Rage Weekly On AML And Social Justice

The tale of power asymmetries is a tale as old as time. There's the guys that have the guns and the guys that have the money (namely, the government), and then there's the guys that don't (namely, you).

To prevent society from being ruled by total psychopaths, we invented elections, checks, and balances (namely, democracy). Sometimes democracy works, but more often than not, it doesn't. Too easily are we blinded by the hero in the purple cape telling us exactly what the hired behavioral research firm has told them that we want to hear, only to be let down within the first 100 days in office. Yet, as we should all be able to agree, the only thing worse than participating in the quarterly disappointments that we call elections is not getting to elect anyone at all.

Power asymmetries emerge more easily where consent is easiest to coerce. As long as we can manufacture opinion to an extent that serves our needs – such as the widely held belief that dragnet financial surveillance is necessary to maintain liberal democracy – dominance is imminent, particularly when it goes unnoticed.

As the Centre for Homelessness Impact has found, "84% of people view homelessness as a very or fairly serious problem". If you asked those same 84% of people whether we should be allowed to transact anonymously, the answer would likely be no – Likely because hardly any public surveys exist querying the people's opinion on AML/CFT policy.

As a paper published by the Central Bank of the Bahamas summarizes: more than half of Canadians "support 'lifestyle-audits' as an anti-money laundering tool"; in the UK, "nearly three quarters of the public believe that sentences [for financial crime] are too lenient"; all in all, many appear to believe that AML/CFT measures do not go far enough, while its second order effects seem hardly understood: if you don't have a home, you can't get a bank account; and if you don't have a bank account, you can't get a home.

Similarly, according to a report published by Pew Research Center, eight in ten democrats (78%) believe that "efforts to ensure racial equality haven’t gone far enough" – Yet, while often bipartisan efforts, democrats continue to be avid supporters of anti-money laundering measures and increased financial regulations.

In 2021, 4.5% of US Households remained unbanked – that's 5.8 Million. In the income range of $30-50.000, 8% of black households and 8.4% of hispanic households were reported to be unbanked, compared to just 1.7% of white households. The main cited reason: not enough money to meet "minimum balance requirements”.

In a study titled The True Cost of Financial Crime Compliance, Lexis Nexis Risk Solutions found that the total cost of financial compliance in the US amounted to $61 Billion in 2023, compared to $85 Billion in Europe, the Middle East, and Africa. In total, global compliance costs lie at $206 Billion, with 98% of respondents reporting an increase in compliance costs due to the growing complexity of compliance requirements and an increase in workload.

Increasing compliance costs do not just affect minimum account requirements, but can also lead to the outright termination of existing banking relationships. In May, the banking giant ING unexpectedly closed down its retail banking services in Luxembourg, informing longtime customers that their business was "no longer profitable enough for them".

Power increasingly manifests as a monopoly on knowledge. Which brings us to FATF. FATF, or the Financial Action Task Force, is an inter-governmental, non-democratic policy group that leads the implementation of AML/CFT measures around the world. You didn't elect FATF, and yet it's paid for by your tax money. It holds no mandate to pass laws or regulations, but its recommendations can make or break entire national economies. Its superpower is that hardly anyone outside of finance knows that it exists.

Founded in 1989 by the G7, FATF routinely turns the idea of innocent until proven guilty on its head. According to FATF, when it comes to money, everyone is a criminal until proven otherwise – we must surveil every transaction in the global financial system, or else the world would soon be ruled by Putin, Al Quaeda, or a Xenomorph.

FATF arrives at these conclusions via a rather alarming path of pseudo-intellectual deduction: it cannot tell you how many Syrians, Yemenis or Iranians are engaged in terrorist financing activities, nor what percentage of terrorist financing throughout national populations would justify the sanctioning of every Syrian, Yemeni, or Iranian national, yet it advocates to do so anyway, just to be sure.

FATF can't tell you how much 'illicit' money passes through the global financial system every year; best it can do is rely on estimates, which place numbers around $3.1 Trillion in 2023. Particularly when it comes to 'Virtual Assets', FATF states that "data gaps remain a main challenge", but that doesn't keep FATF from arguing for increased financial surveillance measures to, maybe one day, be able to tell you.

Relying on FATF for AML/CFT regulation is like relying on the drunk man at the fun fair trying to pin the tail to the donkey. It's long been argued to be ineffective and unproportionate, yet FATF recommendations systemically penalize entire populations for the inaction of their governments through the systemic exclusion from the global financial system and the total surveillance of every cent spent.

In political philosophy, there is a word for rounding up entire groups of people to the doings of a few for collective punishment: we call it fascism.

FATF keeps getting away with it because the – false – belief that AML/CFT works to make the world a better, safer place is too deeply embedded in our brains , so much so that we routinely shut our eyes to its realities. You cannot tackle social justice issues when the policies you support are inherently unjust. You cannot change the world if you don't dare to challenge your own beliefs.

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