{ "episodeId": "SLP318", "speakers": { "stephan": { "name": "Stephan Livera", "role": "host", "tag": "STEPHAN" }, "ronald_pol": { "name": "Ronald Pol", "role": "guest", "tag": "RONALD" } }, "segments": [ { "speaker": "stephan", "time": "00:09", "start": 8.59, "text": "Hi and welcome to Stephan Livera podcast, a show about Bitcoin. Today we're talking about the ineffectiveness of AML anti money laundering laws. So Ron Pol, lawyer and researcher, joins me to talk about how and why AML laws are ineffective and the massive cost to society, the cost to taxpayers and customers, the financial access and inclusion concerns, as well as as FATF, the Financial Action Task Force, and the problems around what they are doing to the world in terms of around government regulation and so-called financial crime laws. This show is brought to you by Swan Bitcoin. Swan is a really easy way to accumulate Bitcoin. 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Now, you don't need advanced technical knowledge to get started, you don't have to go and negotiate a fancy power deal, and many of us have bad residential power rates, and we might be more interested to look for competitive power rates that are found at some of the hosting facilities that CombusMining has found for you. So this is a great way to get started, and if you're in the US, you can partake in the mining at home program and have those miners shipped to your home to mine from home. So they've got all sorts of material and content, go and sign up, it's CombusMining dot io. And now onto the show with Ron Pol. Ron, welcome to the Stefan Livera podcast. Thanks for having" }, { "speaker": "ronald_pol", "time": "02:56", "start": 176.01, "text": "me" }, { "speaker": "stephan", "time": "02:56", "start": 176.11, "text": "on. So, Ron, I've been, having a look at some of your work, and now, this is typically a Bitcoin podcast, but I think your work is actually quite interesting for my audience and listeners because they will probably be interested and perhaps have their viewpoints, informed by some of the research that you have been doing, which is around the research into AML and potentially the ineffectiveness of the current AML, anti-money laundering regimes around the world, and I think it would It would be great to maybe just get a little bit of a background from you, where are you coming from, what's your, professional and academic background in this area?" }, { "speaker": "ronald_pol", "time": "03:30", "start": 210.12, "text": "Fair call. I, was once a lawyer for, for, for many years in London and, New Zealand and also a few other countries, for a small amount of time. in-house and also, external major law firms, et cetera. And I also have a degree in economics, but, certainly don't call myself an economist. but some years ago, I was quoted in the, US Senate, testimony by someone quoting me, describing, AML as arguably the least effective anti-crime measure ever, anywhere, which is quite a, quite a significant, ask really when you consider some of the things. You look at prohibition and you look at the war on drugs and Yeah, pretty ineffective, but, so, so I ended up, doing a PhD with some of the, top critical thinkers in this area just to, get to, really get to the bottom of it." }, { "speaker": "stephan", "time": "04:19", "start": 259.08, "text": "Yeah, and so t-there is this whole discussion, and I think as you pointed out in some of your blog posts, it's this idea that in the corporate media, often the conversation is something like, \"Oh, look how bad Bitcoin is, and look how good AML laws are,\" but I think you have a view that's perhaps fundamentally challenging" }, { "speaker": "ronald_pol", "time": "04:39", "start": 278.82, "text": "Oh, absolutely. I mean, that's, that, that's a narrative that, potentially catches people out as well, because, people are rightly focused on Bitcoin or whatever crypto they happen to be in, or, or, or more broadly, and they're met with a narrative that, you know, Bitcoin is bad and AML is good, and so they tend to focus, and you're quite rightly saying this needs to happen too, on explaining to senators and various others that, you know, Bitcoin isn't bad, that it's used in legitimate ways more than illegitimate ways Which, could potentially be the Trojan horse in terms of, regulations in the space that, you know, some crypto people are inadvertently allowing, the Trojan horse into the city, grounds already. The fact that, AML isn't necessarily, the good that it's made out to be. Certainly the intentions are good, but it's, it's profoundly ineffective and, without addressing, those issues for AML and fiat itself, simply applying all of that Same, stuff without asking those questions into crypto, is, is potentially a very significant issue that people just aren't aware of, a-and won't be aware of it until it's far, far too late." }, { "speaker": "stephan", "time": "05:51", "start": 351.34, "text": "I see, yeah. And so just for listeners who aren't new, maybe they're not as familiar, typically when people sign up with a bank, a financial institution, or a Bitcoin exchange or a Bitcoin company, they have to do what's colloquially called KYC, Know Your Customer, and it's part of this whole AML, Anti-Money Launder There are different players in the industry or in this world, as it were, so there is FATF, F A T F, Financial Action Task Force, and they are pushing out a lot of what they call guidance or policy guidance or best practices, that's what they wanna call it, out to local regulators out there in the world and legislators as well in those different countries. So for example, FinCEN in the US, Oztrack in Australia, FCA in the UK, and, and various others, like the regulating entities or at least the monitoring entities. And so I guess- That's, that's kind of like a high level. Would you, Pat, care to elaborate a little bit on that structure and how we got here to where we are now?" }, { "speaker": "ronald_pol", "time": "06:47", "start": 407.2, "text": "There's certainly a lot to unpack there, so if I neglect something, come, come back to me on it, particularly in terms of the KYC, type element. But in terms of the overall structure, K- FATF, as you say, say is the, the global, regulatory, standard-setting agency, a tiny outfit based in Paris. there are, International agencies involved, in this, including, FATF's regional, groups, a-and a whole lot of others like the IMF and the World Bank and, and, the United Nations and a great many others. So seventy or so international, agencies involved in, AML overall with FATF essentially at the top, of that. e- there are also two hundred and five countries and jurisdictions that, have bought into the FATF model, and that's more, more than there are countries, in So, but that happens because, you know, there are some, the, the former Dutch Ant-- Netherlands Antilles, for example, they're, they're grouped up as, as individuals, so there's two hundred and five, countries and jurisdictions, and in each of those, there's up to about a dozen or so, in some countries like the UK, even more than that, but, but very, at least two or three, and, and often a, a, a dozen or more, government agencies that are involved Our money going into, into that process, and that's without, the compliance costs that are imposed on, banks and, millions of financial institutions, around the world, as part of this. So that's the overall, global structure, of how that works. There was a lot more that you had in that question, right? I, I missed most of it, I suppose." }, { "speaker": "stephan", "time": "08:28", "start": 508.39, "text": "Yeah. Also, just wanted to, to touch on how we got where we are now, because it seems that there has been very little regard for effectiveness Now, to be clear, I'm a libertarian and I'm anti, you know, these, laws and regulations in the first place, but I think it is worthwhile considering that are these laws even effective at their own stated purpose? Are they even cost-effective even on their own terms? And I think some of your research is actually showing that potentially that's not the case. But, and yet, it's that this has been essentially rammed through onto most of, most of society around the world. How did we end up here?" }, { "speaker": "ronald_pol", "time": "09:06", "start": 545.89, "text": "Well, there's different ways of looking at