Altcoins Talks - Cryptocurrency Forum
Crypto Discussion Forum => Cryptocurrency discussions => Topic started by: NotATether on June 25, 2024, 10:41:05 AM
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There is now indisputable evidence that the current implementation of KYC/AML requirements are doing more harm than good.
Let's take Europe as an example:
There is a lot of crime, fraud, and terrorist financing happening in the EU. One study has it at several billions of euros a year (https://www.transcrime.it/wp-content/uploads/2015/04/executive.pdf). Another article shows that only a measly billion or so are actually stopped (https://disruptive-horizons.com/p/kyc-aml-destroying-world) by KYC/AML measures, which means that over 99% of criminal activity is not caught by KYC/AML checks.
Meanwhile the total money spent on ensuring KYC/AML compliance is almost 150 billion euros a year:
(https://www.talkimg.com/images/2024/06/25/hyVQD.png)
It's bad news for service owners and customers because the owners have to waste so much money on tech that can't even stop a large percentage of fraud, and the customers are denied services for various geographical or identification reasons and also put their identity at risk by storing it with many different providers.
Meanwhile the criminals continue to celebrate.
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scammers cannot stop scam and look for a full-time job, and banks cannot tighten regulatory procedures. At some point, they are looking for profits, so whoever complies with certain regulations will be able to use banking services, and fraudsters comply with many regulations.
false positives One of the things and some governments allow a minimum of money laundering or do not care about it much. some customers are gullible that makes them believe all scam offers on the Internet.
I know a friend who still believes Click to Win Millions Scam ads.
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It's bad news for service owners and customers because the owners have to waste so much money on tech that can't even stop a large percentage of fraud, and the customers are denied services for various geographical or identification reasons and also put their identity at risk by storing it with many different providers. Meanwhile the criminals continue to celebrate.
The government side is just pretending that KYC/AML is doing fine so that they can continue on imposing the whole draconian measure to their subjects. The burden is really on the side of the service providers and they have no choice but to obey otherwise it can be so difficult doing business if you are at odds with the government. With eh data already available making KYC really ineffective and generally worthless, the government has to come up with better measures that can be more acceptable to those doing business and the consumers, otherwise this can be liken to just burying our heads in the sand. Criminals all know how to find weaknesses in any system and they got the latest and effective tools to circle around KYC/AML measures...and yes they are laughing right now.
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KYC and AML are both infective globally and as a matter of fact the government is vulnerable in most cases, because just as you mentioned about terrorism financing Sam or even worst case is happening currently in country, while the government through several restrictions limits it citizens in how much the have access to in terms of finance to avoid money laundering, still yet there are huge percentage of terrorism financing which pass through the financial sectors and without a trace.
This is a compelling situation, and for the fact that we face high risk of vinurability in the future, we as citizens must continue to act smartly to avoid being caught in between making out own security a high priority a d knowing when to shot the door on centralized financing.
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There is now indisputable evidence that the current implementation of KYC/AML requirements are doing more harm than good.
Let's take Europe as an example:
There is a lot of crime, fraud, and terrorist financing happening in the EU. One study has it at several billions of euros a year (https://www.transcrime.it/wp-content/uploads/2015/04/executive.pdf). Another article shows that only a measly billion or so are actually stopped (https://disruptive-horizons.com/p/kyc-aml-destroying-world) by KYC/AML measures, which means that over 99% of criminal activity is not caught by KYC/AML checks.
Meanwhile the total money spent on ensuring KYC/AML compliance is almost 150 billion euros a year:
It's bad news for service owners and customers because the owners have to waste so much money on tech that can't even stop a large percentage of fraud, and the customers are denied services for various geographical or identification reasons and also put their identity at risk by storing it with many different providers.
Meanwhile the criminals continue to celebrate.
They've (government) succeeded in rapping the majority up in a world of illusion and delusion, by making them feel the importance of something, when it is not actually important. KYC verification has now become part of every centralized organization not because they know what it truly defines, but because the government has pressured them in doing so. If KYC/AML are ineffective, then why still make heavy budget for it, except there are certain things they are not telling us. Tough criminals who launder heavy money won't attempt to use any medium that operates on KYC, and the government strongly know about this. They choose to track down those minor criminals and proclaim that their effort is effective when it is not.
