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While crypto might not be the ideal solution, it's hard to not notice that modern AML/KYC banking laws are rapidly degrading into complete bullshit, and it is n

While crypto might not be the ideal solution, it's hard to not notice that modern AML/KYC banking laws are rapidly degrading into complete bullshit, and it is nice to have a workaround. I've just read an article how Russian emigrants around the world (that's up to several million people, more than some European countries) are struggling with opening and maintaining bank accounts, and have to resort to all kinds of workarounds, crypto and Binance included. You might not have any sympathy for them, especially in current circumstances, but they did nothing wrong, and won't cease to exist just because of your lack of sympathy. Where I live now, there is a growing number of street currency exchange shops which will gladly and openly accept your USDT and hand over cash in either local currency or USD $100 bills; no documents ever asked, of course. That kind of infrastructure did not exist a mere couple years ago. You might think, why don't just ban it all, but, I'll say it again, the problem with this line of thinking is that if you, as the government, declare large enough numbers of mostly innocent people criminal or "undesirable", they won't magically vanish into thin air overnight; to the contrary, you've just made life harder for your own law enforcement, as real criminals will now have a much larger crowd to blend in. For many countries where it is difficult to legally buy or transfer USD at international market rates (either because of sanctions or capital controls), there is a thriving USD/USDT/BTC black market, involving, in extreme cases, the majority of population; see Argentina or Venezuela for example. Labeling all of them as "criminals" achieves you nothing.

matheusmoreira 3y ago
> it's hard to not notice that modern AML/KYC banking laws are rapidly degrading into complete bullshit They were always bullshit from day one. AML/KYC is literally the financial arm of warrantless global mass surveillance. To me it's comical when I see HN defending unlimited strong cryptography and yet drawing the line at untraceable financial transactions. They are one and the same.
- anon_trader 3y ago
  There is a difference between "evil" and "ineffective", and while I agree with the more controversial "evil" part, my point was to emphasize the "ineffective" part of it. I won't go into further details even under anonymous account, but I have some first-hand experience dealing with compliance from various financial institutions, I have a general idea of what they ask, what they do NOT ask, and all of this feels much like IP address logging or so-called "chain analysis": it may work against unprepared people (mostly those who "have nothing to hide"), but is almost trivially bypassable by any semi-motivated attacker. Mostly it's because incentives are completely off. These people are not the police; their top priority is to cover their asses with enough paperwork, not actively engage in yet another anti-whatever crusade.
null0pointer 3y ago
This comment was marked [dead] when I read it. I vouched it back into visibility. I wish people would respond with a comment if they disagree, rather than reporting it. Meta-comment aside, there’s another population segment who suffer from overbearing AML/KYC regulations - homeless people. Many homeless people do not have any form of ID and hence cannot open a bank account. What option do they have? I would argue for low value accounts, say <$5000 annual transaction volume, AML/KYC enforcement should not be required. $5000 is such a small amount in the grand scheme of money laundering that the government should really focus on the bigger fish. Splitting your laundered money into many bank accounts would, or could, fall under existing structuring laws and would be easily detectable by any bank. I haven’t even mentioned that in many countries, such as the US, you have absolutely no guaranteed right to banking access. Your access to banking can be shut off overnight by any one of the various middle men involved. Until these things are solved, and legal persons can be guaranteed access to banking then crypto is necessary.
- ben_w 3y ago
  Here's a trilemma: 1. Everyone should have access to banking, and a $5k nominal/year in most of the G7 economies[0] is small enough it shouldn't attract attention. 2. If you don't require proof of ID, you can't stop people signing up for as many small accounts as they want to. 3. Homeless people may not have any formal proof of ID (either because it's too expensive, or as a direct consequence of why they're homeless in the first place[1]). You can try to get around #3 with biometrics. But even with AI assistance, the goal here is to prove a person isn't already on the system — which is much harder than merely showing they're the same person as on the ID card they have with them, for reasons which are basically a generalisation of the Birthday problem[2]. [0] one of the G7 is the EU, the worst of the EU is Bulgaria at €12400 GDP (nominal) per capita, Wikipedia reports that "More than a fifth of the labour force work for a minimum wage of $1.16 per hour.[203]" but that citation (which follows) is from 2012 and this is where I stopped going down the rabbit hole: https://web.archive.org/web/20121224023912/http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/3-20122012-AP/EN/3-20122012-AP-EN.PDF https://web.archive.org/web/20121224023912/http://epp.eurost... [1] off the top of my head: because they ran away from home as a minor and didn't take sufficient documentation with them; or because they had an untreated mental health problem; or because they're an unregistered migrant; or because they were born in the country but out of the system. [2] https://en.wikipedia.org/wiki/Birthday_problem https://en.wikipedia.org/wiki/Birthday_problem
pjc50 3y ago
While I'm definitely a "crypto skeptic", I think it's probably going to persist in this niche of "US-equivalent hawala banking for people who aren't allowed the stability of the US dollar". People worried about US hyperinflation are nuts. People worried about Argentine hyperinflation have a reasonable point. A big problem with everything is that digital money has no scale. It's reasonable to want to stop people transacting billions of dollars for Russian weapons and it's not reasonable to pursue every last Russian national. But in an electronic system "one" and "one billion" fit in the same field.
miohtama 3y ago
I have a Lithuanian friend (not even Russian, or Russian heritage) who has a same name as a sanctioned person in Russia. He has never been able to make an international wire transfer. Banks bounce his transaction back based on a name check.
csomar 3y ago
> AML/KYC banking laws are rapidly degrading into complete bullshit It did not. That was their purpose all along but it's nicer to say we are implementing AML instead of we are sanctioning these guys or we are restricting outflows. Crypto did not boom because it is mathematically revolutionary (it is, but most people don't really understand it). It boomed because there is a market for it.
- crotchfire 3y ago
  The only reason it got big enough to be boom-eligible was that geeks, nerds, and cypherpunks (in particular) understood how mathematically revolutionary it was.
deleted 3y ago
[deleted]

