It's a clever setup. Using laws like the Anti-Money Laundering rules, the government nudges credit card companies to avoid high-risk businesses. These companies can then turn away any business without explaining why, all in the name of "security through obscurity."
But when you think about it, this setup skips past important legal protections like due process and the presumption of innocence. It's like the government has quietly asked Visa and Mastercard to play judge and jury.
Quoting a relevant paragraph from the AML post above: Much like KYC, AML policies are recursive stochastic management of crime. The state deputizes financial institutions to, in effect, change the physics of money. In particular, it wants them to situationally repudiate the fungibility of money. (Fungibility is the property that $1 is $1 and, moreover, that you are utterly indifferent between particular dollars.) They are not required to catch every criminal moving money (that would not be a positive result!)
Deputizing payment processors to curb money laundering sounds good on paper. The issue is that the payment processors ban and deny processing for random, computer generated reasons. Their decision is unappealable even if you’re in the right and are selling perfectly legal items.
Normally, if the government suspects you of money laundering, they build a case and bring it to court. The burden of proof is on them to prove you’re laundering money or selling illegal goods. Here, they found a way to not only lessen their work load by deputizing private companies, but also affectively gave payment processors a moat and impunity to decide what people can and cannot sell everywhere.
Visa and MC are well within their rights to deny any person for any reason, but the government should have their own processing network. My gut is saying this will never happen since Visa/MC would lobby heavily against it. Even if one is created, expect it to be neutered.
> Visa and MC are well within their rights to deny any person for any reason
True, but as payment networks take on a more utility-like place in society (I'd argue they're already there), we shouldn't allow them to discriminate for arbitrary reasons.
He is right on point. I recently went through a KYC process and, due to a misunderstanding (and their lack of proper user support), I got kicked out of the service for a while.
What strikes me is how much financial information I had to provide them. Bank accounts, salary slips, savings accounts, etc. I am more than happy to provide that information to my government in the course of, say, a tax audit, but handing it off to a private company abroad just to buy a few shares is not proportionate. And who else will have access to that information? Is it going to be sold to the highest bidder?
The goverment is outsourcing its policing duties and, sooner or later, that will come back to bite us all when a leak outs all this information.
That's my biggest issue with this state of affairs. I am not a libertarian preaching unrestricted Laissez-Faire. But I do think that having your access to a payment system blocked should only happen as a result of a legal procedure with ample defense rights and based on laws voted by a parliament.
Every system can be corrupted. Feels like Americans are so afraid of the slippery slope at every turn, instead of accepting it is there always and the onus is on the people to manage them correctly and participate in the policy decision making that does that.
That's like complaining that Americans are so afraid of house fires that they strive to build their houses from flame-retardant materials and avoid the use of open flame, instead of accepting that house fires just happen and the onus is on the fire department to come by and put them out.
No it’s not. I’m saying Americans are afraid of slippery slopes and it’s leaving them paralyzed to affect any change, instead of accepting that the world is messy and the role of governing is to navigate this. In your analogy it would be like they are afraid to build any houses because a house fire could destroy it.
More generally, large unaccountable bureaucracies are fundamentally against the intent of the Founders, the spirit of the Bill of Rights, and the principles of government by the consent of the governed. That these bureaucracies are powerful private oligopolies rather than formally governmental in nature is mostly just an uncorrected oversight on behalf of those who set up our political and legal systems without the benefit of foresight.
Appeals to the founders are not compelling to me, they intended to have tons and tons of private activity regulated in the purview of private enterprise.
I agree that perspective might have been misplaced, but the founders were not in favor of powerful oligopolies under the control of the government.
Valorization aside, let's remember that the US has only been close to a majoritarian democracy for the last ~70 years or so. We can't necessarily look at the intentions from 200 years ago to decide on how political structures should be made, but we can observe their successes and failures.
Digital money is clearly a downgrade. In the yet ole times, all money (precious metal coins) was decentralized, anonymous and untraceable! It even worked in all world without any exchanges!
/Poe
You kid, but that's a serious attack against crypto, which is that the value is dependant on the existence of a sizeable network with diverse functions.
Whereas gold in the ground is shiny rocks in the ground. You can say, wait out a tax on gold by burying your gold.
Right. No crypto or your money in banks will work once that EMP from (virtually) inevitable nuclear war, Carrington event, societal collapse etc. hits.
Hint: We’re globally headed to The Collapse (with capital C) now. See climate change, resource scarcity, water depletion, or just ecological overshoot.
Which is extra interesting now, because fintrac and US treasury lately had to address issues of derisking ( banks choosing the easy way out from the burden of explaining every instance SAR and UTR was not filed ). Breaking point was coming for a while with crypto being an interesting symptom of the issue, but clearly things did not get bad enough yet.
But when you think about it, this setup skips past important legal protections like due process and the presumption of innocence. It's like the government has quietly asked Visa and Mastercard to play judge and jury.