Bitcoiners Must Fight The FATF And Its AML Regime

The Financial Action Task Force and its anti-money laundering policies are antithetical to Bitcoin and an attack on human rights everywhere.

This is an opinion editorial by Stephan Livera, host of the “Stephan Livera Podcast” and managing director of Swan Bitcoin International.

Financial surveillance is all around us. Every time you want to sign up with a bank, you have to show identifying documentation, be screened by their automated systems and get peppered with all kinds of questions about your job, your lifestyle and source of wealth. Oftentimes, when you go to withdraw, spend or transfer what you thought was your own money, you are subject to even more questions.

It only seems to be getting worse and worse as time goes by. Why are we here? It has to do with various organizations that push this nonsense forward. And one of the key organizations here is FATF, the Financial Action Task Force. FATF is a natural enemy of those who favor financial freedom.

There is a regulatory burden brought by FATF and “financial crime” regulations such as anti-money laundering (AML) requirements and sanctions. These regulations are introduced and driven on the basis that they help stop money laundering or terrorist financing around the world. But serious analysis of their effectiveness seems to show that they are resulting in less than 1% of illicit financing being detected (see my chat with Ron Pol and his research here). And yet, the world is paying a huge cost in compliance and lost civil freedoms. And, from a property rights standpoint, businesses and banks should be able to run their businesses how they see fit, rather than constantly being in a position where they must “ask permission” from regulators or licensing agencies to continue operating.

If there’s a crime being committed, let law enforcement go and get a warrant! Regulators shouldn’t just get to automatically violate the privacy of everyday citizens’ financial details.

So, Who Is FATF Anyway?

Well it’s not clear exactly what kind of entity FATF is. It claims to be an independent inter-governmental body, but what is its registered entity? That appears to be a project operated out of the Organisation For Economic Cooperation And Development (OECD). It’s ironic in some ways that FATF pushes massive regulation and scrutiny onto everyday normal people but it seems to not be very accountable 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 about 619 BTC (or in fiat terms: about $11 million) per year and it has about 65 staff members, per its 2021 Annual Report. But the impact it has is great, because it is the one pushing out FATF recommendations and threatening countries with being placed on FATF gray or black lists.

But It’s Not Just FATF…

Now it’s not just FATF. There are all kinds of AML and “financial crimes” working groups, regulators and other entities out in individual nations around the world. So, they seem to all collaborate on how our financial lives must all be regulated and micromanaged. The gist seems to be that they come back with “FATF recommendations” about how to stop money laundering, and local countries and regulators have to implement these rules. Few people in any individual country or state care enough to kick up a stink and stop the financial regulation overreach and human rights crime.

Usually there are at least a few politicians in each country or political body who want to pretend to be anti-financial-crimes, which might 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’s The Net-Net Of All Of This?

So, the end result is that more and more financial control flows into individual banks, businesses and entities who are forced to comply, or else. The regulatory and bureaucratic state deputizes businesses and individuals to perform unpaid labor. And anyone who disagrees gets accused of being a shill for criminals and money launderers. Do they not appreciate that there might be people who want to defend private property and freedom on principle?

Cue the classic comic.

This is why we are all subject to so much financial surveillance and intrusive questioning about ourselves. In some ways, that poor bank teller or low-level bank staff member is not wholly to blame! The real culprit is at a much higher level, it’s these intergovernmental-funded entities who continually spin narratives about how effective their regulations are.

Now, of course, Bitcoin is a big part of the answer to obsolete these wanton human rights violators. But even here, there are various Bitcoin companies and exchanges who are experiencing issues getting access to fiat accounts to enable the on-ramps that they provide for users.

What About Bona Fide Criminals?

Catch them for the actual crimes they do, whether that’s theft or murder, etc. We also have to accept that freedom has a cost. Criminals also use roads, are we gonna have know-your-customer (KYC) requirements every time anyone uses a road? And criminals could also install curtains in their homes. Can you imagine the insanity if we came up with a Curtain Regulatory Authority that mandated that before any curtain installer could come install curtains, they have to conduct identity checks to confirm that you’re not a criminal hiding behind curtains?

And remember, it’s not like the current justice regime is doing some fantastic job given all of the financial surveillance in the world today. The vast majority of the crime is still being done with fiat currency. The answer is not “more control and bureaucracy,” it’s to accept that the current approach is simply not effective.

