Legal Seminar, Denver, CO
Regulating Cash • The finality of a cash transaction removes the natural incentive for the recipient of cash to identify the counterparty. (Trust the cash, not the person). • AML laws are directed at changing that incentive structure. – Deputizing financial institutions and others to engage in monitoring/reporting – Robust KYC regimes challenge anonymity – But note extent of reporting: 917K SARS for depository institutions; 874K for money service businesses (2017) Money Service Businesses • Non‐bank intermediaries also transmitting money. – BSA/AML concerns. – Safety/Soundness concerns often address through state regulation; variety of regulators creates challenges for compliance – Civil and potential criminal penalties for noncompliance: Caveat venditor. • IVTS (e.g. hawala, hundi) are a separate specie of MSB. – Trust‐based, often with cultural connection. – Will these continue to thrive in a modern world with electronic alternatives?
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