FATF And AML Is A War Against Bitcoin – Bitcoin Magazine
This is an opinion editorial by Stephan Livera, host of the “Stephan Livera Podcast” and CEO of Swan Bitcoin International.
Financial surveillance is all around us. Every time you want to register with a bank, you have to show identifying documentation, be shielded by their automated systems and be peppered with all kinds of questions about your job, your lifestyle and the source of your wealth. Often, when you go to withdraw, spend or transfer what you thought was your own moneyyou are subject to even more questions.
It just seems to get worse and worse as time goes on. Why are we here? It has to do with various organizations pushing this nonsense. And one of the key organizations here is FATF, the Financial Action Task Force. The FATF is a natural enemy of those who favor economic freedom.
There is a regulatory burden brought by the FATF and “financial crime” regulations, such as anti-money laundering (AML) requirements and sanctions. These regulations have been introduced and operated on the basis that they help to stop money laundering or terrorist financing around the world. But serious analysis of their effectiveness seems to show that they result in less than 1% of the illegal funding being detected (see my chat with Ron Pol and his research here). And yet the world is paying a huge price for compliance and lost civil liberties. And from a property rights perspective, companies and banks should be able to run their businesses as they see fit, rather than constantly being in a position where they have to “ask for permission” from regulators or licensing agencies to continue operating.
If there is a crime being committed, let the police go and get a warrant! Regulators shouldn’t just automatically infringe on the privacy of everyday citizens’ financial details.
So who is the FATF?
Well, it is not clear exactly what kind of entity the FATF is. It claims to be an independent intergovernmental body, but what is its registered entity? It appears to be a project run by the Organization for Economic Co-operation and Development (OECD). It is ironic in some ways that the FATF is pushing massive regulation and scrutiny on ordinary ordinary people, but it does not appear to be very responsible in itself.
But the short version is: it bills itself as a global money laundering and terrorist financing watchdog. The FATF Secretariat is funded by OECD nations to the tune of around 619 BTC (or in fiat terms: around $11 million) per year, and it has around 65 employees, according to its 2021 annual report. But its impact is great, because it is the which push out FATF recommendations and threaten countries with being placed on the FATF’s gray or black lists.
But it’s not just the FATF…
Now it’s not just the FATF. There are all sorts of AML and “financial crimes” task forces, regulators and other entities in individual nations around the world. So it seems they are all colluding in how our financial lives need to be regulated and micromanaged. The main thing seems to be that they come back with “FATF recommendations” on how to stop money laundering, and local countries and regulators have to implement these rules. Few people in a single country or state care enough to make a stink and stop excessive financial regulation and human rights crimes.
Usually there are at least a few politicians in each country or political body who want to pretend they are anti-financial crime, which may also explain some of the recent “unhosted wallets” garbage coming out of the EU (see my chat with Gigi on why this corruption of language is harmful to bitcoin and to all of us.)
What is the net of all this?
So the end result is that more and more financial control flows into individual banks, businesses and entities that are forced to comply or else. The regulatory and bureaucratic state puts companies and individuals in place to perform unpaid work. And anyone who disagrees is accused of being a cesspool for criminals and money launderers. Do they not appreciate that there may be people who want to defend private property and freedom on principle?
Watch the classic cartoon.
This is why we are all subject to so much financial surveillance and intrusive questions about ourselves. In some ways, the poor teller or bank employee is not entirely to blame! The real culprit is at a much higher level, it is these intergovernmentally funded entities that continuously spin narratives about how effective their regulations are.
Now, of course, Bitcoin is a big part of the answer to obsolescence of these rogue human rights violators. But even here, there are various Bitcoin companies and exchanges that are experiencing problems accessing fiat accounts to activate the on-ramps that they provide to their users.
What about bona fide criminals?
Capture them too actual crimes they commit, be it theft or murder, etc. We also have to accept that freedom has a cost. Criminals also use roads, should we have know-your-customer requirements every time someone uses a road? And criminals could also install curtains in their homes. Can you imagine the madness if we came up with a curtain regulatory authority that mandated that before any curtain installers could come and install curtains, they had to carry out identity checks to confirm that you are not a criminal hiding behind curtains?
And remember, it’s not like the current legal regime is doing a fantastic job given all the financial surveillance in the world today. The vast majority of the crime is still done with fiat currency. The answer isn’t “more control and bureaucracy,” it’s accepting that the current approach is simply not effective.
Normalization of data collection
However, this normalization of private data collection goes beyond mere AML and “financial crime” laws. We see real effects, with fairly recent examples:
- Celsius: The names and transaction histories of each user disclosed in the bankruptcy proceedings
- Optus: 10 million customers’ data exposed in breach, 2.8 million of whom had passport or driver’s license numbers leaked.
So ultimately it has resulted in creating this culture of private data collection more innocent people are put in danger. Where does this factor help in the calculation of overzealous bureaucrats and politicians toying with their surveillance laws?
Where does PayPal fit into this?
PayPal recently came under fire for its policy change related to “misinformation” and docking customers $2,500. This time it had to go back, given the fury of social media. But clearly this is only a temporary reprieve from further financial monitoring of us all.
As Samson Mow of JAN3 tweeted, we can either use Bitcoin, or be forced to research all political ideologies of executives of major fintech companies. Your self-absorbed bitcoin wallet will not check your political views before broadcasting your bitcoin transaction. Your independent bitcoin wallet will not ask you about the source of wealth until you allow you to deposit money and spend it.
FATF and the AML regime have created and developed a culture where statists believe it is acceptable to look into other people’s finances and control them, as long as their ideology is different from those in power at the time.
This is about human rights
It is a matter of human rights. To the extent that the FATF recommendations encourage local regulators, bureaucrats and politicians to continue to control the money of private citizens and businesses, it affects their private property rights. The FATF and the associated AML regime are violating human rights around the world and we are all the poorer for it.
Bitcoiners need to be clear about what the problem is and start speaking up and taking action on it. That action can take the form of coding and building self-defeating FOSS alternatives to the financial panopticon, and it can also take the form of suing government entities that over-regulate and intrude on the lives of innocent people. It may even take the form of lobbying local politicians to push back on the FATF and financial surveillance. Defunding the FATF would also be a good idea. Why must taxpayers worldwide pay for this ineffective and economically destructive regulation?
As a final take away, however, consider that even if there are more obvious cases of economic exclusion (which the FATF brushes off as “unintended consequences”), the case must be made on the principle of the case. We want to live in a free market society with private property rights, and not constantly wonder what we are allowed to do with our own money. The world does not need more FATF recommendations and reports. It needs the defense of private property rights in principle.
This is a guest post by Stephan Livera. Opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.