The Normalization Of Data Collection

This normalization of private data collection goes beyond merely AML and “financial crime” laws though. We’re seeing real impacts, with quite recent examples:

Celsius: The names and transaction histories of every user made public in bankruptcy proceedings Optus: 10 million customers’ data revealed in a breach, with 2.8 million having their passport or driving license number leaked.

So, in the end, creating this culture of private data collection has resulted in more innocent people being put at risk. Where does this factor into the calculation of overeager bureaucrats and politicians who play-act like their surveillance laws are helping?

Where Does PayPal Fit In With This?

PayPal recently came under fire for its change in policy relating to “misinformation” and docking customers $2,500. This time, it had to walk it back, given the social media outrage. But clearly, this is just a temporary reprieve from further financial surveillance on us all.

As Samson Mow of JAN3 tweeted, we can either use Bitcoin, or be forced to research all political ideologies of executives at major fintech companies. Your self-sovereign bitcoin wallet will not check your political views before broadcasting your bitcoin transaction. Your self-sovereign bitcoin wallet will not ask you about your source of wealth before permitting you to deposit funds and make use of it.

FATF and the AML regime have created and grown a culture where statists believe it is acceptable to peer into other people’s finances and control them, so long as their ideology differs from the people in power at the time.

This Is About Human Rights

It’s a question of human rights. To the extent that its FATF recommendations encourage local regulators, bureaucrats and politicians to continue controlling private citizens’ and business’ money, it is impinging on their private property rights. FATF and the associated AML regime is violating human rights around the world, and we’re all poorer for it.

Bitcoiners must 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-sovereign FOSS alternatives to the financial panopticon, and it can also take the form of suing government entities over-regulating and encroaching on innocent peoples’ lives. It could even take the form of lobbying local politicians to push back on FATF and financial surveillance. Defunding FATF would also be a great idea. Why must taxpayers around the world pay for this ineffective and economically destructive regulation?

As a final take away though, consider that while there are more obvious cases of financial exclusion (which FATF brushes away as “unintended consequences“), the case must be made on the principle of the matter. We want to live in a free market society with private property rights, and not be constantly wondering what we are allowed to do with our own money. The world does not need more FATF recommendations and reports. It needs 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 those of BTC Inc or Bitcoin Magazine.

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This is an opinion editorial by Stephan Livera, host of the “Stephan Livera Podcast” and managing director of Swan Bitcoin International.

Financial surveillance is all around us. Every time you want to sign up with a bank, you have to show identifying documentation, be screened by their automated systems and get peppered with all kinds of questions about your job, your lifestyle and source of wealth. Oftentimes, when you go to withdraw, spend or transfer what you thought was your own money, you are subject to even more questions.

It only seems to be getting worse and worse as time goes by. Why are we here? It has to do with various organizations that push this nonsense forward. And one of the key organizations here is FATF, the Financial Action Task Force. FATF is a natural enemy of those who favor financial freedom.

There is a regulatory burden brought by FATF and “financial crime” regulations such as anti-money laundering (AML) requirements and sanctions. These regulations are introduced and driven on the basis that they help stop money laundering or terrorist financing around the world. But serious analysis of their effectiveness seems to show that they are resulting in less than 1% of illicit financing being detected (see my chat with Ron Pol and his research here). And yet, the world is paying a huge cost in compliance and lost civil freedoms. And, from a property rights standpoint, businesses and banks should be able to run their businesses how they see fit, rather than constantly being in a position where they must “ask permission” from regulators or licensing agencies to continue operating.

If there’s a crime being committed, let law enforcement go and get a warrant! Regulators shouldn’t just get to automatically violate the privacy of everyday citizens’ financial details.

So, Who Is FATF Anyway?

Well it’s not clear exactly what kind of entity FATF is. It claims to be an independent inter-governmental body, but what is its registered entity? That appears to be a project operated out of the Organisation For Economic Cooperation And Development (OECD). It’s ironic in some ways that FATF pushes massive regulation and scrutiny onto everyday normal people but it seems to not be very accountable 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 about 619 BTC (or in fiat terms: about $11 million) per year and it has about 65 staff members, per its 2021 Annual Report. But the impact it has is great, because it is the one pushing out FATF recommendations and threatening countries with being placed on FATF gray or black lists.