After watching a documentary recently, I realized that this people (government) are just interested in our personal lives( not to help us, but to spy on things that can help us). They believe that an average citizen should have a specific amount in his/her account, and not more than. When someone eventually receive something big, is either the account is blocked, or the owner is tracked, even when the money is in no way related to theft. Shameful >:(
+1 by the way.
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KYC/AML may be ineffective but there is no better solution, so people stick with what's available, when there is better solution available, people will surely opt for that over current measures.
p.s: Have used several unique identity verification services in crypto, but those are useless as well.
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I'm not surprised because fake IDs can be accepted as proof of identification. With a weak verification system like that, money launderers and scammers will continue with their fraudulent activity as usual. I guess these platforms need to spend more to increase the effectiveness? ;D
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KYC and AML hurts legitimate people it violates personal privacy and just because of these scammers it was all implemented when a data breach will happen all personal information might be leaked and compromised and we are nowhere to complain. I personally don't like it myself but since I am a law abiding citizen I have to comply and now my privacy lies to people I do not know and systems that could be vulnerable to attacks while scammers are loose and free.
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There is now indisputable evidence that the current implementation of KYC/AML requirements are doing more harm than good.
You're right, upon the fulfilment of all the terms and conditions that goes in line with the request on KYC and AML verification procedures, we still have people looting money and they are not being caught, fraudulent activities are increasing and many are not finding solution to it because even the financial agency in control of financial crime couldn't help the situation, yet they are considering the crypto scam rate where it is nothing to be compared to the fiat losses we have been seeing, are the regulatory institutions not being effective enough, because all the KYC requirements seems in effective as well in tackling financial crime.
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There is now indisputable evidence that the current implementation of KYC/AML requirements are doing more harm than good.
You're right, upon the fulfilment of all the terms and conditions that goes in line with the request on KYC and AML verification procedures, we still have people looting money and they are not being caught, fraudulent activities are increasing and many are not finding solution to it because even the financial agency in control of financial crime couldn't help the situation, yet they are considering the crypto scam rate where it is nothing to be compared to the fiat losses we have been seeing, are the regulatory institutions not being effective enough, because all the KYC requirements seems in effective as well in tackling financial crime.
Seems scammer ar becoming smarter. But I'll also posit that regulatory bodies ain't doing their job effectively..
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People don't have a lot of choice to choose but to choose what is available in order for them to be safe and even though the measures aren't completely safe at all like you said about information/identities being kept safe by other providers or other third party. Even some people use casino to implement KYC/AML to scam people off of their money like they violate their rule and they have the authority to take the money and won't be returned to the person who it belongs to.
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Every system has weaknesses, and that's where criminals enter and commit their crimes.
In my opinion, KYC/AML is correct to deal with these violations, but it is only because criminals or fraudsters have taken advantage of the loopholes so they are not caught.
Therefore, the relevant agencies must work even harder, so that all problems like this can be resolved immediately.
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This is like having a ship in sea with thousands on holes in the bottom and water in leaking inside, and KYC government regulators are trying to close just one hole and they are telling us how this will stop the ship from sinking. :P
All this KYC regulations for me is one big security theater, they know they can't stop any criminals like this, they just want more censorship and control of their citizens.
Silly excuse is that they are using KYC for our safety... as if we need more cameras, more taxes and more regulations.
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Criminals could also have intellectual backgrounds, so they know the loopholes. Never mind avoiding AML compliant services, in reality the KYC system can also be manipulated and criminals are still free to use those services.
I remember one of the CZ cases, where he allowed Chinese residents (who should be restricted) to use his exchange through insiders.
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Criminals could also have intellectual backgrounds, so they know the loopholes. Never mind avoiding AML compliant services, in reality the KYC system can also be manipulated and criminals are still free to use those services.
I remember one of the CZ cases, where he allowed Chinese residents (who should be restricted) to use his exchange through insiders.
And the case where two brothers who went to MIT and got a bachelors degree in mathematics and I think computer science went into the Ethereum blockchain and hacked it for millions of dollars. How did they even do that anyway? Because the way I'm familiar with things, transactions are supposed to be final once broadcast (and in Ethereum's case cannot be replaced by another).
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Criminals could also have intellectual backgrounds, so they know the loopholes. Never mind avoiding AML compliant services, in reality the KYC system can also be manipulated and criminals are still free to use those services.
I remember one of the CZ cases, where he allowed Chinese residents (who should be restricted) to use his exchange through insiders.