matheusmoreira 3y ago

> it's hard to not notice that modern AML/KYC banking laws are rapidly degrading into complete bullshit They were always bullshit from day one. AML/KYC is literally the financial arm of warrantless global mass surveillance. To me it's comical when I see HN defending unlimited strong cryptography and yet drawing the line at untraceable financial transactions. They are one and the same.

anon_trader 3y ago
There is a difference between "evil" and "ineffective", and while I agree with the more controversial "evil" part, my point was to emphasize the "ineffective" part of it. I won't go into further details even under anonymous account, but I have some first-hand experience dealing with compliance from various financial institutions, I have a general idea of what they ask, what they do NOT ask, and all of this feels much like IP address logging or so-called "chain analysis": it may work against unprepared people (mostly those who "have nothing to hide"), but is almost trivially bypassable by any semi-motivated attacker. Mostly it's because incentives are completely off. These people are not the police; their top priority is to cover their asses with enough paperwork, not actively engage in yet another anti-whatever crusade.

null0pointer 3y ago

This comment was marked [dead] when I read it. I vouched it back into visibility. I wish people would respond with a comment if they disagree, rather than reporting it. Meta-comment aside, there’s another population segment who suffer from overbearing AML/KYC regulations - homeless people. Many homeless people do not have any form of ID and hence cannot open a bank account. What option do they have? I would argue for low value accounts, say <$5000 annual transaction volume, AML/KYC enforcement should not be required. $5000 is such a small amount in the grand scheme of money laundering that the government should really focus on the bigger fish. Splitting your laundered money into many bank accounts would, or could, fall under existing structuring laws and would be easily detectable by any bank. I haven’t even mentioned that in many countries, such as the US, you have absolutely no guaranteed right to banking access. Your access to banking can be shut off overnight by any one of the various middle men involved. Until these things are solved, and legal persons can be guaranteed access to banking then crypto is necessary.

ben_w 3y ago
Here's a trilemma: 1. Everyone should have access to banking, and a $5k nominal/year in most of the G7 economies[0] is small enough it shouldn't attract attention. 2. If you don't require proof of ID, you can't stop people signing up for as many small accounts as they want to. 3. Homeless people may not have any formal proof of ID (either because it's too expensive, or as a direct consequence of why they're homeless in the first place[1]). You can try to get around #3 with biometrics. But even with AI assistance, the goal here is to prove a person isn't already on the system — which is much harder than merely showing they're the same person as on the ID card they have with them, for reasons which are basically a generalisation of the Birthday problem[2]. [0] one of the G7 is the EU, the worst of the EU is Bulgaria at €12400 GDP (nominal) per capita, Wikipedia reports that "More than a fifth of the labour force work for a minimum wage of $1.16 per hour.[203]" but that citation (which follows) is from 2012 and this is where I stopped going down the rabbit hole: https://web.archive.org/web/20121224023912/http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/3-20122012-AP/EN/3-20122012-AP-EN.PDF https://web.archive.org/web/20121224023912/http://epp.eurost... [1] off the top of my head: because they ran away from home as a minor and didn't take sufficient documentation with them; or because they had an untreated mental health problem; or because they're an unregistered migrant; or because they were born in the country but out of the system. [2] https://en.wikipedia.org/wiki/Birthday_problem https://en.wikipedia.org/wiki/Birthday_problem

pjc50 3y ago

While I'm definitely a "crypto skeptic", I think it's probably going to persist in this niche of "US-equivalent hawala banking for people who aren't allowed the stability of the US dollar". People worried about US hyperinflation are nuts. People worried about Argentine hyperinflation have a reasonable point. A big problem with everything is that digital money has no scale. It's reasonable to want to stop people transacting billions of dollars for Russian weapons and it's not reasonable to pursue every last Russian national. But in an electronic system "one" and "one billion" fit in the same field.

miohtama 3y ago

I have a Lithuanian friend (not even Russian, or Russian heritage) who has a same name as a sanctioned person in Russia. He has never been able to make an international wire transfer. Banks bounce his transaction back based on a name check.

csomar 3y ago

> AML/KYC banking laws are rapidly degrading into complete bullshit It did not. That was their purpose all along but it's nicer to say we are implementing AML instead of we are sanctioning these guys or we are restricting outflows. Crypto did not boom because it is mathematically revolutionary (it is, but most people don't really understand it). It boomed because there is a market for it.

crotchfire 3y ago
The only reason it got big enough to be boom-eligible was that geeks, nerds, and cypherpunks (in particular) understood how mathematically revolutionary it was.

deleted 3y ago

[deleted]