Is most of that an issue if you declare your income and pay any relevant taxes? Outside of some unnecessary annoyances it generally wouldn’t be too complicated to move your money around.

Otherwise, what are you expecting? Direct taxation isn’t really compatible with ‘financial privacy’ and never was.

My response is civil rights should drive the tax man's behavior and not the other way around. I will accept a loss in efficiency of taxation.

It depends. Some banks will ask for root origin of funds. Say you earned some money 20 years ago, invested them with various brokers into stocks all over the world, real estate etc. And then cashed a large sum into your account. If any one of those transactions is flagged they will require you to go back 20 years and collect those invoices that you earned and then you have to collect every transaction from the brokers, this may involve foreign jurisdictions where record keeping and querying is not available from 20 years ago.

So you will fail the disclosure and the bank will flag you in the shared blacklist DBs, they close your accounts and you are out of the system. This is happening enmasse to people who invested in and cashed out of real estate abroad(asia/africa/sa) some time ago. I imagine it's the same with foreign stock markets. And you never know what will be required 20 years in the future, thus most financial advisors discourage "moving money around". They even have a whitelist of brokers, stocks and jurisdictions, anything outside that is uninvestable for normal people just because of KYC/AML paperwork requirements.

Not providing KYC is definitely not a crime. It happens all the time. What usually happens is that the bank just terminates the account, after a while.

I suspect a lot of people would be eager to know the names of these banks that let customers operate without KYC for awhile.

> a lot of people would be eager to know the names of these banks that let customers operate without KYC for awhile

Non sequitur. Banks generally have to have KYC to do business, though there are famous exceptions in history. There is no jurisdiction I know of in which as a customer not providing KYC is itself a crime.

The customer isnt charged, it is the bank/entity or persons there. Not legal advice but failure if AML and not collecting identifying information is charged under 31 USC 5322 under indictment I'm reading.

The law here notes even some CFRs are criminally binding, the CFRs explicitly require certain identification.

You're so close, but so far.

What happens if the banks don't close it?

Later they might get a fine, which is just the cost of doing business for them.

Unless someone dislikes them, in which case they will unwittingly accept a sanctioned entity and then the indictment will scream bloody murder that this was basically all about not doing KYC (even though we all know sanctioned entities operate on white market using dark identity, so regular banks guilty too).

> in which case they will unwittingly accept a sanctioned entity and then the indictment will scream bloody murder that this was basically all about not doing KYC

Example? Every one I can think of involved the bank not doing KYC, criminals taking advantage of it, and evidence at least some people at the bank knew what was happening. (Usually because authorities told the bank they were doing business with criminals and the bank responded by shuffling things around so they could continue doing that business.)

Banks are always doing business with criminals and sanctioned entities and they know that, although not always when and where.

The difference is if the bank does KYC and the criminal uses a dark identity, the bank will likely get away with it. If the bank just gives each person a random number as their only identifier like the old swiss accounts, then they'll be warned sanctioned entities are using it and ultimately prosecuted when they fail to KYC (i.e. similar but but identical to CZ).

> difference is if the bank does KYC and the criminal uses a dark identity, the bank will likely get away with it

What is a dark entity? Have you worked in finance? Because if you collect KYC and accepted forged or faulty documents, the moment you figure out what's going on is the moment you call your personal lawyer.

One example is criminal pays a heroin addict for their real ID and then basically uses them as pass through nominee on the account.

> criminal pays a heroin addict for their real ID and then basically uses them as pass through nominee on the account

Sure. If you're at a financial institution and accept that documentation, you're personally in for a world of hurt. Doesn't mean it doesn't happen, either due to someone being negligent, overworked or happy to look the other way. But if it's caught, it's not great for the individual. (The bank will survive after paying a fine unless it's systemic.)

I imagine they usually don't know. Some fraction of identities are real IDs taken advantage of by sanctioned entities. If you bank at all you knowingly accept some level of sanctioned entities, but often don't know what identity they operate.

> Some fraction of identities are real IDs taken advantage of by sanctioned entities

Sure. But if the addict you mentioned's account goes from overdrafting every few weeks to holding millions of dollars, that should set off internal alarms.