And the case where two brothers who went to MIT and got a bachelors degree in mathematics and I think computer science went into the Ethereum blockchain and hacked it for millions of dollars. How did they even do that anyway? Because the way I'm familiar with things, transactions are supposed to be final once broadcast (and in Ethereum's case cannot be replaced by another).
Are you referring to 2016 dao hack? If so, there was hard fork which transferred funds from hacker's address to another address where dao depositors could withdraw their eth.
Read: https://ramiwrites.substack.com/p/the-dao-hack-that-changed-ethereums
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And the case where two brothers who went to MIT and got a bachelors degree in mathematics and I think computer science went into the Ethereum blockchain and hacked it for millions of dollars. How did they even do that anyway? Because the way I'm familiar with things, transactions are supposed to be final once broadcast (and in Ethereum's case cannot be replaced by another).
Are you referring to 2016 dao hack? If so, there was hard fork which transferred funds from hacker's address to another address where dao depositors could withdraw their eth.
Read: https://ramiwrites.substack.com/p/the-dao-hack-that-changed-ethereums
Nope, there was another that happened recently where two MIT brothers exploited a vulnerability in a bunch of MEV-bots that run on the Ethereum blockchain to replace the destinations of all those user transactions inside with their own addresses, and they stole $25 million that way very quickly in the process.
There is a more detailed read-up here: https://www.coindesk.com/tech/2024/05/16/how-2-brothers-allegedly-cheated-a-noxious-but-accepted-ethereum-practice-for-25m/
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And the case where two brothers who went to MIT and got a bachelors degree in mathematics and I think computer science went into the Ethereum blockchain and hacked it for millions of dollars. How did they even do that anyway? Because the way I'm familiar with things, transactions are supposed to be final once broadcast (and in Ethereum's case cannot be replaced by another).
Are you referring to 2016 dao hack? If so, there was hard fork which transferred funds from hacker's address to another address where dao depositors could withdraw their eth.
Read: https://ramiwrites.substack.com/p/the-dao-hack-that-changed-ethereums
Nope, there was another that happened recently where two MIT brothers exploited a vulnerability in a bunch of MEV-bots that run on the Ethereum blockchain to replace the destinations of all those user transactions inside with their own addresses, and they stole $25 million that way very quickly in the process.
There is a more detailed read-up here: https://www.coindesk.com/tech/2024/05/16/how-2-brothers-allegedly-cheated-a-noxious-but-accepted-ethereum-practice-for-25m/
Thank you for sharing, this is quite complicated for me to understand, but little do I understand, this exploits mev bots, which exploit normal users, so it's kinda like robinhood thing in a way.
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If there is a billion or two in fraud that is actually stopped by the presence of KYC/AML, then that means that the introduction of this idea is not a complete waste, atleast, it has helped save something.
Of crime is this high even with the presence of KYC/AML, imagine what it would have been like if there was no KYC/AML at all, it would have been way worser than it is right now.
And what I am saying in essence is that, there was never a time the introduction of KYC/AML will completely wipe out crime in our society, it only helps to reduce it.
My personal opinion.
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This is like having a ship in sea with thousands on holes in the bottom and water in leaking inside, and KYC government regulators are trying to close just one hole and they are telling us how this will stop the ship from sinking. :P
All this KYC regulations for me is one big security theater, they know they can't stop any criminals like this, they just want more censorship and control of their citizens.
Silly excuse is that they are using KYC for our safety... as if we need more cameras, more taxes and more regulations.
Pretty much spot on. I will give you an example during covid my drivers license expired. My state said no worries use the expired one. I was unable to do kyc with binace.us I sent them a ton of info but they refused to allow the New Jersey driving id.. I had a passport which was close to expired and I it had been a month later it won have not been good. So kyc was a fail in my case. Close t ok a complete one.
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If there is a billion or two in fraud that is actually stopped by the presence of KYC/AML, then that means that the introduction of this idea is not a complete waste, atleast, it has helped save something.
It has saved something as you have said but not saved all, all these they think is happening and we are pretending as we we don't know the vulnerability in the government agencies as well as their corrupt practices, what we are here to factor out is the truth about the occurrence of crime in the fiat system being more aggressively higher than the one seen with cryptocurrency, despite all the KYC and AML regulation policies, they couldn't achieve a harmonized scam free society with the people in running their economy system.
