Re:Credit Suisse sheds nearly 25%, key backer says no more m...
by mike_hearn on Wednesday March 15, 2023 @06:01PM
(#35175345)
My post was pretty long already. A complete proposal for reforming AML laws would be a book sized topic.
Structuring is a good example of an AML rule that makes no sense any more. The goal was to try and build a database of transactions that might be vaguely relevant to crime (large cash transactions) but it was phrased in an odd way with a per-transaction limit triggering a report to the federal government, probably to deal with the limitations of paper based banking at the time. Due to this poor lawmaking - whether forced or not - of course criminals just started making deposits of $9,999 each time to avoid the reporting and this was addressed with yet more terrible law, specifying a suspicious transaction pattern whose only definition is "you should know it when you see it". Then they threaten bankers with jail if they don't see it. What if the two sides disagree on knowing-it-when-they-see-it? Well, the bankers always lose. This is hardly upholding the core principles of the justice system and only raised the difficulty for organized crime by a small amount, essentially just requiring the bring-up of front companies so they could deposit large amounts of cash without appearing to be suspicious.
Structuring rules could be abolished entirely. Since that time computers and databases got a lot more powerful, and so now in reality the US monitors all financial transactions of any size regardless of the SAR rules. They just do it via semi-secret programmes at the Treasury (TFTP), CIA and NSA. Arguably they shouldn't and an ideal system would abolish all those things, with FinCEN being folded into the FBI and it being the only agency that engages in financial forensics. Reporting in turn could simply be eliminated and replaced with a system in which the investigative agencies submit database queries to banks, and those queries are then approved by bank staff if they are complying with the rules that constrain police activity. This would bring it into line with how other requests for information (are supposed to) work in the modern era.
You could also go further and state that there's nothing special about finance and that as fishing expeditions aren't allowed in classical law enforcement, transaction reporting should be eliminated entirely. That would be consistent with other areas of law, but is presumably too radical for you.
> It's like trying to legislate what specific exploits a company needs to have patched to say they prevented hackers. Then a new exploit comes out, it isn't in the law and that's used until the law catches up. It's useless.
Yes, and AML is like passing a law that says "don't get hacked, if you do you go to jail for a couple of decades if a regulator thinks you didn't make enough effort". What counts as enough effort? What even counts as getting hacked? They won't tell you these things and in reality it depends on what the press says. If such a law were passed and then actually enforced you'd just see people refusing to work in the computing industry because no salary is worth that kind of risk.
Structuring is a good example of an AML rule that makes no sense any more. The goal was to try and build a database of transactions that might be vaguely relevant to crime (large cash transactions) but it was phrased in an odd way with a per-transaction limit triggering a report to the federal government, probably to deal with the limitations of paper based banking at the time. Due to this poor lawmaking - whether forced or not - of course criminals just started making deposits of $9,999 each time to avoid the reporting and this was addressed with yet more terrible law, specifying a suspicious transaction pattern whose only definition is "you should know it when you see it". Then they threaten bankers with jail if they don't see it. What if the two sides disagree on knowing-it-when-they-see-it? Well, the bankers always lose. This is hardly upholding the core principles of the justice system and only raised the difficulty for organized crime by a small amount, essentially just requiring the bring-up of front companies so they could deposit large amounts of cash without appearing to be suspicious.
Structuring rules could be abolished entirely. Since that time computers and databases got a lot more powerful, and so now in reality the US monitors all financial transactions of any size regardless of the SAR rules. They just do it via semi-secret programmes at the Treasury (TFTP), CIA and NSA. Arguably they shouldn't and an ideal system would abolish all those things, with FinCEN being folded into the FBI and it being the only agency that engages in financial forensics. Reporting in turn could simply be eliminated and replaced with a system in which the investigative agencies submit database queries to banks, and those queries are then approved by bank staff if they are complying with the rules that constrain police activity. This would bring it into line with how other requests for information (are supposed to) work in the modern era.
You could also go further and state that there's nothing special about finance and that as fishing expeditions aren't allowed in classical law enforcement, transaction reporting should be eliminated entirely. That would be consistent with other areas of law, but is presumably too radical for you.
> It's like trying to legislate what specific exploits a company needs to have patched to say they prevented hackers. Then a new exploit comes out, it isn't in the law and that's used until the law catches up. It's useless.
Yes, and AML is like passing a law that says "don't get hacked, if you do you go to jail for a couple of decades if a regulator thinks you didn't make enough effort". What counts as enough effort? What even counts as getting hacked? They won't tell you these things and in reality it depends on what the press says. If such a law were passed and then actually enforced you'd just see people refusing to work in the computing industry because no salary is worth that kind of risk.