I'm not sure I got the gist of it right, but not willing to go a second time.
This was specifically about banks and their regulation, and I think it misses the more vague and less accurate sense that financial institutions can remove players and customers from the market basically at will, which would be the reason given by people going to crypto IMHO.
To his point it doesn't fit "debanking", but if tomorrow VISA and Mastercard decide your online business is stinky, holding a bank account won't help you in any useful way.
That's basically what happened with Porn, where even if you had a very tightly managed and stricly lawful business (let's say you produce clay stop motion porn movies), you'd still be kicked off payment platforms.
Sure there can also be interesting discussions about actual bank account closures, but I think it's a lot more of a minority, there's better recourses, and most decent countries will be willing to guarantee citizens can get some form of banking whatever their situation.
> Sure there can also be interesting discussions about actual bank account closures, but I think it's a lot more of a minority, there's better recourses, and most decent countries will be willing to guarantee citizens can get some form of banking whatever their situation.
I think you're just speaking form your personal point of view as an entrepreneur. Losing access to the payment system would be the end of your career, yes. But losing the ability to hold a basic checking account would be a death sentence for most normal citizens, including you.
Think of everything that is primarily paid in checks or bank transfers. Think of all your income that you receive primarily in checks or bank transfers form.
Now think of using cash for those use cases. You'll quickly find that it's untenable and sometimes plain impossible. Cashing a personal check your grandma sent you? Forget about it. Cashing a pay check? Go to one of those cash-for-check places that keep 20% of it!
"death sentence": about 5 million households in the US do not have checking accounts. Although it's a great inconvenience, and in many cases may be an injustice, it doesn't seem incompatible with life.
Note that a "normal" checking account customer poses basically zero risk to a bank - money goes in via direct deposit, comes out via debit, ACH, and withdrawals, and the bank is never left holding the bag.
From the article: Employees of crypto companies are not "normal" bank customers. Recent history shows that there is a significant risk that they may deposit commingled funds from their employer, which (a) puts the bank at risk for huge money-laundering fines, and (b) puts it at additional risk (I think?) if the crypto company fails.
If you have a credit score of 300 and complain about not being able to get a mortgage, I won't have a lot of sympathy. If your employment history is spotty and you're not a full-time employee, I might have more sympathy but I'll still understand why it would be hard to get a loan.
It turns out that if you work for a crypto company, you're a bigger risk to the bank than someone with bad credit is to a mortgage lender, as the possible losses are far higher than the amount of money they'd ever make off of you, and the fraction of crypto companies that have gone down that route is uncomfortably high. Oh well.
BTW, Walmart charges $4 to cash checks less than $1000, and $8 for $1000-$5000. If Grandma's check is $200 or less, it will cost $6. Your local post office will sell you a money order (up to $1000) for about $3, and you can get prepaid credit cards to pay online bills at your local 7-11, again for prices in the single digits.
There's quite a lot of variance across the country of Europe.
Bank transfers are indeed common but implying that payment cards are not is a bit of a misnomer - and the (buyer) protection offered by the card networks is much higher.
I guess my point is, that even in Europe, accepting only Bank transfers is going to limit your client base fairly significantly and to a sizeable number of people will be considered a signal of how much they can trust the vendor.
You don't deserve to be down voted for your comment, because what you wrote is true. Depending on what kind of product you're selling online, you can expect about half of Europeans to pay by card and half by bank wire, if given both options.
Removing the ability to pay by card, I'd estimate the business would lose a substantial share of clients, maybe in the range of 25%.
> Here in Europe, it is common to pay online by bank transfers, not by payment cards.
UK here. I pay my window cleaner and my tree surgeon by a bank transfer (from my bank's phone app app). If I buy a thing or service online or in a shop I pay using a credit card. It's almost unheard for medium to large companies to offer their bank details for a transfer.
You missed the point, banks have costs, banks are companies, banks must be profitable otherwise they collapse, crypto is very expensive to bank, banks have difficulty making profits on funds sourced from crypto, a responsible business you must prioritise (queens English) profitable customers.
My understanding is that crypto is expensive to banks because crypto is expensive to any legal entity in general.
And crypto kings not being able to hold their coins in their bank account doesn't sound like "debanking" to me, because it never was banked in the first place (some banks sure did handle it, but not the ones they're crying about).
I also can't get my bank to hold my beany babies either, and nobody calls that being debanked.
This bit is downright scary: "the bank cannot explain why SARs [Suspicious activity reports] triggered a debanking, because disclosing the existence of a SAR is illegal. 12 CFR 21.11(k) Yes, it is the law in the United States that a private non-court, in possession of a memo written by a non-intelligence analyst, cannot describe the nature of the non-accusation the memo makes. Nor can it confirm or deny the existence of the memo."
I get why this is insane but I also get why the law is there which leaves me in a wired spot. Part of me wants to say something along the lines of "make SAR's disclosable / viewable to American citizens or legitimate users" but you can't really do that because the bad guys will quickly exploit any escape hatches like this.
What do others think about this? Because I'm kinda stuck in the middle about them.
If there is evidence against you, you surely have the right to know of it and to contest it! That's pretty fundamental to any reasonable justice system.
You’ve stipulated that the debanking was ok but that not disclosing why was problematic?
