A thread on FINCEN files and why I think we can throw the whole money laundering laws/cult in the garbage can.

This has to do with types of law.
1- contract law between entities (to civil courts)
2- administrative law (fin supervision, gov. court)
3- penal law (to jail).

Under contract law, parties agree to offer services and pay for those services. There is freedom of contract and we choose to do business with whomever we choose.

This is done on the basis of being honest with a contract clause that illegitimate behaviour ends the contract.
Disputes about the contract can be taken to court, so if a bank thinks that someone is acting illegal, the bank has an incentive to prove it and back it up.

Usually they refer to the administrative law KYC-rules for that but that is wrong. They should refer to penal law.

A bank or any other entity does not want to be complicit to crimes such as money laundering. And it may to choose to steer away from those crimes by ending contracts.

The penalties in penal law, also convictions for managers of the bank, should be the major incentive.

The penal law creates the incentive for bank managers to make sure that they only facilitate legitimate businesses and otherwise end contracts.

Also, under penal law, banks need to fully cooperate with police investigations on a per-case basis. This is a citizens' safeguard

The combination of penal law, duties/responsibilities of police and contract law, create a structure in which companies steer away from facilitating crime while helping authorities with legitimate data requests on possible criminals.

Why need more?
Why administrative laws?

Traditionally bank supervision, under administrative laws, originated to protect the public from banks failing, not doing their duty and harming society in the process.

So banks need to be safe, have reserve capital and so on. This is well understood and legitimate.

However, over time, tax authorities and eager intelligence agencies wanted to reap the honey pot of data that was existing within banks, without the need to have to properly follow police/justice procedures (both national and internationally).

And they had a plan.

Assembled in the FATF (financial action task force) are all kinds of ministries of finance of the world that all seek to battle financial crimes and such. But do notice: it is the Ministries of Finance (tax collectors) not the Ministries of Justice.

And here is their trick.

It is a simple political trick, being that you start an international meeting with international colleagues, then all together you dream up all kinds of directives and recommendations and when back at home pretend like those are made by a god-like entity in heaven.

So back in Dutch parliament the Ministry of Finance can say that the reputable FATF has guidelines that we should comply with locally and therefore the law needs to be changed.

Old trick, also nicely described by Majone, creating a fake-legitimacy.


In essence, the national regulators thus push their desired objectives into international guidelines and without any parliament involved, convince parliament that there is a legitimate need to comply with those (self-written) rules.

Most parliaments fall for it.

And do note that this is a way for working for international banking regulators as well, or many other kinds of supervisors/regulators. As I said, it's a standard trick in the administrative and policy books.

It assumes however that those guidelines intend or do no harm.

For all kinds of Know Your Customer and Monitoring rules, all countries in the world were gradually following the FATF 'Recommendations' and pushing into administrative law the requerst to banks to do investigative stuff as part of their business process.

That is remarkable.
Banks are not an arm of the police and neither are bank supervisors. But they were forced to become one under pressure of the FATF organisation (being Ministries of Finance and intelligence agencies on the background).

Now what was the watershed moment in the process?
Right before this moment, some US agencies, which are at the heart of the FATF money laundering club, had asked Congress to agree on very wide ranging KYC/AML rules to be executed by banks.

Not ok -> invading privacy

h/t @MaraWesConsult
pure.uva.nl/ws/files/17378 .

The 9/11 attacks were the welcoming moment for intelligence agencies. Within a couple of weeks the whole framework that was previously fully dismissed, was put in place, leading to a very costly addional layer of requirements in administrative law.

No one could oppose.

Anyone rightfully claiming that those rules are still a useless invasion of privacy was being shut up as complicit to helping terrorists.

Analytically false of course, but a useful political frame that still works to spin the heads of politicians and the public.

I have contributed myself to an implementation guideline which required name/adress of sender/receiver of transactions to be put in payment messages.

That had nothing to do with terrorism prevention, because would a 'O.B. Laden' really send money from his bank account?

We all have allowed the tax authorities of the world, the Ministries of Finance, to pollute the administrative law that seeks to prevent/protect the public interest, to become the most intrusive piece of digital surveillance law ever being brought into existence.

This might be understandable in the aftermath of terrorist attacks, but we are now almost 20 years later in time and what can we see.

The whole FINCEN/FIU charade/circus does not help and prevent anyone from moving illegitmate funds.