that. So for example recently how it's rammed through and, and, you go back in history and look at that. So if you look at the recent approach, AML laws are quite unusual in the sense that, they don't appear that way. Each individual country puts the AML laws in place and they match, international standards, et cetera. And that's the-- that's the driver. And they appear to follow the same format as any other law. So what happens with other laws? There's, you know, in, in a particular country," }, { "speaker": "ronald_pol", "time": "09:39", "start": 578.9, "text": "Solve the problem in our country. That actually doesn't happen with AML. It's, it's very, very unusual because what A-AML does is countries have to put in laws that match the FATF standards. And so that's what they do. And so the, countries don't actually, match the laws about the problem that's in that particular country. So if that country has a particular, issue, if laundering takes place in a particular way, if crime takes place in a particular way, in a sense, it doesn't matter. It is assumed that in a In effect, that the AM-- that the FATF standards will cover all of that. And it's also quite remarkable because some of my re- research identified that in a great many countries, that's actually not the case. in a great many countries, there is actually occasionally some research, and most countries is none, but there is some, some research which shows how criminals actually use, banks and various other, entities to launder the proceeds of crime, and FATF laws aren't going to have any impact on that, but the country just puts The laws that match FATF standards, and so crims just carry on the way they've, been carrying on, a-and perfectly happy with that. So researchers see all that because, you know, some researchers do the empirical work and see what actually happens, and there's this massive disconnect. But of course, a lot of people believe that, you know, if that, that standard is what it's all about, and if we follow that standard, therefore it's going to have this impact. So there's a whole series of assumptions built into it. So laws are put in" }, { "speaker": "ronald_pol", "time": "11:09", "start": 668.88, "text": "Have the impact, and it's believed to have that impact. Now that goes right back to the beginning. So the, I, I tend to look at the beginning, you know, money laundering has been in place forever, and, we've had money laundering laws since nineteen seventy or nineteen eighty-six, depending where you look at it. But I look at nineteen ninety essentially as the beginning of the modern, era, and that's when the global diffusion took place. That's when, FATF was set up, introduced these standards and And that's where this, the system came about, and the system is one that is inherently based on an assumption. That's not necessarily a bad thing because in science, we, we base things on assumptions all the time, and it's a testable hypothesis. So scientists will test that hypothesis, does it work? So the assumption in this case is, is, if banks and other firms, comply with, lo-local, laws based on international standards, that should have an impact on- money laundering, crime, and terrorism, the, the, the, the main things. Now that's a, that's a, a testable hypothesis, it's a perfectly valid hypothesis. The only trouble Is that it has never been tested and it's not been proven to be the case. Now, in the, in the early days, it didn't really matter, because it was a good idea, it was in fact based on good science in terms of follow the money, science, and, and policing science, and that has worked particularly well. The Italians proved that very, very well, well before some of this stuff came about and so, and also in, in the US jurisdiction, in, in It was based, it was solidly based, but in nineteen ninety one, very few countries had signed up to the FATF standards, and the reason for that was because FATF couldn't prove that following these standards would have a significant impact on crime. So why would the countries sign up? Very few signed up. And then, curiously enough A lot of banks, started using the FATF standards as a, as a lazy proxy for risk in those countries. And what that meant was that all of a sudden, essentially by stealth or, or actually it was, it was almost, inadvertent, but it became, express after that, that countries had to get the FATF tick if they wanted access to the financial system. So all of a sudden, countries had to sign up to the, to the FATF model, whether it worked or not didn't matter anymore. they had- They had to sign up because otherwise they don't get access to the financial system or if they don't, slavishly apply the FATF standards, whether or not they ap- they have an impact on crime, if they don't slavishly apply them, then s-some significant costs are imposed, on their, on their jurisdiction. They have to go through a whole lot of, reviews and get up to standard, et cetera, et cetera. and so that's where it all really went wrong, and there's-- and, in fact, today, if you were to ask, anyone in the, AMO community, and of course, they'll splutter and, and object violently, but if you ask them, well, show where it has been proven, demonstrably, materially, you know, what, where's the significant impact on crime, terrorism, and indeed, money laundering Little and a trio of top professors a couple of years ago pointed out the fact that, they're not even collecting the data to be able to measure it. So it's not, it's not evaluated, it's not measured at all. All that is measured, and there's huge amounts of measurement that does take place, by the way, but what is measured is the activity. You know, we're, we're, we're ticking all these boxes, we're doing all these things, we're, we're, we're prosecuting people for money laundering, et cetera. But when you really drill down and you test, you pull away all of those assumptions, you know, what impact does it have on crime? What impact does it have on, terrorism? What impact does it have on, on even money laundering? and the answer is very, very little. and the UN, has, has bookended the, decade with a" }, { "speaker": "ronald_pol", "time": "15:16", "start": 916.24, "text": "Demonstrated a decade ago that, that the, a, the, the success rate they termed of AML controls in terms of the, proportion of criminal funds, interdicted as a result of it is almost zero. they said point two percent, so ninety, Krums get to keep ninety-eight point, ninety-nine point eight percent, but in fact, when you look at their data and you look at some extra work done by the, the Europol afterwards, it's probably actually point one percent even on their own data. But nonetheless, it's, it's de minimis and, I've updated that since and, and peer reviewed academic journals, and the latest, put, puts it at point zero five percent, so crims get to keep ninety nine point nine five percent. but there's lots of other work out there too. There's some empirical work coming out with another trio of professors, shortly. They did a book in two thousand and fourteen, there's another one coming out later this year, which demonstrates just how simple it is for criminals to, to launder proceeds of crime, to, Money in terms of tax, around the world, et cetera, just standard tax evasion, not just crime, but also terrorists, et cetera. It's still very, very simple, and so in Bitcoin, you know, we're getting all of these, regulations that are gonna be imposed, and I think next week FATF is, is launching, another, You know, guidance on how this should work in, in Bitcoin or, or cryptocurrencies. And, you know, good luck, guys. You're, you're gonna be wearing all these, all these, all these wonderful regulations." }, { "speaker": "stephan", "time": "16:48", "start": 1007.69, "text": "Yeah, so I think what I'm hearing is essentially a story of ineffectiveness, that there has been incredible compliance burden, cost, lack of access driven into the financial system, and just general, you know, administrative bloat driven by many of these AML and so-called financial crime laws that are essentially making it very difficult for people to participate in the financial system, and part of that is, in, in essence, that's part of why Bitcoin exists, to create this parallel- Alternative, but at the same time, even on their own terms, if they're, if they're only finding zero point one percent or point o five percent of criminal finances, then i-it's obviously not a very effective policy. It's not cost effective, and I think that's an important point to consider that, even on their own terms, that they're just effectively they're spinning their wheels in the mud, and everyone's just sort of doing all this checking and checking of things, but we're not really getting much of a result out of it, and that's very, unfortunate." }, { "speaker": "ronald_pol", "time": "17:48", "start": 1067.53, "text": "Yeah, and, and I introduced, the cost effectiveness into it in one of my papers, last year, which was picked up by The Economist and Forbes and a few other places. But, the, and I'm not particularly concerned about the cost effectiveness, it's, it's incredibly ineffective in terms of cost. If you look at the costs, roughly like for like, it costs many hundreds of times more, on banks, citizens, and, and of course, citizens pay every cent of it. So when bank-- banks are fined, you So three or four hundred, billion per year, depending how you do the, a-analysis. it's easy to say, \"Oh, the banks deserve it and, and, you know, they can afford it, et cetera.