How about this:
1. Corporations are highly regulated legal constructs. Being given an extraordinary right (immunity for shareholders) they should be expected to return significant value to society. I propose that value should be “lack of freedom of association” - eg I don’t think corporations should be allowed to stop doing business with, or refuse to do business with, anyone citizen, except after conviction in a court of law for behavior directly related to that business.
2. Government should not be able to use their secret monitoring to prevent anyone from doing anything. No lists, secret orders, etc. If government wants someone debanked, take it to court.
Finally, if corporations can’t debank people, how do they handle unusual cost/risk? With pricing, of course. If porn and crypto transactions pose extraordinary financial risk, then allow pricing based on actual financial risk.
The middle ground seems to be allowing SARs (which are analogous to tips to police officers), but not requiring banks keep them secret from the customer. The bank could decide to do so, but also could decide not to, like any other speech.
When a case is brought to court, they have to outline the methods used to determine the perpetrator. Why is it okay to do that for things like murder and other crimes but not for banks?
The law seems to be punishing people based on secret judgements over sealed "non-accusations".
Sorry, but no, I can't see why a country would want a law like this.
Honestly, my country had a dictator impose a Constitution that made sure every person had access to banks over 200 years ago (we haven't had a democracy at that point, but nobody even discussed it since, because nobody disagrees). I also can't understand how come the US treats that system so frivolously.
Stop with the Al Capone, totally dumb, angle: instead of arresting him for his actual crime, they arrested him because he didn't pay his taxes. Something dumb like that. And everybody applauds as if it was so brilliant. It's not.
What I think is: arrest people for the actual crime they commit... and leave honest people the fuck alone.
Of course it is scary. This is totalitarianism plain and simple. Secret laws. Secret rules. All these do exist (not necessarily only for SARs, where the law is not necessarily secret) when they definitely should not.
The excuse "(but) This is very much the law." isn't much of an excuse.
Last I checked the numbers estimated that, worldwide, KYC/AML costs on business where more than $180 bn while only $12 bn of funds were frozen. And frozen do not mean confiscated: a part of these are unfrozen and rightfully returned to their owners.
So that whole totalitarian, dystopian, system is a gigantic net loss.
And for what? To please bureaucrats who can do nothing else but push papers, create laws and rules and put ever more burden on everybody else.
But the worse of it all is that it gives a perfectly valid excuse for banks to debank anyone they don't like: seen that they don't need to justify anything they can just say "we're sorry we cannot say anything".
Wait, no, that's not the worst of it all. In several countries in the EU like France and Belgium the local IRSes do basically run ads explaining how you can denounce your neighbor.
I've heard a number floating in floating (devs in charge of these systems do talk): 25% of all the self-employed people have had at least one SAR.
On my LinkedIn I see people proudly posting 3rd-reich stuff like "The previous chief compliance officer said there were weeks where they had zero SAR". Basically implying that the previous dude was not filling enough reports and that he was so happy to get the job so that he could run those numbers up.
Burn that entire system. Just burn it to the ground.
There is no moral justification to freezing the bank accounts of truckers in Canada.
I don't care that "this is the law". Laws should be about justice.
This has absolutely nothing to do with being just.
I have a friend that is constantly being debanked and his wires getting lost because he has the same name as politically exposed Russian person.
Banks do not negotiate. They just kick him off and sometimes even lose his money.
There is nothing he can do, even though everyone who would look the issue would figure out it's just a shitty automatic system flagging it because of an unrelated person 's name. It would cost too much time and money for banks to fix this mistake, so giving a boot is cheaper.
Sounds like a big inconvenience, did he try to change his legal name?
Edit: I have no idea why this legitimate question is being down voted. I'm not suggesting that he should change his name or even that such a solution is an acceptable state of affairs. And the replies received re:past names are furthering discussion.
What's more: if you exhibit knowledge of the SAR requirement to a banker, they're supposed to file a SAR on you just for this, even if nothing else about your transaction trips the SAR threshold.
Absolutely, it's one of the most undemocratic, potentially violative of 1st amendment laws that is out there.
This is from the point of view that money laundering as a law is essentially thoughtcrime. The police state has done an orwellian job of normalizing not privacy, but instead telling the government the reason you are doing every transaction. Then, any attempt to not tell the government is "money laundering".
Of course, if you are the state, the powers of this tool are alluring. Imagine if the state could compel citizens to write down what they're thinking, and compel justifications for everything they do in life. Think of how many crimes we could solve! Think of how many bad folks we can catch ahead of time!
> ...is essentially thoughtcrime
> The police state has done an orwellian job...
> Then, any attempt to not tell the government is "money laundering".
Exactly.
But the really most shocking is the number of people that'll find excuses for such a dystopian system.
Now of course very few bite the hand that feeds them: when you literally work on software facilitating the handling of SARs, you need to do post-fact rationalization of your acts and life choices.
I hope the new administration burns that profoundly nightmarish system to the ground.
I don’t think anything was truly debunked here. Debanking is indeed a side-effect of AML laws and regulators, but as the article highlights, these laws are largely ineffective at stopping actual money launderers. Meanwhile, the vast majority of debanked customers are innocent. AML laws should be repealed entirely. Law enforcement should do their job and investigate crimes, rather than outsourcing this responsibility to financial institutions and effectively forcing them to be the "judge, jury, and executioner."
