More countries than those in the EU have KYC laws. But no, I'm not saying illegal means immoral, nor that there aren't degrees of illegality. I mean that if what you did was legal, then you probably used a loophole. And that same loophole can be used by organized crime to launder money from human trafficking.
And that the trade-off between allowing your transaction and preventing organized crime is why KYC and money laundering laws were created.
I recently did a 6 figure international transfer, and I had to talk to people at the bank, who had to sign off that the source of my funds were fine and I wasn't doing anything shady (nor being defrauded). Just a 15min phone call.
For someone who regularly does this I assume it's streamlined, but it does make sense for the bank to be suspicious on multiple levels when I do the biggest transfer of my life.
They also checked with me to make sure I did basic security precautions like "Did someone contact you and tell you to make this transfer, or did you come up with it yourself? Did someone send you the account number, or did you look it up on a trusted source?".
Sure, part of that was "cover your ass" for the bank's liability to a mistake, but some of it is legally mandated for KYC/ML.
Again, don't take my comments as saying governments or these laws in particular are perfect. I'm saying they are deliberate because something like them is really really a good idea, both for the individual and society as a whole.
But I think it's a red herring to say "some governments criminalize homosexuality, therefore KYC/ML laws are bad or overreaching".
> I don't particularly support KYC
So what's your alternative proposal for preventing / detecting the crime it really does catch?
What's your proposal for forcing banks to not look the other way when drug cartels bank their profits?
Again, I'm not saying it's perfect, but without KYC/ML banks wouldn't even have an obligation to look, and would have no liability when they aid organized crime. Clearly we need to do something? KYC/ML is not flawless, but it also works. So this is not a "We have to do something, this is something" case.
If you take away KYC/ML you have to replace it with something better. Otherwise you're just saying "defund the police" with no plan to replace the police.
So that's KYC/ML.
Taxes.
I guess I brought up taxes a little bit, but it's another chapter in the book on cryptocurrencies.
Right now there is huge tax evasion happening in industries that deal with cash. Taxi drivers are a prime example, but also plumbers, carpenters, etc...
Not everyone, of course, but it's so easy for them. E.g. it's common practice among people felling trees for people that they charge a lot because they need to pay insurance in case the tree falls on something expensive. But when the tree doesn't, they just pocket the whole thing and don't tell the tax man or insurance company.
What if we had the cryptocurrency dystopia, where everyone who wants to can get paid in some ideal cryptocurrency? I bet you HUGE parts of salaries will suddenly go dark, and be tax free.
People earning 6-7 digit salaries would just not declare that at all. It would take a lot of sense of civic duty to hand off 5-6 digits per year if you know you can get away with not doing that. Most people don't have that, and I can admit I'd be super tempted too, if I knew math would protect me perfectly.
The reason people actually pay income tax today is because double entry accounting and the paper trail actually makes it hard to hide salary payments. And paying people in cash is also logistically hard, and even harder if you have to do it fraudulently.
You can do it with low wage workers, but I sure as hell wouldn't want to have to deal with thousands of dollars in my hand every week.
But even then, in many countries it's illegal to pay salaries in cash. Because of the rampant fraud that happens when salaries are in cash.
And why would you want to be paid in cash to hide it from the government? You say you believe in taxes, so the tax man will know your income eventually anyway. So there's no point in hiding it.
Interesting about IRS and theoretically not reporting you. Sounds similar to some places where robbing a bank with a fake gun carries a lighter sentence, so that robbers are incentivized to bring the fake gun instead of the real one, thus reducing harm to innocent bystanders and police.
They got Capone for tax evasion, so it's a charge you don't want. But I suspect if you just declare you bank robbery gains, that's not going to work well for you.
And that the trade-off between allowing your transaction and preventing organized crime is why KYC and money laundering laws were created.
I recently did a 6 figure international transfer, and I had to talk to people at the bank, who had to sign off that the source of my funds were fine and I wasn't doing anything shady (nor being defrauded). Just a 15min phone call.
For someone who regularly does this I assume it's streamlined, but it does make sense for the bank to be suspicious on multiple levels when I do the biggest transfer of my life.
They also checked with me to make sure I did basic security precautions like "Did someone contact you and tell you to make this transfer, or did you come up with it yourself? Did someone send you the account number, or did you look it up on a trusted source?".
Sure, part of that was "cover your ass" for the bank's liability to a mistake, but some of it is legally mandated for KYC/ML.
Again, don't take my comments as saying governments or these laws in particular are perfect. I'm saying they are deliberate because something like them is really really a good idea, both for the individual and society as a whole.
But I think it's a red herring to say "some governments criminalize homosexuality, therefore KYC/ML laws are bad or overreaching".
> I don't particularly support KYC
So what's your alternative proposal for preventing / detecting the crime it really does catch?
What's your proposal for forcing banks to not look the other way when drug cartels bank their profits?
Again, I'm not saying it's perfect, but without KYC/ML banks wouldn't even have an obligation to look, and would have no liability when they aid organized crime. Clearly we need to do something? KYC/ML is not flawless, but it also works. So this is not a "We have to do something, this is something" case.
If you take away KYC/ML you have to replace it with something better. Otherwise you're just saying "defund the police" with no plan to replace the police.
So that's KYC/ML.
Taxes.
I guess I brought up taxes a little bit, but it's another chapter in the book on cryptocurrencies.
Right now there is huge tax evasion happening in industries that deal with cash. Taxi drivers are a prime example, but also plumbers, carpenters, etc...
Not everyone, of course, but it's so easy for them. E.g. it's common practice among people felling trees for people that they charge a lot because they need to pay insurance in case the tree falls on something expensive. But when the tree doesn't, they just pocket the whole thing and don't tell the tax man or insurance company.
What if we had the cryptocurrency dystopia, where everyone who wants to can get paid in some ideal cryptocurrency? I bet you HUGE parts of salaries will suddenly go dark, and be tax free.
People earning 6-7 digit salaries would just not declare that at all. It would take a lot of sense of civic duty to hand off 5-6 digits per year if you know you can get away with not doing that. Most people don't have that, and I can admit I'd be super tempted too, if I knew math would protect me perfectly.
The reason people actually pay income tax today is because double entry accounting and the paper trail actually makes it hard to hide salary payments. And paying people in cash is also logistically hard, and even harder if you have to do it fraudulently.
You can do it with low wage workers, but I sure as hell wouldn't want to have to deal with thousands of dollars in my hand every week.
But even then, in many countries it's illegal to pay salaries in cash. Because of the rampant fraud that happens when salaries are in cash.
And why would you want to be paid in cash to hide it from the government? You say you believe in taxes, so the tax man will know your income eventually anyway. So there's no point in hiding it.
Interesting about IRS and theoretically not reporting you. Sounds similar to some places where robbing a bank with a fake gun carries a lighter sentence, so that robbers are incentivized to bring the fake gun instead of the real one, thus reducing harm to innocent bystanders and police.
They got Capone for tax evasion, so it's a charge you don't want. But I suspect if you just declare you bank robbery gains, that's not going to work well for you.