AML gone bananas (or cryptic)! (English, 2023-02-21)

A colleague told me an interesting anecdote over lunch today. We all try to make ends meet in these times, and so the discussion naturally touched on how to reduce one’s mortgages that weigh down the discretionary spending. Naturally, one would think that if you have monetary assets, you would be able to use these in order to pay off debts!

Well, shame on me. Apparently, if these liquid assets have, for example, been obtained by selling crypto, don’t assume that these can be used in order to pay off the debt. Apparently, some banks are so paranoid about Anti Money Laundering regulation that they will not allow it, as the origin of the funds cannot be positively established (for instance, if you sell your crypto on an exchange)! So, you may very well end up in a situation where the liquid assets become illiquid, not because of their innate propensity to repel buyers, but because the bank doesn’t want to deal with them in the first place. After the debacle with the prosecution of the former CEO of Swedbank for non compliance with AML regulation, I can understand that bankers become completely paranoid with these sort of things. But, it’s one thing to obsess about the origins of dirty cash to, or from, the former Soviet  Union; it is quite a different thing to worry about where puny savings really come from when teachers show up at the teller, trying to sanitize the family budget.

I remember a time when banks actually had, and wanted to deal in, money. I also recall a time when you could sell your financial assets on an exchange, obtain money in return for them, and use that money. Those were good times! Well, everything must come to an end I suppose.