> these laws are largely ineffective at stopping actual money launderers.
Let's think about what the purpose of money laundering laws is. Nobody really cares about people concealing the source of their income in the general case. There's no purpose for money laundering laws just for that purpose alone.
The reason that money laundering laws exist is that one way to discover and prosecute crimes that people actually care about (human trafficking, drug dealing, various kinds of fraud, terrorism) is to "follow the money", and if criminals can successfully launder their money, it makes it easier to get away with their criminal activity.
The second reason that it exists is that money laundering _itself_ is often a much easier crime to prosecute than the underlying offense is. What KYC and AML laws do, and are extremely successful at is _not_ preventing money laundering. That would actually be undesirable for prosecutors! What KYC and AML laws do is allow people to money launder while creating a wonderful paper trail for prosecutors to follow and build a case on when they take an interest in someone from crimes they actually do care about. Chances are if you are money laundering, you have at some point lied on a banking form, which is a prosecutable crime, and a lot easier to prosecute than drug dealing and other crimes are, sometimes.
> these laws are largely ineffective at stopping actual money launderers
Money laundering could be the "think about the children" relying cry of the financial world. If international entities want better control over financial exchanges and a window into people's money, playing the money laundering card is a guarantee to get it passed without having to justify it that much.
The degree to which it has affected regular/everyday banking is pretty astounding, and is probably exactly what the regulators wanted from the start.
> Money laundering could be the "think about the children"
My hyper-liberatrianism is showing, but I've always been slightly irritated with money "laundering" being a crime in the first place. It's pretty far removed from the actual harm: money laundering is illegal because drugs are illegal and drugs are illegal because when people do drugs they do things that actually cause harm (to others and themselves). Like... I get the cause-and-effect chain there, but there's no evidence that these laws help anyway and they definitely hurt.
I didn't read the article but I do agree with you completely. I've noticed this repeatedly where if I've to move a small sum of money in/out of my country I need to fill 20 letters and 50 if it's a business. But if I have to move say $100MM? Banks will roll out a red carpet, no questions asked.
If it's left to the banks they are all too happy to serve anyone with money, we have quite a few examples[1] of that. Regulators want banks make examples of anyone which banks do by harassing small businesses which won't have monetary impact to banks' bottomline. My gut feeling is even regulators don't care much, they just want to pretend to the voters that they are trying to do something, anything.
> if I have to move say $100MM? Banks will roll out a red carpet, no questions asked
What are you basing this on? Every nine-figure wire I've seen issued was far more involved to get authorised than anything sub-million. (For obvious fucking reasons.)
>Law enforcement should do their job and investigate crimes, rather than outsourcing this responsibility to financial institutions and effectively forcing them to be the "judge, jury, and executioner."
Think there have being big pressure from banks and financial institutions to centralize power. AML laws seems just a way for the regulators to do it.
Banks and financial institutions see AML as a necessary cost center to continue operating as a business. They would gladly fire 90% of their compliance department if they didn't have to write hourly memos to FinCEN and join conference calls with the Fed. Power and money correlate, but money is ultimately what does the talking.
>This is not the world you live in. [A world where people get debanked for political reasons.]
I know quite a few people, and entities affected by it in Europe. Some of them even personally, individual accounts, not just their companies and organizations. I would elaborate, except I suspect that will be counter productive. Please read site guidelines. Let's agree to disagree.
The idea that the debanking of individuals on political basis has only happened in Canada is wrong. Furthermore, this also only happens to, let's say one side of the political dialogue.
> This [KYC/AML] will affect the typical user of the financial system precisely zero times during their lives.
I've been affected by this nonsense, and so have friends and family. Quite inconvenient when you're trying to buy a house and trying to keep things moving on time. I may not be "typical" but my mother certainly is. I can tell that patio11 is highly invested in the finance industry, not wanting to burn bridges, and I think he is incentivized to try to make people believe that KYC is beneficial and highly effective, but it's just not the case. It reminds me of the people inside Google working on their auto-banning systems who won't admit that it doesn't always work perfectly.
"Debanking will also not infrequently swiftly cascade to accounts in the same household, regardless of title (non-specialists can round this to “name on the account”; industry can’t). Banks institutionally consider those accounts in the same household to be highly likely to be under common control, regardless of what paperwork, account holders, or politically influential subcultures believe."
If people have actually read the article, they will have spotted the bits where patio11 himself has been adversely affected by this at least twice!
> I think he is incentivized to try to make people believe that KYC is beneficial and highly effective
I don't think the article is arguing that at all. It's describing the "system", not endorsing it (and explicitly complaining about it in several places).
If nothing else having to do more paperwork is very common.
British banks tend to not open accounts for people abroad because of the cost of KYC, and they even close accounts if you move abroad. Difficult if you have assets or a pension in the UK but live abroad. As you say, it makes it very hard for people who move around.
There are definitely political biases in closing bank accounts in the UK, and many cases of accounts being closed because banks did not like someone's politics. Not even fringe political views, associations with the previous government's part has caused problems in some cases, and definitely association with smaller but significant parties.
People also avoid taking on jobs that might make them "politically exposed persons" because the rules are too broad, and that (although it affects only a few people) does a great deal of damage because it reduces the number of people from outside in organisations, which worsens governance and corruption.
