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Comment by nullc | Hacker News Reader

It's not anyone elses business where the money came from! If you were engaged in crime then the investigations of the actual crimes can eventually catch up with you. Expecting crime to get caught by surveilling your finances when you have no reason to be suspected of a crime is like expecting to scan your private correspondence for evidence of a crime.

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That's a fair opinion, but the law conflicts with that opinion in many places: https://en.wikipedia.org/wiki/Know_your_customer#Laws_by_cou...

KYC doesn’t mean you have to interrogate your customer about how they earned their money.

You are correct. What you describe is called proof of source of funds and also should be required for high value transactions.

It depends on the jurisdiction and the particular transaction.

In the US, for instance:

> financial institutions covered by the final rule must take reasonable steps to: [...] (3) determine the source(s) of funds deposited into the private banking account and the purpose and expected use of the account;

https://www.fincen.gov/fact-sheet-section-312-usa-patriot-ac...

> financial institutions covered

being key...

Yep. For instance:

> banking institutions;

It does, actually. FinCEN does not fuck around.

Source: just finished renewing my AML training

It does. I was cautioned that due to FINcen "you cannot buy a house with crypto", luckily all of the gains I had made were tracked by a "sufficiently reputable" platform that it wasn't an issue.

Wait, was that for a mortgage? I bought a house outright with cash that had been moved from Gemini (US crypto exchange) to Schwab less than two weeks before and the title company never had any questions about it.

Throwaway for obvious reasons.

Yes, sorry, I should have specified, that is what my lender said for banking operations. I presume you can buy a house with cash from crypto.

It is quite literally the lender’s business, as their decision to lend to you is absolutely contingent upon their confidence that the money came from a legitimate, stable source.

Not to nitpick, but the "stable" part isn't necessarily true. If the money is just being used for a down payment, and not being cited as recurring income, they wouldn't care whether it's stable.

Side note: I still can't make sense of why lenders care about the money's source being legitimate but the title company doesn't, per my experience: https://news.ycombinator.com/item?id=28163885

Well, I was conflating two things for simplicity’s sake.

They care that the down payment came from legitimate savings with a documented history, to ensure it’s not from another loan they’re not aware of.

And they care that your reported income is stable (you’re reliably employed with a reasonably predictable income stream) so they can reasonably expect you’ll continue to be able to make monthly payments.

>It's not anyone else's business where the money came from!

Oh yes it is - that's pretty much the definition of anti money laundering and many many people are involved in trying to figure that.

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