger of increasing barriers to entry in the financial markets. We've got no idea what household names never came to be because they got bogged down in so much paperwork that they never hit a critical mass.

The US banking sector is sick. It is becoming quite centralised and much more dependant on money printing than a healthy system would be. It has been part of the casino directing investment away from wealth generation and towards wealth-destructive ventures. AML/KYC is one of the things driving that and just because the cost is unmeasurable doesn't mean it isn't there.

his entire argument breaks down when a cartel owns the entire vertical and doesn't need to pay fees at each stop along the chain

And the price is everyone suffering for that 1% of criminal intercepts. If you propose a weapon or a drug with such efficiency you would be laughed upon. Why financial world isn't doing the same?

All sorts of restrictions on freedom and privacy "work", if you consider those parts of the human experience to be of zero value simply because they are unquantifiable in a spreadsheet.

> The cost of moving these €300,000 packages to Colombia adds up very quickly. First, the coordinator had to absorb a 3% fee to convert the trafficker's original low denomination euro banknotes to the very compact 500 euro note. To that, add a 2-3% fee to pay the individual courier and 0.5% on airline tickets, as well as additional administrative costs like modifying luggage and bringing couriers to and from the airport.

Thus, money laundering sounds like a market that is ripe for disruption by some startup ... ;-)

Yes, it lowers criminal margins by 10-20%. So what? For it to make a meaningful difference that number would have to be a lot higher. And it's unlikely that the current approach to AML will result in that number changing substantially because criminals only need one weak link in the financial system to undermine the whole AML apparatus.

Most economically driven crime has very high margins. Wholesale drugs in the Netherlands cost ~10 times what they do in Colombia, and I don't think "only" 8xing your money on a drug shipment instead of 10xing it is a very good deterrent.

Edit: And you can look at threat intelligence company reports to find that Russians already sometimes pay in excess of 40% to "cashout" business email compromise or investment fraud wire transfers. They happily pay this because even getting half of $80000 when all it took you was sending a few emails with forged From headers is a great deal if you are already morally bankrupt enough to stomatch stealing.

Notably absent from this piece is any attempt at an analysis of cost vs benefit.

Furthermore, this piece does not address the misuse of the rules to keep legal businesses out of the financial system.

The question almost never is "does this work?", but rather "is this worth the cost of doing it?"

And nothing about the other use of AML rules: combating tax evasion.

No.

It doesn’t work — because the robber-baron banksters and their politician and judicial enablers are completely free to commit crime, globally, using the banking system.

This KYC/AML only affects scum like you and me.

Almost all banks in the states are reluctant to deal with cash. That's why they are closing thousands of accounts every day in the name of de-risking. Many banks and credit unions just restrict how much money can you deposit per month. A local credit union opens business checking only if you agree to "no cash deposits". Chase restricts the max cash deposit per month to $4k for business checking.

100% AML compliance can be achieved, as regulators are pushing Banks to NOT accept cash/money orders/any untraceable monetary instruments. As this happens, Banks will debank you for reputational risk: maybe, you don't like vaccines or politicians that major news papers recommend you to support, etc. This is the path we are heading to.

Are you saying that’s impossible to identify a large quantity of 500 euro notes at airport security?

Why don't they transport it by boat themselves?

I couldn't help but notice this on the blog's sidebar:

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