Also happening in Japan. Quite a number of big-name vendors like DMM, DLsite, and others are getting heavy pressure from Visa and Mastercard to censor certain merchandise for no justifiable reason (as in no legal basis) and in some cases have been blacklisted outright.
The Japanese response, and this is after placating the first round of censor demands, has been to reverse-blacklist Visa and Mastercard because Japan realized that giving an inch only means they will then demand a mile, then a league, and so on.
We live in a society. There were a bunch of pedos in the Netherlands who tried to start a political party to change age of consent.
It did not go well for them.
The middle class and below live paycheck to paycheck so that's an issue they don't have. I suppose the author refers to this (ironically or not)
But debanking happens, or has happened, to _almost_ everybody who has some assets and cash, probably from the higher middle class until the ~1% .. as for the super wealthy, this class enjoys offshore private banking, has assets split into dozens of accounts and is mostly unbothered by AML.
> debanking happens, or has happened, to _almost_ everybody who has some assets and cash
I don't think this is true. I know many people with assets and as far as I know, none of them has been debanked. Surely I would know someone who has been debanked if almost everybody with assets has been.
You need to provide data behind your claim that debanking is so widespread as to use the word almost everybody.
Never ever heard any person I know being denied banking services, except for some unlucky (were they?) entrepreneur with very shady is-he-laundering-money situations.
> But debanking happens, or has happened, to _almost_ everybody who has some assets and cash, probably from the higher middle class until the ~1%
Can you back up this claim? The wealthier you are the less chance you're going to be debanked. Marc Andressen and all the crypto bros will never have an issue with debanking. Banks are rolling out the red carpet for him and everyone else with his net worth.
What they (1%) want is to own the bank and own (and create) the currency without ever having to be an actual bank. They invest in crypto to make a massive profit, and it's foolish to play along with these things as some sort of benefit to society. Together these guys could end world hunger and still have more money than they would ever need, but no, they've decided VBucks are a pressing issue.
It's interesting that the idea that 'banks should refuse to do business with potential terrorists' is something that most people I know support, or don't care about.
Until it happens to them. Then suddenly they get quite passionate about the state that the world is currently in.
I don't have data on how many people are being debanked, but anecdotally it definitely seems to be some kind of 'line go up' number, and I wonder if cumulatively it will get to some kind of critical mass where we have a large enough percentage of people make enough noise that the laws are reigned in, or if they'll be 'that group of weirdos' forever.
> It's interesting that the idea that 'banks should refuse to do business with potential terrorists' is something that most people I know support, or don't care about.
I tell them about the "terrorists" truckers who went on strike in Canada and who got debanked for going on strike.
> (I almost got debanked once -- I had my account re-instated after many weeks of extreme stress ...
You tell me. I had to fill nearly a PDF with nearly 50 pages justifying where and how I bought groceries and how I put tank in my car because they somehow thought I may not be living in the country I said I was living in.
Same things: weeks of insane stress but, eventually, they said things were OK.
You're not a weirdo. People don't realize we live in a Brave New World, complete with secret ESG score (assigned by banks to customers), etc.
Many simply have blind love for the state and they'll never question any rule made by the state.
So they'll state: "But banks are only following the law!". Which is precisely the problem: such laws shouldn't exist.
I live in a country where it's all about banking finance and most don't realize they don't produce anything at all. It's all about KYC/AML/compliance/SARs/fiscal lawyers/etc. A big, gigantic, void.
While you see SpaceX going from their Raptor 1 design to their Raptor 3 design, using the "idiot index", where things become more efficient and way cheaper, bureaucracy (and their banking following dogs) works the other way: everything becomes less efficient and more costly.
all of the laws meant for terrorists are being applied to normal citizens at an astounding rate, things like border crossings and these unconstitutional laws like the patriot act have really undermined people's rights
A few years ago in Russia, when protesting was still barely legal and possible, prominent opposition leaders were 'fined' for ~1M USD each for damages to businesses what happened due to some protest activity. Banks simply deduced every account balance by -50000000,00 RUB and have a nice day.
Whoever thinks that 'but that was bad, evil Putin's government and our nice, good government would never do such a thing' should think again. The government should not have such power at all, neither directly, nor via bank proxy that would 'independently' refuse you service.
When you happily cheer that in EU you can't pay with 500 EUR bill (because tax evasion, crime, etc!!!), you are basically helping the government create means to financially strangle anyone the government doesn't like. One day it might strangle you.
How could they not have the power? All power the banks have is directly derived from their ability to operate as they do within a currency regime that is directly controlled by the state. Best case is it's your state; plenty operate in a system controlled by a foreign state.
> ... [debanking] often gets conflated with declining to open an account for a person or a business ...
A reasonable perspective. But the obvious follow up is what one pithy word should be used to describe this activity? The proffered terms (offboarding, derisking) are being suggested by the industry with an obvious political motive to minimise the significance of what they are doing.
There is an ongoing war against the pornography industry that has been waged in part through payment processing. The entire thing is an intense mish-mash of poverty, wealth, politics, drama, technology and major social forces clashing with each other. It isn't appropriate to talk about that sort of action in bland terms. There is an attempt being made to sculpt society by leveraging the financial system. The implementation details of that isn't "offboarding" or "derisking" - it is much more in the spirit of a word like "debanking".