\" Well, actually, we pay every cent of that as citizens, and as taxpayers, we pay every cent of the cost of all of these government agencies as well. also, personal level, I, I'm not particularly fussed by the, regulation or not regulation either. I know a" }, { "speaker": "ronald_pol", "time": "18:47", "start": 1127.43, "text": "Fine, if it's regulated, that's fine. and a lot of people think, \"Well, we should be regulated, and therefore it'll be wider adoption, et cetera.\" I don't even buy into that particular argument, 'cause let's assume that, y-yes, it's regulated, that's fine, but the regulation should be effective. And that's, that's my point. My focus is effectiveness. Whether there is regulation or not, others can argue that, I don't have any particular concern. I, I tend to favor regulation personally, but" }, { "speaker": "ronald_pol", "time": "19:18", "start": 1157.67, "text": "On, crime as intended, does it even have an impact on, on laundering? and, and of course, a lot of people say that it does, and so we're in the industry, so there are a lot of people in the industry, I, I, you know, I'm a bit different in the industry, I've dug down to a very, very, very deep level to look at the underpinning of the entire system using a PhD, at the highest level of critical thinking, and p-pulling away every single assumption. that's unusual" }, { "speaker": "ronald_pol", "time": "19:47", "start": 1187.43, "text": "Is something that somebody described to me. He just passed his exam recently and he, he was somewhat flummoxed. He said, \"It's a three and a half hour multi-choice exam, and now I'm an expert somehow.\" which I, I thought was, an interesting observation on his part. But there are some really, really smart people in the space, but there is this belief that, \"Oh, we catch some criminals, therefore it works.\" And that, that misses the counterfactual, and it also misses the other thing. So, yes, we catch Criminals. But it misses the fact that if we had a system that was effective, we could catch a heck of a lot more criminals. it also misses the fact that because we believe this is effective, we're not actually testing the system properly to actually catch all those other criminals. So we are constantly, sweating the point zero five percent impact or the point one percent impact, or even call it point five percent impact if you really want to, on crime, while the ninety-nine point nine five percent is, is, happily carrying on. And so while we convince ourselves themselves of this, and it's, it's natural human nature as well, because we don't wanna think that we're doing all of this work and it's not really having the impact. And so we see the criminal that gets caught, and we think, \"Yes, there's the impact,\" and we're not thinking about the counterfactual. and in fact, KYC is a fascinating thing in itself. there is a perception that, if we know the identification of someone, then that's gonna help, fix the problem." }, { "speaker": "ronald_pol", "time": "21:17", "start": 1277.43, "text": "That crims want to hide and that ordinary people are perfectly happy to have their information, are given to, all and sundry. Well, neither of those assumptions are necessarily true. and in fact, my, empirical research has found, and a lot of other researchers have found something similar. Very often, crims are delighted to be asked for KYC because, they were previously hiding in the shadows, they were earning their money from, you know, methamphetamine or whatever they're earning their money from, and they're constantly trying to, Hide their money and constantly trying to get large amounts of cash into the system, et cetera, et cetera. but, but then when they're, they have to prove, they have to show, ID, and they, they, in purchasing a house, for example, then they buy another house and another house and another house. very quickly, they are known to the world as a property developer, and that's apparently, you know, better than being known as a methamphetamine dealer. and so KYC actually helps laundering take place," }, { "speaker": "ronald_pol", "time": "22:17", "start": 1337.41, "text": "It'll blow up and then, you know, maybe John Oliver will run with it, or write a script for him, where a regulator in a, in a country, introduced new ID, laws, in the-- in that country for a particular, a particular area in that, in the economy in that country. That it was not actually possible to launder proceeds of crime in that particular, area, until the, the, the regulator introduced the KYC requirement. All of a sudden, it was then possible to launder proceeds of crime, which was, you know, fascinating really when you think about it. so, so KYC Th-there's just a perception that, oh, this fixes everything. We just need to get, you know, beneficial ownership. We just need to get this. Well, I, that's, you gotta drill down past those, those perceptions and find, you know, does it actually work? And when you, when you drill down, drill down, drill down, and ask those hard questions, it really, really doesn't work. And we should, we should, you know, rather than just imposing on every new area now, you know, Bitcoin and, and the wider You know, we-- if we just extend it to another country, it will fix everything. If we extend it to every country, now every country is extended to. If we just extend it to, to gatekeepers, you know, professional facilitators like lawyers and accountants, that'll fix everything. Well, that hasn't done it either. If we just, you know, extend it to more, if we do ratings and blacklists, that'll, that'll fix it. Well, that hasn't fixed it. and if we give regulators more," }, { "speaker": "ronald_pol", "time": "23:50", "start": 1430.18, "text": "more money, well, Well, actually, in nineteen ninety four, scientists pointed out the SARS, issue was a major problem that needed to be addressed, not just giving more money to it. So, you know, nineteen ninety four and we're now twenty twenty one and still haven't addressed those fundamental issues. So, yeah, that's, that's, that's the situation, we're currently at. But of course, there's a huge belief that it works, which prevents anyone testing whether it really works. And so when someone like me points this out, and scientists have been As I said, for-- I'm not the only one, since I-- for twenty-seven years, then it's, it's often seen as a personal affront, \"Oh, you must be wrong,\" rather than, \"Okay, let's drill down to that. Let's, let's ask the questions.