Most people instinctively support anti-money laundering laws, but I wonder whether they would change their minds if they understood two very important facts.
As shown repeatedly in research studies, there is no evidence that these laws actually reduce criminal activity.- As shown in a major study from the World Bank, these laws can deprive poor people of access to banking services.
Regarding the second point, let’s look at some excerpts from a recent report in the New York Times by Tara Siegel Bernard and
There are many anecdotes about consumers losing access to banking services, but let’s look at some macro issues.
…financial institutions are obligated to alert regulators and law enforcement through a Suspicious Activity Report if there’s irregular behavior that they cannot easily explain. …if banks fail to report suspicious activity and regulators discover problematic transactions later,
banks and their compliance employees are potentially on the hook for all manner of penalties. “So all their incentives are toward closing accounts,” according to an explanation of SARs on the website of the Bank Policy Institute… a median of just 4 percent of 640,000 suspicious activity reports from a sample of large banks warranted a follow-up from law enforcement, according to the research, which examined 16 million alerts.
By the way, some people may think AML laws are worthwhile because 4 percent of reports generate follow up, but that has to be balanced against the estimated $180 billion cost imposed on the private economy.
In his Washington Times column, Richard Rahn draws the should-be obvious conclusion that these laws fail a cost-benefit test and should be repealed.
Money laundering became a federal crime only in 1986… Because the law is so vague and has been subject to so much prosecutorial abuse, including its weaponization for political purposes, there have been calls for its repeal.
…The real purpose of many payments between individuals and other individuals, government, or business entities is difficult to prove, which is why so few “stand-alone” money laundering convictions are made. …There is no evidence that the government’s crusade against money laundering has had any appreciable impact on drug dealing, terrorism, or government corruption. …By any objective standard and given the massive cost per conviction in contrast to the few stand-alone convictions, the war on money laundering has been a colossal failure. It has hurt the taxpayers, financial institutions, and, most importantly, Americans’ civil liberties.
Amen. Richard is right. These laws never should have been enacted.
Sadly, many politicians want to expand AML laws by abolishing cash.
P.S. I’m batting .500 in my career as a global money launderer.
P.P.S. Here’s Barack Obama’s satirical encounter with AML laws.
International Liberty 
The U.S. govt may be able to bully the Australian govt into enforcing its FATCA regulations, on innocent Australian investors, but no one loves the bully, or their supine local cronies. I think the US does itself a disservice, in its quest to lower its former prestige. If the banks report all transactions as suspect, or decline to make overseas transfers, the problem will go back to where it belongs, and not as fines affecting bank shareholders.
Dan. Thanks RWR
Sent from my iPad
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1984, ironically! The 1984 Comprehensive Crime Control Act enabled prosecutors to seize fees paid to defense lawyers as provided in Section 3554, Criminal Forfeiture, of the 419-page feeding frenzy targeting victimless disobedience. “Laundering” in Biden-Reagan 1986 laws entered the jargon as a euphemism.
The more government, the more harm. No surprise there.
It is much more helpful to show that all major crashes since 1907 resulted from forfeiture laws enabling armed looting. Even the Panic of 1837 resulted from Brits withdrawing capital to fight Opium Wars against Chinese prohibition. But Jackson and banks are blamed instead.