Timeline for Why does an online stock broker need to know information about my current salary?
Current License: CC BY-SA 4.0
14 events
| when toggle format | what | by | license | comment | |
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| Oct 24, 2021 at 16:49 | comment | added | Aron | @JonathanReez As others have noted, KYC doesn't catch fraudulent transactions, but rather prevents them locally. This will likely force criminals to other, less robust institutions with weak AML/KYC processes. Why burgle a neighbourhood watch house, when there are houses that are left unlocked? Take HSBC of 2012. Regulators found that various cartels are funneling their money laundering services through the HSBC banking network. In this case, it wasn't the KYC process at HSBC that caught the fraudulent transactions, but rather the audit that occured after it was found that HSBC has crap AML. | |
| Oct 24, 2021 at 10:10 | comment | added | Jivan | @Jouni your take is smart, but Im afraid the actual purpose of the regulation is to make it harder to cheat for peasants, while clearing the path for elites. | |
| Oct 24, 2021 at 5:23 | comment | added | JonathanReez | @user71659 is there a cost-benefit analysis somewhere that tries to measure direct and indirect consequences of KYC/money laundering laws on the global economy? Keep in mind that while the drug trade is $600B a year, not all of it is detrimental to the global economy, just like the sales of alcohol/cigarettes have both positive and negative effects. | |
| Oct 24, 2021 at 4:11 | comment | added | user71659 | @JonathanReez I can confidently say KYC prevents far over $10B of crime a year, since worldwide illicit drug trade in itself is a $600B a year business. Again, you're thinking in direct effects. The point of KYC is to make it harder to commit other forms of crime, since money is a key motivator. This was a famous lesson known from the prosecution of Al Capone, and was key in reducing organized crime in the US during the 1970s. | |
| Oct 24, 2021 at 1:15 | comment | added | JonathanReez | @user71659 now do the other side of equation: let’s say KYC prevents $10b worth of crime per year. Does it take less than $10b worldwide to comply and enforce KYC? By how much is global trade reduced due to KYC? And the effects are compounding - if trade is reduced by 0.1% per year, that’s a 3% compounded reduction over 30 years. It’s very rare to see such calculations from police officials as they threaten their jobs. | |
| Oct 24, 2021 at 0:48 | comment | added | user71659 | @JonathanReez No, that's the wrong way to think about it. These processes force criminals to be smarter and work harder, increasing the cost and barrier of money laundering, therefore reducing the volume. It prevents ordinary criminals from doing it, only smart ones. Police arrest people they see committing murder. Very few people are caught this way, so by your logic, police shouldn't bother anybody committing murder in front of them. Would the police be as effective in that case? Your logic says yes. | |
| Oct 23, 2021 at 18:36 | comment | added | JonathanReez | @Jouni there’s a high cost to society from these measures, as financial transactions become more expensive and people have to waste time on paperwork. The question is if preventing some crime is worth this added friction. The regulators are never forced to produce a cost benefit analysis to justify what they’re doing, unfortunately. | |
| Oct 23, 2021 at 17:14 | comment | added | Jouni | @JonathanReez The purpose of the regulations is preventing crime by making it harder and more expensive. Catching a criminal is always a failure, because the crime has already happened by then. | |
| Oct 23, 2021 at 1:57 | comment | added | Loren Pechtel | @JonathanReez Doesn't surprise me at all--such measures are going to be best at catching tax cheats, not bigger fish. | |
| Oct 22, 2021 at 18:49 | comment | added | JonathanReez | Fun fact: current estimates show that only 0.1% of fraudulent transactions are caught by KYC processes. Real criminals know numerous ways around these laws. Its the normal people who suffer the most from such bureaucracy. Adding the comment as your answer seems to imply that these processes are good because they catch criminals - they kind of don't. | |
| Oct 22, 2021 at 15:32 | vote | accept | Allure | ||
| S Oct 22, 2021 at 13:25 | history | suggested | CGCampbell | CC BY-SA 4.0 |
added a couple links and minor spelling
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| Oct 22, 2021 at 12:02 | review | Suggested edits | |||
| S Oct 22, 2021 at 13:25 | |||||
| Oct 22, 2021 at 11:38 | history | answered | Aron | CC BY-SA 4.0 |