\"" }, { "speaker": "stephan", "time": "24:38", "start": 1477.64, "text": "Back to the show in a moment. CipherSafe dot io are making metal backup seed products, so when you set up your bitcoin wallets like your hardware wallets, you'll normally get given twelve or twenty four words, but you need to make sure you've got that on metal so that way if your house goes up on fire you are covered and you can still recover. So with CipherSafe they've got the CipherWheel and the CipherGrid, these are different metal seed products that you can use to back up your seed words. So these products are designed to be fireproof, rustproof and waterproof. With the CipherGrid Automatic center punch provided, which is what you use to stamp in the letters for your words. You get a tamper-evident seal provided, and you can lock it with a padlock. So this is a great way to make sure your family and your loved ones can access your coins if something were to happen to you. You can set this back up, and you can also use it to help protect against natural disasters. So go to ciphersafe dot io and use the code livera to get yours. Are you looking for a Bitcoin hardware wallet? My favorite and one of the most recommended hardware wallets by Bitcoiners is the Coldcard. You can get it at Coincard dot com. It's got all sorts of features. You can use this as part of a single signature setup or as part of a multi-signature setup. You can use an SD card to set it up and initialize the device, and then move that information back and forth between the Coldcard and your computer with wallets like Sparrow, Specter, Electrum, BlueWallet, and others. 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So you can go from never having held your private keys to actually holding multi-signature security with Unchained. So this is a great way to improve your security and give yourself a little bit more peace of mind in the case of an accident occurring or things like that, you can feel a little bit more confident Actually got a multi-signature setup. So if you're interested, go to Unchained dot com, select the concierge onboarding program, and use the code Livera for a discount. Back to the show. Yeah, yeah. So, I mean, there's a lot in there, so let's take some of those ideas and expand on some of them. So one crucial point you touched on was SARs. So that's these activity reports basically. So things like if it's over ten thousand dollars, that it has to be reported to the regulator, and in other cases, even if it's" }, { "speaker": "stephan", "time": "27:30", "start": 1650.04, "text": "As an example, then that bank might be now required to run some analytics in the background and then report that up to the local regulator, FinCEN or Oztrack or whoever. And so could you just touch on that a little bit, what we've seen o-over that twenty-seven years, as you've been, saying that there's so many SARs and activity reports going to the regulators, but what's happening? Is it just not being effective there?" }, { "speaker": "ronald_pol", "time": "27:53", "start": 1673.31, "text": "That's it's, and it's incredibly ineffective. Well, the reason, the reason, well, there's two elements. One, there This number anyway, and the second is the, the other reports like the, anything above ten thousand dollars or anything of, of a certain type of international transaction or whatever. So there's those two, two things. So one, banks, et cetera, have to provide everything that meets this particular threshold, whatever it is, above ten thousand or international, orders above a certain amount, whatever. And then, banks also have to have a massive, compliance function, which itself is, is hugely costly and is a barrier to entry to, Firms and a barrier to entry to competition, but that's a, a separate issue again. And so they have to go sift through it. Now, this is also fascinating because, banks find that, you know, ninety-eight percent false positive rate, very com- is very common. So, you know, what other, sort of software would, would we allow a ninety-eight percent false positive rate? So it's sending up all these flags of legitimate transactions, legitimate people that just don't quite match the things, and so the, the software does all the easy work and then to, onto the individuals and to the, into the compliance people, they're hardworking people in those compliance departments, they're very, very dedicated, they do an amazing job, but the system is completely skewed against them. So they've got this massive, massive amount of data they've got to try and sift through. But the real problem with the SARS system, it's, it's not actually set up to find crime at all. It is set up to build haystacks, and the way it builds haystacks is fundamentally flawed as well. So what it does, it puts together vast haystacks of Data. And, and there are some needles, criminal needles, in that data, right? That's true. But it's really, really, really hard to find those, needles, and the way it's set up, it's really, really hard to find those needles. And the solution, and, and the, the banks are penalized not for not finding crime or finding crime or whatever, no, they're penalized because the haystack doesn't quite match the height, weight, you know, ambient temperature distribution required by the regulator. so the regulator looks at it, tick Great, that passes. Well, does it have any impact on crime? Oh, nobody asked that question. Doesn't meet those requirements. And so, and yes, there, there, there are criminal indicators in those, but those are crims that are hid-hiding in plain sight. so, so somebody, and one of our major US banks said to me, \"As long as crims are doing what they've always been doing, our system is set up to find anomalies. So if they find, if they're doing what they've always done, we'll never see them Systems are set up to comply, and, FATF sets out a whole bunch of, standards. Look, we've found that criminals do this, this, and this, therefore you need to set up a system that does this, this, and this and looks for these particular things. So the compliance, software team set up systems to look for those particular things, and that's fine. and there's a whole lot of what they call rules or scenarios that they look for, and like this colleague in the US bank, anything that's a bit different from that gets" }, { "speaker": "ronald_pol", "time": "31:00", "start": 1859.94, "text": "Looking at, because that's not where it's at. it's also they're following the FATF standards, they're not following empirical evidence, so I've got empirical evidence in, in, in, in several countries that shows what criminals actually do doesn't match the FATF standards, so that's fine, criminals love it, they can keep doing that. And the other thing, it's, and when, when, The other problem with the, the haystack manufacturing business, otherwise known as AML compliance, is that there are a whole lot of needles still in the bank. And so the bank complies, but criminals are still working, through that bank very, very well, even though they're fully compliant with these incredibly complex rules. So you can just imagine the bank is handing over a whole bunch of haystacks, so there's acres and acres and acres of, of haystacks in FIU, the outfit that needs to try and look, through that to try and find, crime." }, { "speaker": "ronald_pol", "time": "31:52", "start": 1912.13, "text": "crime going on in the banks, and the banks are patting themselves on the back 'cause we comply, there's no risk. There's a heck of a lot of risk, they just don't see it because the system isn't set up to see it. Meanwhile, the crims, you know, the criminal needles in those haystacks are mostly not being found, but they're there, hidden in plain sight. And the solution, which is what happened with FinCEN just, earlier this year, the solution is to give more money to create bigger haystacks." }, { "speaker": "ronald_pol", "time": "32:21", "start": 1940.97, "text": "The system, two scientists pointed out in nineteen ninety four that the SARS, the SARS idea, yeah, it, it sounds good in practice, it sounds good, it's, it's a nice, a nice theory, but it actually doesn't work. We need to fix it, and, you know, that was twenty seven years ago. and, you know, every year there's another, another issue where it's not being, you know, in Germany a couple of years ago, in the US, just this year" }, { "speaker": "ronald_pol", "time": "32:51", "start": 1971.11, "text": "The, criminal activity faster and more efficiently." }, { "speaker": "stephan", "time": "32:55", "start": 1975.37, "text": "Yeah, and it can have an impact for customers and the service quality at that bank as well. As an example, because that bank or a Bitcoin exchange or company has to go through and do all this reporting, then there might be some compliance analyst sitting in a team who has to look at that S-SAR or SMR, suspicious matter report and then either shut down that customer's account or stop that account, and then it just causes all this- Friction and blockage when, in, as you're saying, it's often