But It’s Not Just FATF…

Now it’s not just FATF. There are all kinds of AML and “financial crimes” working groups, regulators and other entities out in individual nations around the world. So, they seem to all collaborate on how our financial lives must all be regulated and micromanaged. The gist seems to be that they come back with “FATF recommendations” about how to stop money laundering, and local countries and regulators have to implement these rules. Few people in any individual country or state care enough to kick up a stink and stop the financial regulation overreach and human rights crime.

Usually there are at least a few politicians in each country or political body who want to pretend to be anti-financial-crimes, which might 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’s The Net-Net Of All Of This?

So, the end result is that more and more financial control flows into individual banks, businesses and entities who are forced to comply, or else. The regulatory and bureaucratic state deputizes businesses and individuals to perform unpaid labor. And anyone who disagrees gets accused of being a shill for criminals and money launderers. Do they not appreciate that there might be people who want to defend private property and freedom on principle?

Cue the classic comic.

This is why we are all subject to so much financial surveillance and intrusive questioning about ourselves. In some ways, that poor bank teller or low-level bank staff member is not wholly to blame! The real culprit is at a much higher level, it’s these intergovernmental-funded entities who continually spin narratives about how effective their regulations are.

Now, of course, Bitcoin is a big part of the answer to obsolete these wanton human rights violators. But even here, there are various Bitcoin companies and exchanges who are experiencing issues getting access to fiat accounts to enable the on-ramps that they provide for users.

Catch them for the actual crimes they do, whether that’s theft or murder, etc. We also have to accept that freedom has a cost. Criminals also use roads, are we gonna have know-your-customer (KYC) requirements every time anyone uses a road? And criminals could also install curtains in their homes. Can you imagine the insanity if we came up with a Curtain Regulatory Authority that mandated that before any curtain installer could come install curtains, they have to conduct identity checks to confirm that you’re not a criminal hiding behind curtains?

And remember, it’s not like the current justice regime is doing some fantastic job given all of the financial surveillance in the world today. The vast majority of the crime is still being done with fiat currency. The answer is not “more control and bureaucracy,” it’s to accept that the current approach is simply not effective.

The Normalization Of Data Collection

This normalization of private data collection goes beyond merely AML and “financial crime” laws though. We’re seeing real impacts, with quite recent examples:

Celsius: The names and transaction histories of every user made public in bankruptcy proceedings Optus: 10 million customers’ data revealed in a breach, with 2.8 million having their passport or driving license number leaked.

So, in the end, creating this culture of private data collection has resulted in more innocent people being put at risk. Where does this factor into the calculation of overeager bureaucrats and politicians who play-act like their surveillance laws are helping?

Where Does PayPal Fit In With This?

PayPal recently came under fire for its change in policy relating to “misinformation” and docking customers $2,500. This time, it had to walk it back, given the social media outrage. But clearly, this is just a temporary reprieve from further financial surveillance on us all.

As Samson Mow of JAN3 tweeted, we can either use Bitcoin, or be forced to research all political ideologies of executives at major fintech companies. Your self-sovereign bitcoin wallet will not check your political views before broadcasting your bitcoin transaction. Your self-sovereign bitcoin wallet will not ask you about your source of wealth before permitting you to deposit funds and make use of it.

FATF and the AML regime have created and grown a culture where statists believe it is acceptable to peer into other people’s finances and control them, so long as their ideology differs from the people in power at the time.

It’s a question of human rights. To the extent that its FATF recommendations encourage local regulators, bureaucrats and politicians to continue controlling private citizens’ and business’ money, it is impinging on their private property rights. FATF and the associated AML regime is violating human rights around the world, and we’re all poorer for it.

Bitcoiners must 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-sovereign FOSS alternatives to the financial panopticon, and it can also take the form of suing government entities over-regulating and encroaching on innocent peoples’ lives. It could even take the form of lobbying local politicians to push back on FATF and financial surveillance. Defunding FATF would also be a great idea. Why must taxpayers around the world pay for this ineffective and economically destructive regulation?

As a final take away though, consider that while there are more obvious cases of financial exclusion (which FATF brushes away as “unintended consequences“), the case must be made on the principle of the matter. We want to live in a free market society with private property rights, and not be constantly wondering what we are allowed to do with our own money. The world does not need more FATF recommendations and reports. It needs 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 those of BTC Inc or Bitcoin Magazine.

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