I'm with the activists on this one. It makes more sense to redefine the word debanking to cover politically motivated (or even motivated by business-logic) denial of a bank account. These are not bland administrative decisions.
What's the point of this windy article? An allusion to "debanking people is OK actually!"
Allowing the bank remove your financial lifeline via some opaque and kafkaesque process where you have zero recourse is not OK and we should not tolerate it.
This is specifically a response to Andreessen conflating crypto offboarding with "debanking" on Rogan. The goal is to inform you about the regulatory and political environment around banking and crypto in general, and to warn you to be wary when a crypto investor uses terms like "debanking" to rally favor for their cause, which is to integrate crypto into the banking sector.
The point is that reality is more complicated than short statements (which often embed political assumptions) can express, and understanding the reality of the situation is useful, especially to people who want to change the system.
This is a valid point. Banks should compete for customers by providing value. They should also be free to decline customers to ensure quality. However, debanking due to perceived or real regulatory risk is ultimately a political act. The banks may not be exclusively political actors, but they are incentivized to act outside of market concerns by state pressure.
Similarly, one of the alleged intentions of the cryptocurrency movement was to decouple the state from monetary control.
> An allusion to "debanking people is OK actually!"
Literally the opposite of what he says. He says it happens too often to too many people, and that mostly it happens to people who are immigrants or don't speak english well or are financially illiterate, or just generally people at the margins, and not to privileged crypto bros.
In the UK, there is no concept of "universal service". if you look dodgy, your bank account can be closed. However unless there is strong evidence of fraud, you should be able to get your assets back, assuming that you can find a bank to take you.
But
Its more often the most vulnerable that cannot get bank accounts. If you have no fixed address, then you are not able to have a bank account.
If you work in stuff that looks like a prude to be sex work, you are also extremely vulnerable.
so yes, its great that this might be looked at in the USA, it won't however get reform, because its a very powerful and useful tool for the an administration to pull on when it wants to exert pressure.
>In the UK, there is no concept of "universal service".
The nine largest banks have a legal duty to provide a bank account to any eligible applicant under Part 4 of the Payment Accounts Regulations 2015, except where providing an account would be unlawful under other legislation (fraud, money laundering and terrorist financing) or where the customer has engaged in harassment against the bank's employees.
>If you have no fixed address, then you are not able to have a bank account.
The above legislation applies to customers with no fixed address. Two banks offer products specifically for customers with no proof of identity and no fixed address. Many others have significant flexibility in their identity and address requirements.
Alas my edit time has ran out, otherwise I would update with your correction.
Thank you for correcting me with sources, it is appreciated.
The People I know who have no fixed address, told me how difficult it was to get an account. I know when I opened my account recently, I had to provide a whole host of information that wouldn't be possible to have if I was homeless. I made the mistake of projecting incorrect assumptions, confidently. I went full techbro, which is wrong of me.
Readit News
This was specifically about banks and their regulation, and I think it misses the more vague and less accurate sense that financial institutions can remove players and customers from the market basically at will, which would be the reason given by people going to crypto IMHO.
To his point it doesn't fit "debanking", but if tomorrow VISA and Mastercard decide your online business is stinky, holding a bank account won't help you in any useful way.
That's basically what happened with Porn, where even if you had a very tightly managed and stricly lawful business (let's say you produce clay stop motion porn movies), you'd still be kicked off payment platforms.
Sure there can also be interesting discussions about actual bank account closures, but I think it's a lot more of a minority, there's better recourses, and most decent countries will be willing to guarantee citizens can get some form of banking whatever their situation.
I think you're just speaking form your personal point of view as an entrepreneur. Losing access to the payment system would be the end of your career, yes. But losing the ability to hold a basic checking account would be a death sentence for most normal citizens, including you.
Think of everything that is primarily paid in checks or bank transfers. Think of all your income that you receive primarily in checks or bank transfers form.
Now think of using cash for those use cases. You'll quickly find that it's untenable and sometimes plain impossible. Cashing a personal check your grandma sent you? Forget about it. Cashing a pay check? Go to one of those cash-for-check places that keep 20% of it!
Note that a "normal" checking account customer poses basically zero risk to a bank - money goes in via direct deposit, comes out via debit, ACH, and withdrawals, and the bank is never left holding the bag.
From the article: Employees of crypto companies are not "normal" bank customers. Recent history shows that there is a significant risk that they may deposit commingled funds from their employer, which (a) puts the bank at risk for huge money-laundering fines, and (b) puts it at additional risk (I think?) if the crypto company fails.
If you have a credit score of 300 and complain about not being able to get a mortgage, I won't have a lot of sympathy. If your employment history is spotty and you're not a full-time employee, I might have more sympathy but I'll still understand why it would be hard to get a loan.
It turns out that if you work for a crypto company, you're a bigger risk to the bank than someone with bad credit is to a mortgage lender, as the possible losses are far higher than the amount of money they'd ever make off of you, and the fraction of crypto companies that have gone down that route is uncomfortably high. Oh well.
BTW, Walmart charges $4 to cash checks less than $1000, and $8 for $1000-$5000. If Grandma's check is $200 or less, it will cost $6. Your local post office will sell you a money order (up to $1000) for about $3, and you can get prepaid credit cards to pay online bills at your local 7-11, again for prices in the single digits.
Bank transfers are indeed common but implying that payment cards are not is a bit of a misnomer - and the (buyer) protection offered by the card networks is much higher.