a haystack. They're just creating a bigger and bigger haystack that then all that data then gets, well, they have to then decide that compliance analyst in the bank or the bitcoin exchange or wherever has to then decide, okay, we're reporting this up to our regulator, and then the regulator is just dealing with a, with a huge haystack, but they're just, they're not necessarily finding the actual criminals. And what I've seen as well and I'm, I'm sure you've probably got an interesting comment on this as well, is that oftentimes when we see in the news, the unsophisticated person who's just looking at it in the news, they don't really understand the AML laws and things, they say, \"Oh, this bank got done for not doing AML,\" and really what was happening is maybe they weren't catching all the reporting that they were meant to be catching, and so they weren't building the haystack to the right level in, in this analogy. And so I wonder, in your view," }, { "speaker": "stephan", "time": "34:16", "start": 2055.54, "text": "Crafted in such a way that just, it's very difficult to comply with, and so banks and other financial institutions just get in trouble from that point of view, even if there's not necessarily been money laundering or terrorism financing going through those accounts." }, { "speaker": "ronald_pol", "time": "34:29", "start": 2069.11, "text": "Excellent question. In fact, I, I would venture to say that it is impossible to, comply with AML laws, absolutely impossible. I could go into any bank, any large bank at least, go into any large bank with a, with a decent analyst, I will find, significant- Significant amounts of criminal activity, I will find breaches of the AMLO laws, no question. Alright? so the question, the, the issue there is that banks think that they're compliant and they're not, because they can't be. The system is set up in that way. But it's actually worse than that because the system isn't no longer, and it's increasingly no longer focused against crime, it's focused against banks. And, because banks are, and is a target for lazy regulators. Now, regulators don't think that, regulators genuinely believe, or shared with me that they, they know the reality, but they can't say it publicly. But, but a great many of them genuinely believe that they're, they're crime-fighting, demons. but what they're doing, and a great many of these cases, not all of them, so you go back to the original HSBC case, and that was serious, facilitation of criminal activity known by the bank, and, you know, they should be pinged for that. But if you look at a lot of these cases, you drill down into it and get And it's for breach of, they're not ticking the right boxes, they missed a few reports they should have sent, their software wasn't quite set up to send those reports over. did those reports have any indication of criminal activity? was there any laundering taking place? Was there any risk of laundering taking place? You ask those questions, and very often, I've, I've seen some here in New Zealand recently actually, and they've really got to the high water mark in this country, two regulators in particular, have just gone com- it's, it Penalizing banks for, for si- for situations where there is zero risk or almost zero risk of any laundering, any crime, they just didn't tick the boxes quite right. and so that's actually gonna have a particular-- That's, that's gonna have a chilling effect, and this is, so, so, and of course, it's impossible to comply anyway. So the only determinant now is not whether a, whether a bank or an exchange is going to be, prosecuted, is not determined By their activities, whether they're facilitating crime or whether they're a bit dodgy or whether they just don't, they don't care or, that's not the issue. It's whether the regulator gets around to looking at them and has the resources to do so, 'cause the regulator can go to any exchange, any bank and, and will find breaches because the laws are impossible to comply with and they're not focused on crime, they're focused on, you know, creating, enormous haystacks." }, { "speaker": "stephan", "time": "37:10", "start": 2230.3, "text": "I see. And so similarly to that point is that you could be an enterprising politician This and then use that to sort of drum up anger against banks because that's like a popular way that you can be a very populist politician, drum up anger against the banks, say, \"You aren't doing enough against AML, we need these new laws,\" and, and, et cetera. And so it just kind of perpetuates the same problem and we just build bigger haystacks rather than finding genuine criminals and stopping genuine crime, which, you know, I think-" }, { "speaker": "ronald_pol", "time": "37:39", "start": 2259.44, "text": "Absolutely. I had a co- I mean, I won't say which country, I had a conversation with Later in a, a G7 country, and, and that particular legislator was previously a p-police commissioner, and I said to that person, I said, \"Well, if you want, AMLO's to be effective in your country, it depends really what-- whether you've got your, police commissioner hat on, someone who actually understands crime and, and wants to actually have an impact on, reducing the harms from crime, or whether you're a politician. and, you know, he, he is a politician and, and was the police commissioner. And so it's a bit brutal, but I said, if you put in place these laws, as everyone is advising you, you'll get, the media will be all over you saying, \"This is amazing, we're, we're fixing, plugging gaps, and we're having a huge, impact on crime.\" and so you'll be lauded for it, it'll be fantastic politically, and, in ten years' time, you, you know, you've retired, et cetera, and it'll have showed to have zero impact on crime or almost zero impact on crime, and would have cost hundreds of billions of dollars. so, you know, it really depends if you're thinking like a politician that just wants to win the particular votes because, there is a perception that it has an impact on crime, and so you're just working to that Actually want to have an impact on crime, and that's the core really, and that's, you know, you've, you've nailed it." }, { "speaker": "stephan", "time": "39:08", "start": 2348.35, "text": "Yeah. And so one other point I wanted to draw on from what you were saying earlier around criminals who actually want some of these laws because it maybe helps legitimize their money or actions in the eyes of the law, they can now front as a legitimate business. A similar trend, and obviously this is a Bitcoin show, one, news item I've seen recently is this notion of people basically buying, an already- KYC'd account at one of the big Bitcoin exchanges, and then simply people are basically using somebody else's KYC to basically sell their bitcoins or buy bitcoins or things like that. And so that's one example where the system might be a bit counterproductive in that way. So I'm wondering whether you've noticed that trend or do you have any comment on that?" }, { "speaker": "ronald_pol", "time": "39:54", "start": 2394.36, "text": "I've not seen it in Bitcoin, but it's exactly the same as happened, in fiat, so I'm not, not at all surprised. In fact, we'll see a lot of the same things happen Happen in Bitcoin that we've seen in Fiat as well in terms of, it's often explained by people in the AML industry as, oh, crims being so much smarter and getting ahead and finding gaps, et cetera. It's not really finding gaps. I mean, the whole system is, is, it's, it's, it's basically, like, creating a stack of colanders to catch water, in terms of you're trying to stop crime. It's like, it's, and so, and, and it's not working, so It's not that criminals are so much smarter and, and, and constantly getting ahead, et cetera, it is the system isn't built to stop crime, period. It was never built to do so, and that's not necessarily, deliberately not built to do so, although some researchers have found evidence that US and UK officials actually conspired to do just that. but there was only a juicy six months of correspondence they were able to, get declassified, so we, we wanna see more of that in future, but I don't rely on that. At all, I look at how is it designed, what does the design enable it to do, does the design enable it to, stop, have a material demonstrable impact on serious profit-motive crime, terrorism, and