this is the first important non-intuitive thing about KYC and AML regimes: the goal is not to achieve banks having good knowledge of their customers or to prevent money laundering. It is to stochastically manage crime and terrorism at the margins by requiring an oft-unrecognized policy arm, the financial industry, to implement their own stochastic management of their books of business.

A particular important realization is that KYC and AML don’t have to be effective in their own terms to contribute to these goals.

KYC and AML: beyond the acronyms
from Patrick McKenzie (patio11) favicon