I guess my point is, that even in Europe, accepting only Bank transfers is going to limit your client base fairly significantly and to a sizeable number of people will be considered a signal of how much they can trust the vendor.
Removing the ability to pay by card, I'd estimate the business would lose a substantial share of clients, maybe in the range of 25%.
UK here. I pay my window cleaner and my tree surgeon by a bank transfer (from my bank's phone app app). If I buy a thing or service online or in a shop I pay using a credit card. It's almost unheard for medium to large companies to offer their bank details for a transfer.
And crypto kings not being able to hold their coins in their bank account doesn't sound like "debanking" to me, because it never was banked in the first place (some banks sure did handle it, but not the ones they're crying about).
I also can't get my bank to hold my beany babies either, and nobody calls that being debanked.
What do others think about this? Because I'm kinda stuck in the middle about them.
How about this:
1. Corporations are highly regulated legal constructs. Being given an extraordinary right (immunity for shareholders) they should be expected to return significant value to society. I propose that value should be “lack of freedom of association” - eg I don’t think corporations should be allowed to stop doing business with, or refuse to do business with, anyone citizen, except after conviction in a court of law for behavior directly related to that business.
2. Government should not be able to use their secret monitoring to prevent anyone from doing anything. No lists, secret orders, etc. If government wants someone debanked, take it to court.
Finally, if corporations can’t debank people, how do they handle unusual cost/risk? With pricing, of course. If porn and crypto transactions pose extraordinary financial risk, then allow pricing based on actual financial risk.
Sorry, but no, I can't see why a country would want a law like this.
Honestly, my country had a dictator impose a Constitution that made sure every person had access to banks over 200 years ago (we haven't had a democracy at that point, but nobody even discussed it since, because nobody disagrees). I also can't understand how come the US treats that system so frivolously.
Stop with the Al Capone, totally dumb, angle: instead of arresting him for his actual crime, they arrested him because he didn't pay his taxes. Something dumb like that. And everybody applauds as if it was so brilliant. It's not.
What I think is: arrest people for the actual crime they commit... and leave honest people the fuck alone.
The excuse "(but) This is very much the law." isn't much of an excuse.
Last I checked the numbers estimated that, worldwide, KYC/AML costs on business where more than $180 bn while only $12 bn of funds were frozen. And frozen do not mean confiscated: a part of these are unfrozen and rightfully returned to their owners.
So that whole totalitarian, dystopian, system is a gigantic net loss.
And for what? To please bureaucrats who can do nothing else but push papers, create laws and rules and put ever more burden on everybody else.
But the worse of it all is that it gives a perfectly valid excuse for banks to debank anyone they don't like: seen that they don't need to justify anything they can just say "we're sorry we cannot say anything".
Wait, no, that's not the worst of it all. In several countries in the EU like France and Belgium the local IRSes do basically run ads explaining how you can denounce your neighbor.
I've heard a number floating in floating (devs in charge of these systems do talk): 25% of all the self-employed people have had at least one SAR.
On my LinkedIn I see people proudly posting 3rd-reich stuff like "The previous chief compliance officer said there were weeks where they had zero SAR". Basically implying that the previous dude was not filling enough reports and that he was so happy to get the job so that he could run those numbers up.
Burn that entire system. Just burn it to the ground.
There is no moral justification to freezing the bank accounts of truckers in Canada.
I don't care that "this is the law". Laws should be about justice.
This has absolutely nothing to do with being just.
A SAR does not deprive you of life, liberty or property.
Banks do not negotiate. They just kick him off and sometimes even lose his money.
There is nothing he can do, even though everyone who would look the issue would figure out it's just a shitty automatic system flagging it because of an unrelated person 's name. It would cost too much time and money for banks to fix this mistake, so giving a boot is cheaper.
Edit: I have no idea why this legitimate question is being down voted. I'm not suggesting that he should change his name or even that such a solution is an acceptable state of affairs. And the replies received re:past names are furthering discussion.
This is from the point of view that money laundering as a law is essentially thoughtcrime. The police state has done an orwellian job of normalizing not privacy, but instead telling the government the reason you are doing every transaction. Then, any attempt to not tell the government is "money laundering".
Of course, if you are the state, the powers of this tool are alluring. Imagine if the state could compel citizens to write down what they're thinking, and compel justifications for everything they do in life. Think of how many crimes we could solve! Think of how many bad folks we can catch ahead of time!
Exactly.
But the really most shocking is the number of people that'll find excuses for such a dystopian system.
Now of course very few bite the hand that feeds them: when you literally work on software facilitating the handling of SARs, you need to do post-fact rationalization of your acts and life choices.
I hope the new administration burns that profoundly nightmarish system to the ground.
Let's think about what the purpose of money laundering laws is. Nobody really cares about people concealing the source of their income in the general case. There's no purpose for money laundering laws just for that purpose alone.
The reason that money laundering laws exist is that one way to discover and prosecute crimes that people actually care about (human trafficking, drug dealing, various kinds of fraud, terrorism) is to "follow the money", and if criminals can successfully launder their money, it makes it easier to get away with their criminal activity.