even money laundering. and the answer is no. So, it's, it's, it is not designed to stop crime. It, the design doesn't do so, and it does that extremely well. Yeah." }, { "speaker": "stephan", "time": "41:29", "start": 2488.69, "text": "Yeah. And, one other Bitcoin point that we make in the Bitcoin community is this idea of creating honeypots, and this applies even in the fiat world as well, but essentially when banks and Bitcoin exchanges and other companies are forced by the law, by the government, to collect KYC and other information, this now creates a honeypot that a hacker or some other Malicious party could try to get that information, and especially in the case of Bitcoin, where there's no takebacks, there's no bailouts, and if we're truly bullish on Bitcoin, as many, as I and many of my listeners are, we think this thing is going to literally millions of dollars per coin, if they know that, let's say, Stephan Livera, KYC'd at exchange A, and he purchased, you know, this many SATs or this many Bitcoin, a-and then that database later gets hacked, and they have my name, my address, how many coins I have Very serious honeypot risk as well. So I'm wondering whether any-- you've looked at any of that or whether that has come into your analysis at all?" }, { "speaker": "ronald_pol", "time": "42:28", "start": 2548.22, "text": "Yeah, it, it adds to-- I've seen it, I've not done research on it at a, at a deep, deep level, but I've certainly seen it, seen it happening. In fact, one example, you, you look at what happened in, in Afghanistan recently. So people provided their information to the legitimate government at the time, then Taliban came back in and is now" }, { "speaker": "ronald_pol", "time": "42:51", "start": 2570.9, "text": "The records of people who, you know, did all the KYC, et cetera, people who helped the previous government, who helped the US government, et cetera. So it happens there, you know, whether you're in the US and there's a Democrat or a Republican, and the next one is in control and puts in place something, and, and, you know, would you want that information across? I, I, we're, we're seeing that now, of course, with, with vaccine passports and, all of that information," }, { "speaker": "ronald_pol", "time": "43:20", "start": 2599.56, "text": "et Does as well, which is a significant issue, and a lot of these issues aren't being well addressed. There is an assumption, an underlying assumption that KYC is good, that we need identification, we need all sorts of identification, that's a good thing. and certainly there are privacy, people who are putting, up a good, argument, in, in, in a number of, areas. But what's often missing from that is, you know, is it's, it's a, it's a belief that KYC is good. Let Test that assumption. do we need all this KYC or could we do some of it that actually has an impact or could we do something else that has a greater impact? So, when-- when there seems to be an assumption that we need to do KYC rather than, what's the purpose of KYC? What are we trying to achieve by KYC? And if we're asking that deeper question, then what sort of KYC, should we get to, to achieve that as the bare minimum that enables that objective? And that's not happening. It's, it KYC is good, crypto is bad. It's that sort of, very, very simple, narrative that's coming about, and I'm seeing that, in the AML community too. There are people, who aren't saying it publicly, but serious AML elites, are, are saying, i-in the background that, in fact, AML, software should have access to all of a country's, financial data, period. If you're not a criminal, you've got nothing to hide. that's More and more, I've seen it, on a number of occasions, a-again, in small group discussions by AML elites, and, you know, I, I even joked, just w-with, with one a few months ago, one group, saying, \"You mean a bit like that NSA system that, Snowden pointed out?\" Thinking that somebody might think, \"Oh, are we really going that far?\" And no one in that group blinked an eye. They-- it was, it was a little chilling, I thought. now, I'm not Etcetera. My issue is always, does it work? Is it effective? What are we trying to achieve? What's the underlying goal? If the underlying goal is, is, preventing criminals, you know, for any criminal use, stopping crime, having a demonstrable impact on crime, okay, rather than assume that's gonna have that impact, let's test what's going to have that impact and put in place the minimum amount that will achieve that goal. and that's not, that is not what is happening, it has not happened in the AM" }, { "speaker": "ronald_pol", "time": "45:51", "start": 2750.82, "text": "If I see is rolled out into, Bitcoin and other areas, it's not-- I, I'm seeing it not happening even more so. And so it's, it's potentially worse than people think it's going to be." }, { "speaker": "stephan", "time": "46:01", "start": 2761.11, "text": "Yeah. So as you say, the main concern from your point of view is the ineffectiveness of AML, and certainly I agree with you. It's, it's like, we can disagree with government regulation on companies, but even if on-- even if you granted that or set that to the side, we're saying, even on their own terms, have they" }, { "speaker": "stephan", "time": "46:21", "start": 2780.8, "text": "You were saying there, is that there's a massive potential for abuse. So as you pointed out with the NSA, there were examples where US government spy agency staff would spy on their ex-girlfriends, wives, and people because they would use that tool that it was there. And yes, some of them got in trouble for it, and there were news articles you can search that, listeners. But the same thing would be possible in a KYC database, such as what you were saying, that if all the KYC software was allowed to tap into everyone's financial information, it's a massive Think how many people would love to get access to that. Marketing companies would love to be able to surveil you in terms of what and how you spend your money. Governments would love to surveil you. Criminals would love to surveil you so they know who's who's wealthy and who's keeping money at their home. There's all these aspects that are just not really just about that system, and unfortunately it seems that there's not enough noise about the injustice of this and the risk that, that, that there are very serious risks being created, for innocent people who may not have done anything wrong No crimes committed, and yet their data is potentially being leaked out just in the same way that, for example, there was a big Equifax hack years and years ago, so or not that long ago, maybe five to ten years ago. And so these are all examples where that's a pretty big risk. Alright, so we've got that there." }, { "speaker": "ronald_pol", "time": "47:38", "start": 2857.97, "text": "Rick, and probably add something there, Stephan, too. I, I said that the UN bookended the decade with two reports. The one I mentioned, which is, illustrating how incredibly ineffective it is. Earlier this year demonstrating the massive harm caused to millions of people, communities, and even countries by AML laws. and this is the, and unfortunately their systems, their proposed solutions, I don't think are particularly effective. but they're absolutely right, that, the harms are immense. And so, you know, if, if for example, we had this here, years ago, where there's a, a, an expat community trying to send ho-- money home to Somalia, and Somalia banking system wasn't wasn't working, and so they had to send it via another country, right? And these are legitimate people, but, but because it sent up a flag, it could be laundering. The bank knew it wasn't laundering, but it was too much of a risk from the regulator, so they just cut all those accounts away. Ordinary people trying to, send a few dollars home to, to their, their, their own people, and it was known that they're legitimate people. And you'd look at that on a global scale," }, { "speaker": "ronald_pol", "time": "48:48", "start": 2928.06, "text": "the vast, you know, Countries are being slammed with, ratings, poor ratings. You're, you're a bad money laundering country, country because of this, this and this. Well, actually, there's, there's great irony in this. So you look at, say, the UK and the US who get the, the highest ratings for, you know, anti-money laundering