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Follow-up: KYC, AML, WTF?

The mini-rant started a few conversations. Turns out the basis of the rant is really the façade that social security numbers are secret or private. They're leaked everywhere, to the tune of hundreds of millions out there.  The whole point of know your customer, aka KYC, is to stop fraud and ostensibly money laundering. 99.5% of financial crime isn't stopped by KYC/AML, it turns out. More on that below.

I don't have a solution. However, admitting there's a problem is the first step to solving the problem. I'm sure NIST or some committee could start working on next generation person identification at a federal level.

Here's some reading material on the topic:

And, someone pointed me at this:

Anti-money laundering: The world's least effective policy experiment? Together, we can fix it,

Here's the Introduction to the paper:

A worldwide policy paradigm enforcing complex anti-money laundering laws gives the comfort of activity and feeling of security but does not make us safe from crime. Letting criminal enterprises retain up to 99.95 percent of criminal proceeds, the modern anti-money laundering experiment unwittingly enables, protects and supports terrorists, drug, human, arms and wildlife traffickers, sex and labor exploiters, and corrupt officials, fraudsters and tax evaders on a global scale. Anti-money laundering is a globally significant policymaking function affecting millions of businesses and billions of people daily, so it seems odd that policy design issues are mostly addressed independently. More explicit connections with the rigor of policy science should contribute to better results.

Ronald F. Pol (2020) Anti-money laundering: The world's least effective policy experiment? Together, we can fix it, Policy Design and Practice, 3:1, 73-94, DOI: 10.1080/25741292.2020.1725366

And one view of what's happening with national digital currencies and the relation to KYC/AML,