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I wouldn't say AML/KYC is ineffective. It was not primarily conceived as a control and fight against criminals, fraud or terrorism, but to have a better insight into the finances of ordinary people, possibly preventing tax evasion.
I would say that it is quite functional for this purpose, and the fight against crime, and terrorism is just an excuse for ordinary people to more easily accept various checks and controls.
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Pretty much spot on. I will give you an example during covid my drivers license expired. My state said no worries use the expired one. I was unable to do kyc with binace.us I sent them a ton of info but they refused to allow the New Jersey driving id.. I had a passport which was close to expired and I it had been a month later it won have not been good. So kyc was a fail in my case. Close t ok a complete one.
Let's be honest, you can't expect anyone to accept your expired documents anywhere, but we are not talking about that here.
With recent new tools I have seen how easy is to trick exchanges and getting ''verified'' with randomly generated name/address on passport.
It's never been easier to get a fake ID:
https://cointelegraph.com/news/ai-generated-fake-ids-pass-crypto-exchange-kyc-onlyfake
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Pretty much spot on. I will give you an example during covid my drivers license expired. My state said no worries use the expired one. I was unable to do kyc with binace.us I sent them a ton of info but they refused to allow the New Jersey driving id.. I had a passport which was close to expired and I it had been a month later it won have not been good. So kyc was a fail in my case. Close t ok a complete one.
Let's be honest, you can't expect anyone to accept your expired documents anywhere, but we are not talking about that here.
With recent new tools I have seen how easy is to trick exchanges and getting ''verified'' with randomly generated name/address on passport.
It's never been easier to get a fake ID:
https://cointelegraph.com/news/ai-generated-fake-ids-pass-crypto-exchange-kyc-onlyfake
well my motor vehicle in New Jersey shut due to covid. it shut for 21 months so my expired and the rest of the expired drivers licenses were allowed by the state of nj to drive.
officially. so all kyc businesses should have allowed the licenses. they did not allow it.
now I did have a soon to expire passport which did work. but i simply did kyc with three other places. then it expired and was not renewable for about ten months.
So basically i got lucky. I wonder if anyone did sue the exchanges over this. as the exchanges were legally obligated to accept a state driver’s license. and the state NJ extended them for over a year.
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well my motor vehicle in New Jersey shut due to covid. it shut for 21 months so my expired and the rest of the expired drivers licenses were allowed by the state of nj to drive.
officially. so all kyc businesses should have allowed the licenses. they did not allow it.
now I did have a soon to expire passport which did work. but i simply did kyc with three other places. then it expired and was not renewable for about ten months.
So basically i got lucky. I wonder if anyone did sue the exchanges over this. as the exchanges were legally obligated to accept a state driver’s license. and the state NJ extended them for over a year.
Crypto exchanges in particular are infamous for their non-compliance to various laws of jurisdictions, so I am not surprised that Binance and others were giving you trouble over your driver's license. Somebody has to literally threaten them with penalties before they comply - but what usually happens instead is that they end up getting out of the area to avoid implementing new compliance stuff.
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Somebody has to literally threaten them with penalties before they comply - but what usually happens instead is that they end up getting out of the area to avoid implementing new compliance stuff.
That's actually true; here in India Binance were warned for not complying and were told that if they were to continue with non-compliance they'll get blocked and guess what? They continued with non-compliance and did get blocked (up until this moment Indian users can't access binance's app and website even though there were news that Binance is to restore access to Indian users).
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Somebody has to literally threaten them with penalties before they comply - but what usually happens instead is that they end up getting out of the area to avoid implementing new compliance stuff.
That's actually true; here in India Binance were warned for not complying and were told that if they were to continue with non-compliance they'll get blocked and guess what? They continued with non-compliance and did get blocked (up until this moment Indian users can't access binance's app and website even though there were news that Binance is to restore access to Indian users).
That is what happens when they fail to comply with the standing regulations. Here in my country, binance officials was held in my country for operating without complying with existing regulations but it happened that they weren't supposed to be held on behalf of binance but binance as a whole but binance has no office in my country and we came to realise that all the saga was all about tax payment.
However the binance the government dropped the charges against the officials. One thing I noticed was that hey were all holding each other for the tax which is normal but the truth is that after paying the tax would the government be accountable for the tax paid? Even with all these data going on citizens were still accessing binance website and doing their trade but binance removed the our p2p from their platform. So it happened. KYC is just a waste of time they would do whatever they feel like doing no body cares.