effectiveness according to the, the current protocols, and they are, arguably the two top money laundering countries in the world. And so, it, it, you know, this, the rating system doesn't do what On the box, and so that harms a lot of countries, who are penalized with poor ratings who may actually have very, very little risk or may not have that particular level of risk, or, and this is where other researchers look into it, and I don't, have too much on this, but it's, it's been said by some researchers that there are certain countries that are using the apparent objectivity of, FATF, protocols as, in fact, a, a, a, another layer of, foreign policy control, because they have influence in the background in, in this area. Now, again, I'm not concerned with that personally. With my research, I look at, is it effective? And it's really, really not effective. but, you know, those are issues, that are quite significant issues and the harm on communities, on, on millions of individuals, it's been, and it's been slammed by the United Nations, but it just rolls on. The narrative is the narrative." }, { "speaker": "stephan", "time": "50:15", "start": 3015.48, "text": "Yeah, and, as you were saying, there's been that concern about countries because of FATF and the pressure applied amongst the countries else say, \"You're not doing, quote unquote, enough. You're not making a big enough haystack. So you need to go and report harder or KYC them harder or ask more stuff.\" And it also perhaps leads to debanking of certain industries. So we're seeing certain banks come out and say, \"Oh, we're just gonna put out a blanket policy. If you are involved in, say, the gun industry or drug industry or one of Countries, we're just not gonna bank you at all, just flat out. And so pa- perhaps that's also part of it." }, { "speaker": "ronald_pol", "time": "50:50", "start": 3050.21, "text": "You know, Cuba had, had that. A whole lot of people, a whole lot of banks, disestablished their correspondent banking relations with Cuba, with a bunch of South Pacific countries, in Africa, in the Middle East. These are legitimate people doing legitimate transactions, legitimate businesses, you know, ninety-nine percent, but they happen to get a, a, a bad check from FATF. And in fact, my research has indicated that it's actually If you look at the way the system works to get any tech you actually want, and a couple of countries, some countries have figured that out, but many others are just going through, you know, following the narrative, getting the experts that tell them what to do, et cetera, and they're getting really, punished by the, the FATF ratings. and, but a few have figured out that it's, it's eminently gameable, a-and, and it is. It's, it's, you know, I could get just Countries don't realize that they do it, they do it legitimately, they, they genuinely think it has an impact. All their, all their advisors tell them it has an impact, and they go through the motions, and they get absolutely brutalized, and then, then they realize, and then, then it takes another six or seven years to try and claw that back, and meanwhile, their legitimate businesses, their, you know, many of their citizens are hurting big time." }, { "speaker": "stephan", "time": "52:09", "start": 3128.97, "text": "Yeah, so I wanna touch on what can be done. I guess one thing that h-often happens in these things is they talk about, \"Oh, we're gonna reform the system,\" but then really they just make it worse. And they just, you know, what can be done is- What can be done in terms of people who believe this is an issue? Can they find politicians who are willing to champion the cause? Perhaps some of the Bitcoin-friendly politicians who might want to champion the cause, or, is it possible to defund or restrict the funding for entities like FATF or some of these overly large and, but overburdensome regulators and laws? What can be done here?" }, { "speaker": "ronald_pol", "time": "52:45", "start": 3164.9, "text": "Well, it's, it's interesting there 'cause, I see, my research, originally focused on, in, in terms of that approach, so which is the- Top-down approach, how do we change the system to enable it to have a massive demonstrable impact on serious profit motivated crime? And by the way, that is a huge reduction in compliance cost, a huge reduction in, a regulatory risk, at the same time. It doesn't need to be as it is now, increasing each of those, it can be less. The trouble is there's a whole lot of barriers to that. And so, for example, one of the barriers with politicians, we've touched on a little bit of that, is that politicians are in a really difficult place. They, well, one, they're busy, so they've got a whole lot of things they're doing, right? So they take advice on this sort of thing, and they're given advice that, you need to fi-fill the gaps and, and do, do the fat of rules that will work, right? So they take that advice, and, and often they, they take that genuinely, they believe it will work, and they implement those laws. And those laws have no, such impact at all, but they, the, the politicians don't question that advice, and" }, { "speaker": "ronald_pol", "time": "53:49", "start": 3229.28, "text": "knows it's a crock, will still put in place the FATF standards because we need to get that tech so that we've got access to the financial system. So the system is set up against its reform, it's set up against recognizing that. Even in banks, I've talked to chief executives of, and, and chairs of major banks who know that it's a crock, but they can't say anything 'cause they're between a rock and a hard place too. One, they're advised by senior compliance people who genuinely believe this stuff, and so it's difficult for For them to, to push back and do something different, particularly when they've got a regulator that has also s- drank the Kool-Aid and is gonna penalize them for any, anything there. So where I've moved my, so, so the chance of, the chance of a top-down change at that level is, is fairly rema- remote, and FEDF a few months ago basically said, \"We just need to keep doing what we're doing.\" So they're locking in a fourth decade of failure. So my research some time ago started to pivot towards looking at, is there a An individual country with a degree, a degree of leadership rather than the, the supine followership that we've had to date for the past, thirty odd years, could actually, very quietly do it itself and achieve a dr-- a massive impact on serious, proper, motivated crime, but in a risk-free way, i.e. not jeopardizing the FATF tech or getting the FATF tech, but have a massive impact. Now, if that happens, then that country could then be a catalyst for others to follow, and that would be fantastic Fantastic, and p- other countries will follow because it works and because it's, because it's much less costly and much less, burdensome on their businesses, et cetera. And, and other countries will follow simply because it works, not because they have to. Also, I've been looking at ways that individual banks can act as a catalyst for change, and, that's looking possible as well. And, and but this needs to be done in a way where banks can quietly do it, have a massive impact, but without affecting the regulatory, And strip out all of their, regulatory risk, including all those needles that the current system leave in the banks. So stripping out all those criminal needles, so they got, they got, slashed their regulatory risk to almost zero. But it needs to be done in a way that, the regulators are, are happy with. So, so in fact, that's where I've been working on in a way where in fact, you can make the regulators look like heroes, strip out your, regulatory risk dramatically, cut down your costs enormously. And as a few more banks start to do that, because it works, and the regulators look good, because all of a sudden, oh, we're having a demonstrable impact on crime, and, and the current system, there's no, no one's ever demonstrating it, no one's ever robustly testing it, but it can be done in a way where it can be robustly tested, that individual bank can quietly do it, another bank can quietly do it, that regulator looks good, then all of a sudden that can act as a, as a catalyst, around the world as well." }, { "speaker": "ronald_pol", "time": "56:52", "start": 3411.55, "text": "discern-- well, not