Quite the opposite.

The administrative laws provides a free pass for all companies involved that they can no longer be penalised (pillar 3 penal law) if they report suspicious (or in NL: irregular) transactions to authorities.

This is reporting of which the data-subjects are unaware.

While the combination of contract law and penal law incentivised bank managers to steer clear from money laundering, crimes and such, the administrative law creates a perverse structure where they can do business with such entities and get a free pass by filing trx-reports.

Now, the happy receivers of this information, government authorities, are generally overwhelmed by the information and have no track record at all in preventing true terrorism or preventing money laundering schemes.

This is common knowledge what the FINCEN files prove.

This Dutch article on FINCEN, outlines that 90% of all irregular transaction reports are unread/unused whatsoever and the Financial Intelligence Unit is understaffed to do its work. Does this stuff really work in practice?

What do scientists say?


Well, if you read the excellent disseration by @MaraWesConsult here -pure.uva.nl/ws/files/17378…
you can see the political history of the rules and their 'effectiveness.

By using the theatre metaphore she outlines that AML/KYC stuff is a form of showcase regulation/circus.

And if you read this dissertation by Carolin Kaiser, you can see that with AMLD5 now implemented in EU, there are 17 elements where this violates are basic human right on privacy and the innocence presumption.


Thus, the 9/11 terrorist attack was succesfull for the terrorists and FATF alike. Society was hypnotised to allow tax authorities/intellegence agencies to invade our privacy and hurt companies with costly KYC/AML rules in administrative law

thread-> translate.google.com/translate?hl=e…

Also, without society noticing, we have been brainwashed into believing that tax-officials under administrative law are the equivalent of police officers under penal law. But they are not and they shouldn't be there. It is a cult.

See thread -> translate.google.com/translate?hl=e…

Back to the FINCEN-files or their numerous equivalents under all sorts of equivalent administrative laws. We can stack them up to hights of the Kilimanjaro, but we are sorting through tonnes of illegitimat mass data surveillance that should not have been collected at all.

I am critical of banks and their roles in money laundering and see how the FATF-cult is bullying them (and new players like crypto) into submission with high fines, whether penal or administrative.

But that doesn't make what's wrong suddenly right.

I do not share the hypnosis trick of the FATF that it is a proper duty for banks to do the work of the tax authority or police.

The financial reporting / data surveillance and mass-customer data broadcasting via financial transactions is an FATF-terrorist attack from within

We should not, under pressure of terrorists, let our administrative supervision law, which seeks to protect citizens and companies, become an ineffective, illegal, human rights violating tool for tax authorities.

Thus the solution is clear...

We should abandon all and KYC/AML requirements under administrative law and the free passes of suspicious transaction reporting.

Consequently, the selfinterest under private and penal law will lead to a more effective incentive structure, with bank managers doing jailtime.

Police/justice still have access to private sector players customer data, but only with proper legal basis.

Should players want to file a formal suspicion of crime, that can be done under penal law.

But no more data broadcasting and surveillance as administrative rules.

We should no longer amass all this data on the assumption that money laundering is going on. We should throw it away and trust that our police will be able to pinpoint criminals and asked for focused information.

This is a more sane, clear application of contract law, administrative law and penal law that does justice to the protection of citizens/companies and the interests of society.

Of course the intelligence agencies and FATF don't want to be robbed of their data-drug.

But bottom line remains that we should not give up human rights of all customers for the pursuit of uncatchable criminals by non-formally appointed bank employees that buy their own get out of jail passess while allowing money laundering to go on.

I hope this thread helps you understand the different, human rights perspective that is relevant here.

We must not trust bureaucracies ever and must not give them too powerful tools in good times, which may do harm in bad times.


So what do I think about the FINCEN files?

They should not exist as they are illegitimate rules sneaked into administrative law, creating unjust policing and surveillance burdens for institutions and a perverse incentive to let crime continue.

We should close that theatre.

I have thus submitted an infringement complaint to the EU Commission, requesting the anullment of AMLD-rules in EU where they are in violation of human rights.

Of course referring to the Kaiser dissertation and EU Court of Justice verdicts -> simonl.org/wp-content/upl…

PS. With the now published EU definition of crypto-asset, and the FATF-travel rule, all future blockchain applications will need to include mass data-surveillance into their transactions as a standard feature.

Let's prevent this human rights breach.

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