The second reason that it exists is that money laundering _itself_ is often a much easier crime to prosecute than the underlying offense is. What KYC and AML laws do, and are extremely successful at is _not_ preventing money laundering. That would actually be undesirable for prosecutors! What KYC and AML laws do is allow people to money launder while creating a wonderful paper trail for prosecutors to follow and build a case on when they take an interest in someone from crimes they actually do care about. Chances are if you are money laundering, you have at some point lied on a banking form, which is a prosecutable crime, and a lot easier to prosecute than drug dealing and other crimes are, sometimes.
Money laundering could be the "think about the children" relying cry of the financial world. If international entities want better control over financial exchanges and a window into people's money, playing the money laundering card is a guarantee to get it passed without having to justify it that much.
The degree to which it has affected regular/everyday banking is pretty astounding, and is probably exactly what the regulators wanted from the start.
My hyper-liberatrianism is showing, but I've always been slightly irritated with money "laundering" being a crime in the first place. It's pretty far removed from the actual harm: money laundering is illegal because drugs are illegal and drugs are illegal because when people do drugs they do things that actually cause harm (to others and themselves). Like... I get the cause-and-effect chain there, but there's no evidence that these laws help anyway and they definitely hurt.
If it's left to the banks they are all too happy to serve anyone with money, we have quite a few examples[1] of that. Regulators want banks make examples of anyone which banks do by harassing small businesses which won't have monetary impact to banks' bottomline. My gut feeling is even regulators don't care much, they just want to pretend to the voters that they are trying to do something, anything.
[1] https://www.icij.org/investigations/fincen-files/hsbc-moved-...
[1] https://en.wikipedia.org/wiki/World_Jewish_Congress_lawsuit_...
What are you basing this on? Every nine-figure wire I've seen issued was far more involved to get authorised than anything sub-million. (For obvious fucking reasons.)
Think there have being big pressure from banks and financial institutions to centralize power. AML laws seems just a way for the regulators to do it.
Social law and order rests upon consent of the governed.
Social contracts are abrogated when legal power is hijacked.
Indirection of motive via narrative, math or physics is not consent.
This is a non-goal. Taking it at face value is extremely naïve, and no one in the fintech world thinks this way.
AML laws exist solely for the purpose of enforcing the American grip on the world's politics via financial means.
I know quite a few people, and entities affected by it in Europe. Some of them even personally, individual accounts, not just their companies and organizations. I would elaborate, except I suspect that will be counter productive. Please read site guidelines. Let's agree to disagree.
The idea that the debanking of individuals on political basis has only happened in Canada is wrong. Furthermore, this also only happens to, let's say one side of the political dialogue.
https://www.bitsaboutmoney.com/archive/money-laundering-and-...
> This [KYC/AML] will affect the typical user of the financial system precisely zero times during their lives.
I've been affected by this nonsense, and so have friends and family. Quite inconvenient when you're trying to buy a house and trying to keep things moving on time. I may not be "typical" but my mother certainly is. I can tell that patio11 is highly invested in the finance industry, not wanting to burn bridges, and I think he is incentivized to try to make people believe that KYC is beneficial and highly effective, but it's just not the case. It reminds me of the people inside Google working on their auto-banning systems who won't admit that it doesn't always work perfectly.
"Debanking will also not infrequently swiftly cascade to accounts in the same household, regardless of title (non-specialists can round this to “name on the account”; industry can’t). Banks institutionally consider those accounts in the same household to be highly likely to be under common control, regardless of what paperwork, account holders, or politically influential subcultures believe."
> I think he is incentivized to try to make people believe that KYC is beneficial and highly effective
I don't think the article is arguing that at all. It's describing the "system", not endorsing it (and explicitly complaining about it in several places).
British banks tend to not open accounts for people abroad because of the cost of KYC, and they even close accounts if you move abroad. Difficult if you have assets or a pension in the UK but live abroad. As you say, it makes it very hard for people who move around.
There are definitely political biases in closing bank accounts in the UK, and many cases of accounts being closed because banks did not like someone's politics. Not even fringe political views, associations with the previous government's part has caused problems in some cases, and definitely association with smaller but significant parties.
People also avoid taking on jobs that might make them "politically exposed persons" because the rules are too broad, and that (although it affects only a few people) does a great deal of damage because it reduces the number of people from outside in organisations, which worsens governance and corruption.
The Japanese response, and this is after placating the first round of censor demands, has been to reverse-blacklist Visa and Mastercard because Japan realized that giving an inch only means they will then demand a mile, then a league, and so on.
But debanking happens, or has happened, to _almost_ everybody who has some assets and cash, probably from the higher middle class until the ~1% .. as for the super wealthy, this class enjoys offshore private banking, has assets split into dozens of accounts and is mostly unbothered by AML.
I don't think this is true. I know many people with assets and as far as I know, none of them has been debanked. Surely I would know someone who has been debanked if almost everybody with assets has been.
Never ever heard any person I know being denied banking services, except for some unlucky (were they?) entrepreneur with very shady is-he-laundering-money situations.
You mean they answer surveys saying they do, according to surveys published in press releases from payday lenders.
They also answer surveys from the Fed saying they have median $8k in bank accounts and that they can pay 3 months of expenses in cash.
These two things are contradictory.
Can you back up this claim? The wealthier you are the less chance you're going to be debanked. Marc Andressen and all the crypto bros will never have an issue with debanking. Banks are rolling out the red carpet for him and everyone else with his net worth.