zero, almost zero discernible interest in changing at the top level in terms of FATF and, and, and countries having that leadership." }, { "speaker": "stephan", "time": "57:00", "start": 3419.75, "text": "But Ron, one part I'm, I'm not clear what you're saying there is that you're saying that banks would have to keep doing all the KYC, FATF, et cetera stuff, but have their own thing on the side that's their own way of showing that they're stopping criminals? How, how exactly would they do that, that other thing?" }, { "speaker": "ronald_pol", "time": "57:15", "start": 3434.62, "text": "Oh, I can't give too much away, but think of it this way. So, so for example, so o-over the years I've looked at, say, compliance, systems, right? I have never seen a compliance system that has matched, the three requirements that I have, never, until, until recently. and so at the moment, compliance systems do They, they, they allow, banks and exchanges, et cetera, to comply with the regulations. The regulator says you need to do these things, and so they have all of these, rules and, and, and scenario, they call them scenarios, they might have twenty or thirty scenarios, bigger banks might have a hundred scenarios, that they tweak to look for criminality. Now, they, they look down those, th-those lines of criminality, but there's ninety-eight percent of, of, of that they just can't see, These systems are set up to comply. I've had chief executives of compliance firms say, \"Come and look at our system, it's the best thing, it's got AI, it's got all of this, et cetera.\" And I, I then tell them I look at three things, and then they run away screaming, well, not quite screaming, but they certainly, are no longer that interested in me looking at their system because they know that it doesn't achieve those things. and so, you know, I ask, \"Will it have a substantial demonstr Substantial demonstrable impact on compliance costs, slashing all of those and in a robust way. And until recently, I never saw a single system that did that. And the, the first one I saw that did it, It was fascinating. It wasn't built as a compliance system, it was built to find crime. and so it's not based on, those particular, the, the, the, you know, ticking those boxes, et cetera. It's based on how do we actually strip out in time, in terms of crime? But so coming back to your question, does a firm need to do this and this? Well, the interesting thing about that, not necessarily, it, it still needs to do the, the tick box stuff in the meantime, 'cause it can't afford not to, so it has to. But if you tack on something that enables, that, that visibility to happen in a way that is robust in terms of the way I look at things, as a, from a scientist, scientist point of view, is, is it robust? Is it demonstrable? You can demonstrate this in a way demonstrates to the regulator there's a, there's a demonstrable impact on crime that's never been done before in a way that demonstrates to the board that we've stripped out massive regulatory risk Right? If you can do that, right? That's when you then get to the stage where the regulator is saying, \"This is fantastic, this is an amazing thing, thank you very much.\" All of a sudden, you've got no regulatory risk, and you've got no risk anyway, 'cause your system has stripped it out. And so, it, it's, it's a sh-- you still have to tick those boxes for the meantime, but eventually, you're moving towards something where your regulator is saying, \"This is great, let's do more of this.\" And when one regulator does All along, and that's fine. It's not about ego. when that happens and FedIF actually says, \"Oh, yeah, that's what we meant all along,\" and then, \"Yes, here's a system that works, we'll slightly tweak, the, the, the, you know, what's happening because, you know, this country is doing a great job, and everyone else needs to follow that approach,\" that's great, don't have a problem with that. That's when we flip from 0.05% impact on crime to have a market impact on crime, whether it's, you know, in that particular metric, it might be twenty or thirty percent or whatever it happens to be, which is a hundreds of times, a greater impact, and the modeling I've done demonstrates that the costs just fall away to, not quite zero, but a tiny, tiny fraction of the, of the benefits, which is what happens in most regulatory, compliance systems, unlike AML, which is why they don't measure it, because this is, this is one where instead of being a, the cost being a tiny fraction of the benefits, the costs are, by some measures, twenty-five thousand percent of the, the, the benefits, which is, you know, unheard of in regulatory compliance, except in AML." }, { "speaker": "stephan", "time": "01:01:20", "start": 3680.97, "text": "Yeah, it's unfortunate that, there's very little concern for actual cost effectiveness and, I think the other thing is because it's an ever-shifting goalpost, there'll be some new directive and they'll say, \"Oh, now it's AML five D, now you've got to check this and this,\" and they just continually implement some new thing and then the compliance cost shoots into the sky, and so again, it just keeps the current large players in banking, financial services institutions, entrenched in their position versus new players while the same Time, not really doing much against actual, genuine bona fide crime." }, { "speaker": "ronald_pol", "time": "01:01:54", "start": 3714.95, "text": "That's been going on for nearly thirty years. It's, it's basically a, a silver bullet type approach, and so, oh, the-- and, and all the, all the firms are doing it, and eve-- all the experts are saying it, oh, if we-- so at the moment it's AI, for example, AI is gonna fix everything, and it's, it's, some of the stuff that's come out of" }, { "speaker": "ronald_pol", "time": "01:02:15", "start": 3735.13, "text": "the, out of the recent data leak transparency, that'll fix everything. but people don't step back a, a second and think, and I, I've done this analysis, I've looked at all of those, silver bullet solutions over the past thirty odd years, and every one was touted the same. We need to extend it to more countries, we need to extend it to more businesses, we need to extend it to more, you know, now, you know, to Bitcoin, et cetera. but if you look at all of those, the combined impact of all-- so yet no one's asking that question. they're just, it, it, it sounds like a good idea. So let's do another, another tranche of extending it further, extending it further into the art industry, into crypto, into, et cetera. That's going to have this impact. And, and all we're doing is sweating the point zero five percent, impact, and, you know, it, it's fantastic for two global cartels, and that's it. Organized crime and organized compliance." }, { "speaker": "stephan", "time": "01:03:18", "start": 3798.29, "text": "Well, I think that's probably Thank you for joining us. It's been a really great and informative discussion around the ineffectiveness of AML. For any listeners who wanna follow your work online or find you, where's the best place for them to find you?" }, { "speaker": "ronald_pol", "time": "01:03:33", "start": 3813.12, "text": "probably, probably the blog, I guess, effectiveaml dot org, or drop me a line, through LinkedIn, Google me and you'll find, you know, find me or find all sorts of abuse about me, I suspect. I don't know. I haven't Googled myself for a while, so I don't know quite what, what will come up, but, effectiveAML dot org is, is, is probably the best start." }, { "speaker": "stephan", "time": "01:03:53", "start": 3833.48, "text": "Excellent. Well, I'll, I'll put that in the show notes for listeners and, Ron, thank you again for joining me. Thank you. I hope you found that informational about the problems and challenges of AML ineffectiveness and how and why Bitcoiners should be looking to build a parallel system with open source software and hardware, as well as the eventual goal of defunding the FATF, which is probably the goal that I would have in mind, because I think these things aren't going to be reformed in a productive way. They simply have to just be abolished or made obsolete thanks to the creation of a better and new system. Anyway, get the show on the road. Notes at stephanilivera dot com slash three one eight, and I'll see you in the citadels." } ] }