KYC and AML fail to stop criminals but restrict financial freedom
Global financial regulations like Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures have long been promoted as key tools against illegal finance. Yet recent findings reveal a stark gap between their intended purpose and actual outcomes. Studies indicate that criminals still retain nearly all their profits, while ordinary users face growing restrictions on financial privacy and freedom.
Research shows that KYC and AML measures recover only about 0.05% of criminal funds worldwide. This translates to roughly $1.5 billion out of an estimated $3 trillion in illicit money circulating each year. Despite decades of enforcement, no study has proven these procedures effectively reduce money laundering or terrorism financing.
Beyond their limited success, the rules introduce new risks. Financial surveillance has been used to freeze accounts and suppress political protests, as seen in Canada. The mandatory collection of sensitive data also raises concerns over theft, censorship, and arbitrary enforcement. Critics argue that the burden falls heavily on law-abiding users. Stricter regulations erode monetary confidentiality and restrict how individuals manage their own funds. Meanwhile, the core problemâcriminals keeping 99% of their profitsâremains largely unaddressed.
The current system of KYC and AML checks has not delivered on its promises. With minimal impact on criminal finances and growing threats to financial freedom, calls for reform are likely to increase. The data suggests a need for more effectiveâand less intrusiveâapproaches to tackling illicit money flows.