What they (1%) want is to own the bank and own (and create) the currency without ever having to be an actual bank. They invest in crypto to make a massive profit, and it's foolish to play along with these things as some sort of benefit to society. Together these guys could end world hunger and still have more money than they would ever need, but no, they've decided VBucks are a pressing issue.
Banks are a necessary evil, but evil all the same.
Dead Comment
Until it happens to them. Then suddenly they get quite passionate about the state that the world is currently in.
I don't have data on how many people are being debanked, but anecdotally it definitely seems to be some kind of 'line go up' number, and I wonder if cumulatively it will get to some kind of critical mass where we have a large enough percentage of people make enough noise that the laws are reigned in, or if they'll be 'that group of weirdos' forever.
(I almost got debanked once -- I had my account re-instated after many weeks of extreme stress https://news.ycombinator.com/item?id=37925678)
I tell them about the "terrorists" truckers who went on strike in Canada and who got debanked for going on strike.
> (I almost got debanked once -- I had my account re-instated after many weeks of extreme stress ...
You tell me. I had to fill nearly a PDF with nearly 50 pages justifying where and how I bought groceries and how I put tank in my car because they somehow thought I may not be living in the country I said I was living in.
Same things: weeks of insane stress but, eventually, they said things were OK.
You're not a weirdo. People don't realize we live in a Brave New World, complete with secret ESG score (assigned by banks to customers), etc.
Many simply have blind love for the state and they'll never question any rule made by the state.
So they'll state: "But banks are only following the law!". Which is precisely the problem: such laws shouldn't exist.
I live in a country where it's all about banking finance and most don't realize they don't produce anything at all. It's all about KYC/AML/compliance/SARs/fiscal lawyers/etc. A big, gigantic, void.
While you see SpaceX going from their Raptor 1 design to their Raptor 3 design, using the "idiot index", where things become more efficient and way cheaper, bureaucracy (and their banking following dogs) works the other way: everything becomes less efficient and more costly.
Whoever thinks that 'but that was bad, evil Putin's government and our nice, good government would never do such a thing' should think again. The government should not have such power at all, neither directly, nor via bank proxy that would 'independently' refuse you service.
When you happily cheer that in EU you can't pay with 500 EUR bill (because tax evasion, crime, etc!!!), you are basically helping the government create means to financially strangle anyone the government doesn't like. One day it might strangle you.
A reasonable perspective. But the obvious follow up is what one pithy word should be used to describe this activity? The proffered terms (offboarding, derisking) are being suggested by the industry with an obvious political motive to minimise the significance of what they are doing.
There is an ongoing war against the pornography industry that has been waged in part through payment processing. The entire thing is an intense mish-mash of poverty, wealth, politics, drama, technology and major social forces clashing with each other. It isn't appropriate to talk about that sort of action in bland terms. There is an attempt being made to sculpt society by leveraging the financial system. The implementation details of that isn't "offboarding" or "derisking" - it is much more in the spirit of a word like "debanking".
I'm with the activists on this one. It makes more sense to redefine the word debanking to cover politically motivated (or even motivated by business-logic) denial of a bank account. These are not bland administrative decisions.
Allowing the bank remove your financial lifeline via some opaque and kafkaesque process where you have zero recourse is not OK and we should not tolerate it.
Similarly, one of the alleged intentions of the cryptocurrency movement was to decouple the state from monetary control.
Literally the opposite of what he says. He says it happens too often to too many people, and that mostly it happens to people who are immigrants or don't speak english well or are financially illiterate, or just generally people at the margins, and not to privileged crypto bros.
>Literally the opposite of what he says.
In that case the message is lost in the wall of text.
Ah, I had the same reaction (https://news.ycombinator.com/item?id=42387392).
Seems like an article meant to distract, or a someone nerding off on the nuances with no solutions offered.
Dead Comment
In the UK, there is no concept of "universal service". if you look dodgy, your bank account can be closed. However unless there is strong evidence of fraud, you should be able to get your assets back, assuming that you can find a bank to take you.
But
Its more often the most vulnerable that cannot get bank accounts. If you have no fixed address, then you are not able to have a bank account.
If you work in stuff that looks like a prude to be sex work, you are also extremely vulnerable.
so yes, its great that this might be looked at in the USA, it won't however get reform, because its a very powerful and useful tool for the an administration to pull on when it wants to exert pressure.
The nine largest banks have a legal duty to provide a bank account to any eligible applicant under Part 4 of the Payment Accounts Regulations 2015, except where providing an account would be unlawful under other legislation (fraud, money laundering and terrorist financing) or where the customer has engaged in harassment against the bank's employees.
https://www.legislation.gov.uk/uksi/2015/2038/part/4
>If you have no fixed address, then you are not able to have a bank account.
The above legislation applies to customers with no fixed address. Two banks offer products specifically for customers with no proof of identity and no fixed address. Many others have significant flexibility in their identity and address requirements.
https://england.shelter.org.uk/professional_resources/no_fix...
Thank you for correcting me with sources, it is appreciated.
The People I know who have no fixed address, told me how difficult it was to get an account. I know when I opened my account recently, I had to provide a whole host of information that wouldn't be possible to have if I was homeless. I made the mistake of projecting incorrect assumptions, confidently. I went full techbro, which is wrong of me.